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GM, BMW battery maker goes bust

2012-10-17 10:07

DETROIT, Michigan - Battery maker A123 Systems, reeling from lack of funding and poor sales of electric vehicles, has sent its US operations into bankruptcy protection on Tuesday and sold its automotive assets.

The company warned that it would likely miss its debt payments and could be headed for a court-supervised restructuring. The company said in a statement that auto parts maker Johnson Controls Inc would buy its automotive business assets for R1-billion.

SLOW EV SALES

A123 received a R2.1-billion grant from the US department of energy in 2009 to help its build factories. The company creates batteries for automakers including General Motors, BMW, and Fisker Automotive.

The filing is likely to stoke the debate in Washington over Barack Obama administration's funding of alternative energy companies. Republicans have accused Obama of wasting stimulus money on alternative energy companies after the failure of politically connected and now-bankrupt solar power company Solyndra. Its failure cost US taxpayers R4.5-billion.

A123 has struggled for several years as Americans have been slow to embrace electric cars. The company has yet to post a profit and lost R720-million in revenue.

Despite the slow sales of battery vehicles, US automaker Cadillac is set to enter the hybrid market as it produces its Chevrolet Volt-based ELR in 2013.

AP