Battery maker goes bankrupt

DETROIT - After years of struggling with weak sales and mounting losses, electric-car battery maker A123 Systems Inc. filed for bankruptcy protection and reached a deal to sell its automotive assets Tuesday.

Auto-parts maker Johnson Controls Inc. will pay $125 million for A123's auto business, which includes two Michigan factories and the lithium-ion battery technology used in cars including the Fisker Karma and upcoming Chevrolet Spark.

A123's demise as an independent business reflects the problems of the electric-car industry. Americans have been slow to buy the vehicles because they're expensive, and many models have limited range and can run out of power on longer trips. Lackluster sales of EVs and batteries left A123 Systems with huge losses and plunging market value.

The company's stock price, more than $20 the day of its initial public offering in 2009, fell 74 percent Tuesday to close at 6 cents.

The bankruptcy filing also spawned more Republican criticism of the Obama administration, which used stimulus money to support alternative-energy businesses including A123, electric-car companies, and solar-panel maker Solyndra L.L.C. (which went bankrupt).

Under Tuesday's deal, Johnson Controls will get A123's lithium-ion battery technology, other products and customer contacts. It will also take over A123's two Michigan factories, cathode-ray factories in China, and an equity interest in a Chinese battery company.

The Michigan plants, in the Detroit suburbs of Livonia and Romulus, were paid for with the help of a $249 million government grant from stimulus funds. Johnson Controls plans to keep the factories running but said it was too early to give details about A123 employees or customers.

Alex Molinaroli, president of Johnson Controls' Power Solutions division, said the A123 deal would advance JCI's battery technology.

A123 said it expects to continue operations as it moves toward the sale to Johnson Controls. The company also said it was in talks to sell its grid, commercial, government and other operations that weren't purchased by Johnson Controls.

The Waltham, Mass.-based A123 is supplying batteries for the new all-electric Chevrolet Spark subcompact from General Motors Co., as well as Fisker's Karma. Fisker has sold about 1,000 of the cars this year, while the electric Spark goes on sale in 2013. A123 also has contracts to make batteries for BMW AG.

A123 has struggled for several years, and ran into serious trouble this spring after a costly recall of its batteries.

The company had warned that it might not be able to stay in business unless it got more financing.