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From MIT Technology Review
BY KEVIN BULLIS
What Happened to A123?
Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future.


A few days after A123 went public in the fall of 2009, the value of the company's stock nearly doubled as investors rushed to get a piece of one of the hottest clean-tech companies. The company boasted advanced lithium-ion battery technology, developed at MIT, that promised to popularize electric cars by making batteries more powerful, safer, and longer-lasting.

Things could not have looked better. Prior to the initial public offering, A123 had raised over $350 million in private funding. In the months leading up to the IPO, it announced it had been offered $100 million in refundable tax credits from the Michigan Economic Development Corporation and a $250 million federal grant as part of the Recovery Act of 2009. The IPO raised nearly $400 million, bringing total funding for the company to more than $1 billion. A123 had factories in Asia capable of producing millions of batteries per year, and within a year it would open what it called the largest lithium-ion battery factory in the United States, in Livonia, Michigan.

Three years later, A123's situation looks very different. Its stock value has fallen dramatically, depressed by ever-increasing financial losses. This week it reached a low of 82 cents a share, down from $25.77 shortly after its IPO. The company loses money on every battery it sells, and it's desperate for more capital to stay afloat. Its most recent earnings statement included a warning that the company might not survive.

What happened to one of clean tech's brightest stars? Part of A123's problems are specific to the company. A123 has signed dozens of production contracts and supply agreements, but its current problems are partly due to the fact that it has relied heavily on just one customer, Fisker, for a large part of its revenue. When Fisker failed to bring its Karma sedan to market in time, it cut back orders for batteries, and A123 was forced to lay off workers and shut down some of the production at its plant in Livonia. Then, in March, A123 announced that in its rush to scale up production for Fisker (before Fisker cut its orders), it had produced some defective battery cells, leading to a massive recall and replacement program.

But A123's problems also reflect the challenges facing many startups in the highly competitive energy markets. Not only is it expensive to scale-up and commercialize new technologies and manufacture energy-related products—A123 has spent well over $300 million on equipment and other capital expenses alone over the last three and a half years—it is also risky. Like some other battery makers, it is struggling with a difficult market in which it can't charge enough for its batteries, a situation that can't be helped by its current oversupply of manufacturing capacity. As a result, it loses money on every battery it sells. Andrea James, an analyst for Dougherty, estimates that A123 spends $1.57 for every $1 in revenue it gets from sales to Fisker.

A123 says it can become profitable eventually, if it can raise enough money to keep going until supply contracts kick in over the next couple of years. It says that will allow it to get to the volumes it needs to achieve to take advantage of economies of scale. James estimates it needs to sell nearly 50,000 electric-vehicle battery packs a year, or more than a tenfold increase over last year's sales. (She adds that the company must also make technical advances to become profitable.)

But reaching the needed volume could prove difficult. A123 has signed contracts to supply batteries for several vehicles over the next few years, including one with GM for its upcoming Spark. But it's not clear how well the new vehicles will sell—EV sales so far have been disappointing—or whether A123 can raise enough money to stay afloat long enough. It's also not clear whether A123 will hold onto these customers. Automakers need to be able to count on a company being around for many years to fulfill warranty obligations, and A123's financial troubles could scare some of them off.

"A123 has a very impressive battery system," says Jeff Dahn, professor of physics and chemistry at Dalhousie University. "It can provide very high power, and it works really well at low temperature. But unfortunately, it doesn't have all the ingredients that a successful lithium-ion battery technology needs to have," he says. In particular, he says, A123's battery lacks a low cost per kilowatt-hour of energy storage.

A123 may yet survive. To hedge its bets, A123 is drumming up business in other markets. For example, it's selling batteries to help stabilize the electrical grid. But the market for grid batteries is also uncertain.

EV sales have been sluggish because they're expensive, in some cases twice as costly as their gas-fueled equivalents. Batteries—which sell for over $10,000—are one of the biggest reasons for that high cost, even though automakers are buying them for less than it costs to make them. A123 talks about lowering its costs, but this may not do much to make electric vehicles cheaper. It will just help A123's business by allowing it to make money on what it sells. Those hoping for a revolutionary technology that will make electric vehicles affordable may need to look elsewhere.

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Sent from my iPad using Tapatalk HD
 

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ebarneyr said:
From MIT Technology Review
BY KEVIN BULLIS
What Happened to A123?
Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future.

