Green tech, red ink

Purveyors of green technology have not, in general, had an easy time of it of late. This should not surprise anyone, really: despite the Obama administration’s willingness to provide subsidies, the hoped-for product demand has not yet materialized. And rather a lot of these companies are startups, and startups, as any venture capitalist can tell you, tend to fail.

A123 Systems has long since departed startup status, having been in business since 2001. You may already be using one of their products: they make batteries for Black and Decker’s DeWalt line of power tools. And they’re on the edge of the power grid, supplying reserve-storage batteries for power plants. But electric cars may prove to be their undoing:

A123 Systems Inc on Friday told investors it has about five months of cash left to fund operations, adding to woes for a sector short on results and long on government loans.

The company, which received a $249 million grant from the Obama administration as part of a program to develop advanced lithium-ion batteries, said in documents filed with U.S. regulators that it “expects to have approximately four to five months of cash to support its ongoing operations” based on its recent monthly spending average. Its shares fell almost 11 percent despite A123’s announcement of moves to raise $39 million.

The problem, though, seems to be less low demand and more damage control:

“Five transportation customer production programs … have received products from A123 that potentially have defective cells. We are working with these customers to develop a schedule to get them replacement packs and modules to quickly remedy the situation.”

One of those customers is Fisker, which is having troubles of its own.

The recall is costing A123 Systems $55 million, which otherwise could have supported ongoing operations for another two or three months.

(Via The Truth About Cars.)


  1. McGehee »

    8 July 2012 · 9:00 am

    The “sexy” green technologies that the Obama Maladministration has been subsidizing have been “just around the corner” for a generation or more for a simple reason — but there’s still a hint of that “Detroit killed the engine that runs on water” conspiracy thinking out there and that’s why people think all they need is more money and support to get past the artificial hurdles supposedly thrown up in their way by the eeeeevil 1% that supposedly likes drinking dirty water and breathing dirty air.

    Meanwhile all the mundane green technologies that have been turning the corner and becoming mainstream have been doing so for a simple reason, and that’s the same reason they’re so mundane and un-sexy: they’ve come about the same way all the un-green technologies came about.

  2. I picked a bad week to try to be a blogger... « Blog de KingShamus »

    12 July 2012 · 6:27 pm

    […] Swiss Bank hypocrisy post.  I loved Dustbury’s piece on A123’s electric car battery troubles.  John’s ‘cut your losses’ post was pretty insightful.  Innominatus continued […]

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