Wanxiang Group will provide a bridge loan of $75 million or so, and eventually invest up to $450 million in A123, which would give it an ownership stake of about 80% in the company.

Had you given up on A123? Not so fast! The plucky Massachusetts battery maker was snatched from the jaws of bankruptcy this week as it signed a memorandum of understanding with Wanxiang Group, China’s largest auto parts manufacturer. Wanxiang will provide a bridge loan of $75 million or so, and eventually invest up to $450 million in A123, which would give it an ownership stake of about 80% in the company. Wanxiang’s global empire boasts some $13 billion in revenue and over 45,000 employees.

It would seem that A123’s financial woes are over, and that’s good news for American EV fans. The company provides batteries for the Fisker Karma (it was the Fisker batteries that got A123 in trouble, as a manufacturing error led to a costly recall), and the upcoming Chevy Spark EV. Most interesting of all is the company’s potentially game-changing battery technology, Nanophosphate EXT, which can operate at extreme temperatures without requiring thermal management.

The Wanxiang deal may strengthen A123’s access to China’s red-hot EV and grid-scale energy storage markets. On the other hand, along with the deal that rival battery builder Boston-Power announced this week, it certainly strengthen’s China’s access to innovative American battery technologies.

"Today's announcement is the first step toward solidifying a strategic agreement that we believe would remove the uncertainty regarding A123's financial situation," said David Vieau, CEO of A123. "A substantial capital investment from Wanxiang would not only provide financial stability to A123 as we continue to grow, but it would also align us with a large, successful global brand in the automotive and cleantech industries. Wanxiang has a successful track record of operating in the U.S. with significant employment and commitment to good corporate citizenship, and we expect that a strategic agreement with Wanxiang would help enhance our competitive position in the global marketplace, especially in China."

"A123 offers industry-leading technology for vehicle electrification and grid-scale energy storage, as well as strong manufacturing and systems engineering capabilities in Michigan and Massachusetts. We think this creates important synergies with Wanxiang, which has been involved in this field for 12 years and has strong R&D and manufacturing capabilities in China, especially as we continue to expand on our strategy of investing in the automotive and cleantech industries in the U.S.," said Weiding Lu, CEO of Wanxiang Group.

Source: A123 Systems