A123 files for bankruptcy

[emperus]

Wow. I'm glad you guys weren't alive during the Space Race. Why is anyone cheering this? We used to be a country that was on the cutting edge of innovation and supported it.

 

[drebo]

Wow. I'm glad you guys weren't alive during the Space Race. Why is anyone cheering this? We used to be a country that was on the cutting edge of innovation and supported it.

Government funded R&D is very different, and much more efficient and acceptable, than government funded production companies.

I have no problem with government grants for technology. I wish there was less fraud and more oversight, but I can live with that. What I have a problem with are government-backed loans to companies designed to subsidize an otherwise unviable product into viability.

 

[Svnla]

What you mean to say is 29/33 of the loans aren't in default - that is the companies are making the coupon payments (~6%?). Paying back means returning the principal (corp debt doesn't amortize) is a whole another problem that will generally require private refinancing... or DOE is stuck in a perpetual loan situation.

Just like when I hear about GM is alive and how GM did an ad in which they brag about they "paid" their debt back. GM is still owe the government/tax payers BILLIONS.

BTW to the other poster, Johnson Controls or JCI is from Milwaukee, WI. It is one of the largest automotive suppliers in the world. It has several divisions: Automotive, Battery, Building Controls.

<<<<====spent a few years in manufacturing after college.

 

[halik]

Government funded R&D is very different, and much more efficient and acceptable, than government funded production companies.

I have no problem with government grants for technology. I wish there was less fraud and more oversight, but I can live with that. What I have a problem with are government-backed loans to companies designed to subsidize an otherwise unviable product into viability.

This, absolutely dead on. Orgs like DARPA, NIH, DHS ( yes homeland security issues grants also), NIST,NSF etc lead to awesome academic research and new businesses when the technology matures. On the other hand, subsidizing production of what's by and large bleeding edge ($20K+ repair bill if your electric car if your battery charge drops) is doomed to failure.

 

[umbrella39]

Odd timing on the filing...

 

[Bitek]

I really love electric motors - I have a degree as an electrical engineer and I find the whole concept of electric motors to be pretty fascinating. Along those lines, about 8 years ago I started flying electric radio controlled model airplanes. At first I started by winding my own motors, but I soon found that batteries were as important, if not more important, than the motor. To this day, in my mind A123 batteries are the best batteries available - except in terms of power/weight. But if you are looking for a battery that you can charge and discharge quickly, that has really good electrical characteristics, and pretty good power/weight, and that don't explode when you crash (like lipolys are prone to do), A123's are as good as I know of...

You guys can talk conspiracy theories, and the Obama presidency's culpability (or otherwise), but from my perspective the main problem A123 had was that they didn't handle the manufacturing ramp from initial concept to high-volume manufacturing very well, and they had quality control issues (see the big recall they did last year). They were pooly managed, and it's a real shame because their cells remain the best that I know of for certain applications.

Did RC cars for a while and was way into the brush less electrics. A123s were fantastic cells, and I had my share of the 36v dewalt packs, but was disappointed they never really evolved beyond their initial cells. The 26mm cells were hard to fit into cars, and the lipo batt market just evolved past them very quickly. Plus lipos were easy and cheap to buy from places like HobbyKing in HK. Still have my a123s from 2007-2008, but didn't buy more after that.

I agree the mgmt just fked this up badly. Had great tech and didn't move fast enough on it. Plus the Chinese and Korean batt makers have torched them.

Disappointed they didn't do better, but we can't just let the Asians run away with the next gen tech.

 

[DucatiMonster696]

Wow. I'm glad you guys weren't alive during the Space Race. Why is anyone cheering this? We used to be a country that was on the cutting edge of innovation and supported it.

Appeals to patriotism in the face of free market realities isn't going to save these companies who are operating inefficiently in the marketplace. Additionally you can't support true innovation by just throwing taxpayer money blindly at market losers who demonstrate that they cannot keep up with their competitors and push to the bleeding edge on more than just one front (product tech, manufacturing, etc) which spurs further competition and true innovation in industries.