"A123 has a very impressive battery system," says Jeff Dahn, professor of physics and chemistry at Dalhousie University. "It can provide very high power, and it works really well at low temperature. But unfortunately, it doesn't have all the ingredients that a successful lithium-ion battery technology needs to have," he says. In particular, he says, A123's battery lacks a low cost per kilowatt-hour of energy storage.

Sent from my iPad using Tapatalk HD
A123 battery differentiate itself by its power density. I have heard it can be run up to 35 C-rate if you don't care about its life. Running at 10 C-rate is a picnic. To compare A123 production capacity with laptop battery production capacity is a misnomer. Laptop battery is not a "Power" battery, it is an "Energy" battery.

A123 is a "Power" battery. It is more difficult to make nanophosphate lithium-ion battery than the normal block-type lithium-ion battery. Nano is why it has a high-power density due to high surface area.

True, that A123 doesn't have an "Energy" battery which can store lots of electrons. "Energy" battery tends not to deliver a high C-rate. I see "Energy" battery as a lesser challenge than the "Power" battery. "Energy" battery is made (commoditized) by lots of big battery companies, e.g. Panasonic. So why reinvent the wheel? Just use the Panasonic 18650 cells. This type of battery has a metal oxide chemistry and has a thermal runaway problem. How does Tesla get around using the Panasonic battery? Pretty smart, really. By spacing out the cylindrical cells, so when there is fire in one, it won't spread to its neighbour. Metal oxide chemistry releases oxygen. Iron phosphate binds its oxygen tightly and will not allow for its release to become fuel.
If A123 wants to reinvent the "Energy" battery, their manufacturing is agnostic to chemistry. Two paths A123 can take; license other's "Energy" chemistry or roll their own. But before that, let A123 perfects its "Power" battery manufacturing first.

It is not a blame game. A123 ran into execution problem, over built capacity in anticipation of customer demands. This is all temporary. Hopefully, the price for these mistakes are just share dilution and not bankruptcy. If A123 becomes successful, share dilution is not a big problem.

A123 and Fisker have now resynchronized. I see Fisker is improving each day and fixing its software (teething) problem. A123 is reramping its production.

Overall Karma is absolutely sexy. I know it will sell well.

When you drive your Karma, appreciate the A123 battery that you are using. It is the one that was used in the Formula One KERS system. You have the pinnacle of the battery technology!

A123 has the product. It has an execution problem. It is trying to pull up from a dive. It is a gamble. If it survives, it will be the next great US company along with Fisker!
 

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Sparky168 said:
ebarneyr said:
From MIT Technology Review
BY KEVIN BULLIS
What Happened to A123?
Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future.

"A123 has a very impressive battery system," says Jeff Dahn, professor of physics and chemistry at Dalhousie University. "It can provide very high power, and it works really well at low temperature. But unfortunately, it doesn't have all the ingredients that a successful lithium-ion battery technology needs to have," he says. In particular, he says, A123's battery lacks a low cost per kilowatt-hour of energy storage.

Sent from my iPad using Tapatalk HD
A123 battery differentiate itself by its power density. I have heard it can be run up to 35 C-rate if you don't care about its life. Running at 10 C-rate is a picnic. To compare A123 production capacity with laptop battery production capacity is a misnomer. Laptop battery is not a "Power" battery, it is an "Energy" battery.

A123 is a "Power" battery. It is more difficult to make nanophosphate lithium-ion battery than the normal block-type lithium-ion battery. Nano is why it has a high-power density due to high surface area.

True, that A123 doesn't have an "Energy" battery which can store lots of electrons. "Energy" battery tends not to deliver a high C-rate. I see "Energy" battery as a lesser challenge than the "Power" battery. "Energy" battery is made (commoditized) by lots of big battery companies, e.g. Panasonic. So why reinvent the wheel? Just use the Panasonic 18650 cells. This type of battery has a metal oxide chemistry and has a thermal runaway problem. How does Tesla get around using the Panasonic battery? Pretty smart, really. By spacing out the cylindrical cells, so when there is fire in one, it won't spread to its neighbour. Metal oxide chemistry releases oxygen. Iron phosphate binds its oxygen tightly and will not allow for its release to become fuel.
If A123 wants to reinvent the "Energy" battery, their manufacturing is agnostic to chemistry. Two paths A123 can take; license other's "Energy" chemistry or roll their own. But before that, let A123 perfects its "Power" battery manufacturing first.

It is not a blame game. A123 ran into execution problem, over built capacity in anticipation of customer demands. This is all temporary. Hopefully, the price for these mistakes are just share dilution and not bankruptcy. If A123 becomes successful, share dilution is not a big problem.

