White House press secretary Jay Carney cited Wednesday the advanced battery industry as an area the stimulus built despite major financial problems for one of the most prominent grant recipients in the industry.
"The Recovery Act helped create new industries in this country—or build new industries in this country, including the advanced battery industry, that barely existed here in the past," Carney said, responding to questions about the president's outsourcing record.
One of the most prominent advanced battery grant recipients, A123 Systems, is facing major financial problems. The company received a $249.1 million grant from the Department of Energy--roughly 10 percent of grants to the industry--in 2009 to build a plant in Michigan.
The Boston Globe reported on the company's issues last week in a piece titled, "Can battery maker A123 avoid Solyndra's fate?"
But A123 remains far from profitability. Theodore O’Neill, an analyst at Wunderlich Securities in New York, estimates the company must raise about $400 million in the next 18 months to stay afloat, and then raise a similar amount after that. [...]
Ultimately, A123 may have bet more heavily on electric cars that it should have. Sales to the transportation sector accounted for almost 70 percent of A123’s revenues in the first three months of 2011, financial filings show, but fell to about 40 percent in the same period in 2012.
Late last year, one of A123’s biggest customers, Fisker Automotive, the California company that makes the Karma electric hybrid, cut its orders for A123 batteries after saying it would build fewer vehicles. Soon after, A123 discovered its plant near Detroit had produced defective batteries, forcing a recall that cost the company nearly $67 million.