Chinese Company Wins Auction for A123 Systems

Chinese Company Wins Auction for A123 Systems

A year riddled with controversy for electric cars is winding down, but not without at least one more flare up — Chinese firm Wanxiang Group won the bidding war for A123 Systems.

Almost certain to stir up controversy, Wanxiang was one of four bidders competing to take control of the bankrupt U.S. battery maker in Chicago last week. Of the four, Johnson Controls was the only American company submitting a bid, but it wasn’t enough to compete with the Chinese firm’s $257 million bid.

The development has several politicians up in arms including Republican member of Congress, Marsha Blackburn who said in a blog post that any sale of A123 to the Chinese had “significant implications” for U.S. national interests.

Part of that concern, which was voiced on Friday before the winning bid was announced, probably stemmed from the fact that A123’s client list includes the U.S. military. Some might be concerned that Wanxiang’s winning will mean U.S. military technology slipping into Chinese hands, but that issue was quickly quelled. Instead, the company’s government and military projects will go to Navitas Systems for $2.2 million.

SEE ALSO: A123 Eyed by Foreign Bidders on Auction Date

Apart from military technology, A123 has something else taxpayers are likely to feel uneasy over Wanxiang taking — their money. The company received  $249 million in federal grants to promote domestic battery production. Some might see the sale as tax dollars evaporating.

But that might not necessarily be the case.

“We plan to build on the engineering and manufacturing capabilities that A123 has established in the U.S. and we are committed to making the long-term investments necessary for A123 to be successful,” said president of Wanxiang America Pin Ni.

The bidding might be over, but the final sale is still subject to approval by the bankruptcy court. Nothing is actually done yet, and if Wanxiang ends up taking A123 afterall, the deal will be likely be carefully examined.

Assuming things move forward, there is also one other important thing to keep in mind. This won’t mean American jobs being shipped overseas, at least not in the near future. The Chinese firm will acquire A123’s automotive, electric-grid and commercial business assets including its three U.S. factories which will continue to operate.

Aside from preserving jobs, that also means automakers like Fisker will still have a source for their battery packs.