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.)