 

[dmcowen674]

Originally Posted by dmcowen674
This is another failure of the 1%.

What happened Job Creators?

Where's the jobs?

I bet all the money is safely in offshore bank accounts of the rich 1% execs.

The problem is that all this money was given to businesses that don't have sustainable business models to begin with.

It isn't about job creators not able to create jobs...it's about businesses with stable business plans needing assistance to grow.

Or do you want to start outlawing businesses from bankruptcy?

Not true, stop lying.

 

[Doppel]

Is mcowned arguing with himself now?

 

[buckshot24]

This is another failure of the 1%.

What happened Job Creators?

Where's the jobs?

I bet all the money is safely in offshore bank accounts of the rich 1% execs.

If they couldn't make it with the hundreds of millions Obama gave them then they were never going to make it.

 

[buckshot24]

Just like when I hear about GM is alive and how GM did an ad in which they brag about they "paid" their debt back. GM is still owe the government/tax payers BILLIONS.

BTW to the other poster, Johnson Controls or JCI is from Milwaukee, WI. It is one of the largest automotive suppliers in the world. It has several divisions: Automotive, Battery, Building Controls.

<<<<====spent a few years in manufacturing after college.

Problem with GM is that they are still making cars that not many people want. The infusion of government money merely delayed the inevitable.

 

[buckshot24]

Government funded R&D is very different, and much more efficient and acceptable, than government funded production companies.

I have no problem with government grants for technology. I wish there was less fraud and more oversight, but I can live with that. What I have a problem with are government-backed loans to companies designed to subsidize an otherwise unviable product into viability.

Yes, let's spend the money on research instead of propping up shitty companies.

 

[SandEagle]

nice. and to think i was going to drop a few thousand on their stock last week. whew.

 

[dmcowen674]

nice. and to think i was going to drop a few thousand on their stock last week. whew.

1%er alert

 

[WackyDan]

This is another failure of the 1%.

What happened Job Creators?

Where's the jobs?

I bet all the money is safely in offshore bank accounts of the rich 1% execs.

How is this a failure of the 1%? It is likely that many of the 1% ponied up the venture capital that started this business... THEY TOOK THE RISK.

In the time this company existed, it employed people... gave them medical coverage...And somehow you equate this to a failure? Companies come and go...Not every one can succeed... and in this case, it allows Johnson Controls to buy A123's patents and tech and even perhaps maintain employment of some of the A123 employees... That is the business process whether you like it or not.

 

[werepossum]

There was no chinese deal, Johnson Controls acquired the battery business for $125mio.

http://www.crainsdetroit.com/articl...ruptcy-jci-agrees-to-acquire-battery-business

More fundamentally, government should be funding research and development, not operations. Taking unviable technology and subsidizing its operation doesn't make it into viable technology. Same goes for ethanol.

Very good news. A123 is I think the best of the hybrid battery designs and I'd hate to see those patents bought to kill, or worse, in Red Chinese hands. Johnson Controls should have the resources to mature not only the products, but also the business model. Sucks for those who started it, but most of the techs and engineers will probably continue their work.

I really love electric motors - I have a degree as an electrical engineer and I find the whole concept of electric motors to be pretty fascinating. Along those lines, about 8 years ago I started flying electric radio controlled model airplanes. At first I started by winding my own motors, but I soon found that batteries were as important, if not more important, than the motor. To this day, in my mind A123 batteries are the best batteries available - except in terms of power/weight. But if you are looking for a battery that you can charge and discharge quickly, that has really good electrical characteristics, and pretty good power/weight, and that don't explode when you crash (like lipolys are prone to do), A123's are as good as I know of. There's a whole bunch of electric model helicopter pilots that I know who won't use anything other than A123's.

