U.S. lawmakers resist Chinese takeover of EV battery maker
Opposition to China acquiring a US. maker of high tech batteries continues to mount in Washington.
Wanxiang Group Corporation, a private company that is one of China’s largest makers of car parts, last week offered a US$450 million rescue package to troubled A123 Systems, Inc., one of the few American manufacturers of advanced batteries for electric vehicles.
According to the terms of the deal, Wanxiang will provide some US$75 million in debt financing, and could also buy US$200 million of senior secured convertible notes and invest US$175 million by exercising warrants.
Together, these instruments could be converted for shares representing a stake of about 80% in A123, which lost US$258 million in 2011 despite receiving US$249 million in U.S. government grants to develop lithium iron phosphate batteries.
Some U.S. lawmakers have raised security concerns about the deal, claiming it will transfer advanced U.S. taxpayer funded intellectual property to China, a foreign adversary.
A123 has never been profitable and has lost a total of US$690 million since its founding in 2009. Losses are accelerating. The company said it lost US$208 million in the first half of this year.
In response to the string of continuous losses, the company’s stock price has plummeted 97% from over $25 in September 2009 to $0.57 this week.