A123 and Fisker have now resynchronized. I see Fisker is improving each day and fixing its software (teething) problem. A123 is reramping its production.

Overall Karma is absolutely sexy. I know it will sell well.

When you drive your Karma, appreciate the A123 battery that you are using. It is the one that was used in the Formula One KERS system. You have the pinnacle of the battery technology!

A123 has the product. It has an execution problem. It is trying to pull up from a dive. It is a gamble. If it survives, it will be the next great US company along with Fisker!
Video explaining power battery by A123.
http://goo.gl/hBb5b
 

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Sparky168 said:
ebarneyr said:
From MIT Technology Review
BY KEVIN BULLIS
What Happened to A123?
Once the rising star of the clean-tech industry, the advanced battery maker faces an uncertain future.

"A123 has a very impressive battery system," says Jeff Dahn, professor of physics and chemistry at Dalhousie University. "It can provide very high power, and it works really well at low temperature. But unfortunately, it doesn't have all the ingredients that a successful lithium-ion battery technology needs to have," he says. In particular, he says, A123's battery lacks a low cost per kilowatt-hour of energy storage.

Sent from my iPad using Tapatalk HD
A123 battery differentiate itself by its power density. I have heard it can be run up to 35 C-rate if you don't care about its life. Running at 10 C-rate is a picnic. To compare A123 production capacity with laptop battery production capacity is a misnomer. Laptop battery is not a "Power" battery, it is an "Energy" battery.

A123 is a "Power" battery. It is more difficult to make nanophosphate lithium-ion battery than the normal block-type lithium-ion battery. Nano is why it has a high-power density due to high surface area.

True, that A123 doesn't have an "Energy" battery which can store lots of electrons. "Energy" battery tends not to deliver a high C-rate. I see "Energy" battery as a lesser challenge than the "Power" battery. "Energy" battery is made (commoditized) by lots of big battery companies, e.g. Panasonic. So why reinvent the wheel? Just use the Panasonic 18650 cells. This type of battery has a metal oxide chemistry and has a thermal runaway problem. How does Tesla get around using the Panasonic battery? Pretty smart, really. By spacing out the cylindrical cells, so when there is fire in one, it won't spread to its neighbour. Metal oxide chemistry releases oxygen. Iron phosphate binds its oxygen tightly and will not allow for its release to become fuel.
If A123 wants to reinvent the "Energy" battery, their manufacturing is agnostic to chemistry. Two paths A123 can take; license other's "Energy" chemistry or roll their own. But before that, let A123 perfects its "Power" battery manufacturing first.

It is not a blame game. A123 ran into execution problem, over built capacity in anticipation of customer demands. This is all temporary. Hopefully, the price for these mistakes are just share dilution and not bankruptcy. If A123 becomes successful, share dilution is not a big problem.

A123 and Fisker have now resynchronized. I see Fisker is improving each day and fixing its software (teething) problem. A123 is reramping its production.

Overall Karma is absolutely sexy. I know it will sell well.

When you drive your Karma, appreciate the A123 battery that you are using. It is the one that was used in the Formula One KERS system. You have the pinnacle of the battery technology!

A123 has the product. It has an execution problem. It is trying to pull up from a dive. It is a gamble. If it survives, it will be the next great US company along with Fisker!
Enough space to prevent fire from spreading to its neighbor? That statement is marketing gone bad. LOL.
 

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I admire my A123 battery every day I plug in to charge it and it lets me drive over 40 miles in comfort without using a drop of gas.
 

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Sigurd said:
I admire my A123 battery every day I plug in to charge it and it lets me drive over 40 miles in comfort without using a drop of gas.
Even the little girl can plug the charger into the Karma :)
http://t.co/8Q54ZxxF[hr]
Sparky168 said:
Sigurd said:
I admire my A123 battery every day I plug in to charge it and it lets me drive over 40 miles in comfort without using a drop of gas.
Even the little girl can plug the charger into the Karma :)
http://t.co/8Q54ZxxF
Not much difference between Karma and the $2M Aston...:D
Beast Cars
http://t.co/P4zIqG4r
 

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Sigurd said:
I admire my A123 battery every day I plug in to charge it and it lets me drive over 40 miles in comfort without using a drop of gas.
I have seen power flow of 135KW (accelerating uphill) which is about 40x what my entire house draws from the grid at night. Getting that from a battery is pretty damn impressive.
 

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There was another thread somewhere discussing the Karma's regenerative braking. The Karma's A123 batteries certainly are not the limiting factor.
 
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