That said, I was always disappointed by how hard they were to buy. Back when they were first released, I contacted A123 directly and asked how I could buy their cells and they aimed me at a super-expensive development kit. The "best" way to get them was to take apart 18V DeWalt cordless drill battery packs (google "DeWalt A123" for all the instructions). But that was expensive - DeWalt stuff isn't cheap in general, and buying a name-brand cordless drill battery pack simply to take it apart to get the cells inside seemed like a stupid way to do it. While I recognize that end-user customer service is hard and expensive, I remain disappointed in A123's management that they never made their products more readily available to homebrew electric builders. Despite one phone call, and several emails, I could never get A123 to sell anything to me - or to tell me how to get what I wanted through other companies that resold A123 cells. For my really large battery installation at home (60V 80Ah), I use Thunder Sky batteries (Chinese) because they actually sell batteries to people.

You guys can talk conspiracy theories, and the Obama presidency's culpability (or otherwise), but from my perspective the main problem A123 had was that they didn't handle the manufacturing ramp from initial concept to high-volume manufacturing very well, and they had quality control issues (see the big recall they did last year). They were poorly managed, and it's a real shame because their cells remain the best that I know of for certain applications.

Great post. A123 seems to have ignored the small markets that existed in favor of chasing the big markets not yet in existence. That's a problem with any truly innovative, game-changing start-ups, but especially if the folks in charge of handing out the government largess are predisposed to favor the company, and double especially in a bad economy. Had A123 been required to get private financing, it would have needed to demonstrate a sound business model. Had A123 gotten this loan a decade later, it probably would have flourished. But an ideologically favorable government and a bad economy, just too much for a startup to overcome.

Government funded R&D is very different, and much more efficient and acceptable, than government funded production companies.

I have no problem with government grants for technology. I wish there was less fraud and more oversight, but I can live with that. What I have a problem with are government-backed loans to companies designed to subsidize an otherwise unviable product into viability.

Agreed, but as PM says A123 has an excellent product. What they didn't have was a viable business model for this particular economy. They ramped up to a level of production they could not sell.

If we weren't actually at war, they could probably have made it just selling to the military. Nobody needs to conserve fuel and maximize battery power while maximizing safety during case failure like the military, and if we weren't actually trying to groom the world's arsehole into something presentable we could afford to start converting military vehicles to hybrid drive. And that's the very best of upgrades, those that maximize performance while decreasing logistics requirements.

 

[bfdd]

Yay more failures when trying to pick a winner or loser. I would rather them not trying to pick winners or losers in cases like this. The only reason they do this kind of shit is because we continue to allow them to steal from us TRILLIONS a year.

 

[Doppel]

How is this a failure of the 1%? It is likely that many of the 1% ponied up the venture capital that started this business... THEY TOOK THE RISK.

In the time this company existed, it employed people... gave them medical coverage...And somehow you equate this to a failure? Companies come and go...Not every one can succeed... and in this case, it allows Johnson Controls to buy A123's patents and tech and even perhaps maintain employment of some of the A123 employees... That is the business process whether you like it or not.

Oh dear. Please don't try and debate with mcowned, he is not capable of rational discussion.

 

[cybrsage]

“Behold, a sower went out to sow. And as he sowed, some seed fell by the wayside; and the birds came and devoured them. Some fell on stony places, where they did not have much earth; they immediately sprang up because they had no depth of earth. But when the sun was up they were scorched, and because they had no root they withered away. And some fell among thorns, and the thorns sprang up and choked them. But others fell on good ground and yielded a crop, some a hundredfold, some sixty, some thirty. He who has ears to hear, let him hear.”

Sadly, Obama sowed in the parking lot...on the blacktop...they all fell by the wayside.

 

[cybrsage]

Johnson Controls or JCI is from Milwaukee, WI. It is one of the largest automotive suppliers in the world. It has several divisions: Automotive, Battery, Building Controls.

And is a GREAT company to have purchased this tech.