The end may be near for troubled American battery maker A123

The road to success for tech startups is always under construction, and one wrong turn can result in a plunge from an unfinished bridge and fiery death. Sadly, such a disaster may be approaching for battery maker A123, which told the SEC this week that its “ability to continue as a going concern” is in doubt.

The company isn’t giving up just yet, saying in its latest 8k filing that management “continues to seek to reduce cash used in operating and investing activities, including by improving the Company’s gross margins, reducing operating expenses, and reducing working capital. Although the Company’s intent is to improve its operating efficiencies and to obtain additional financing, there is no assurance that the Company will be able to obtain such financing on favorable terms, if at all, or to successfully further reduce costs in such a way that would continue to allow the Company to operate its business.”

The Massachusetts firm has received several forms of support from federal and state governments, including a $249-million grant from the DOE in 2009. Policymakers wagered that A123’s edge in technology would allow it to compete with the much larger multinational firms that dominate the battery business. Alas, the company suffered a string of misfortunes, including some troubles at Fisker, A123’s most famous customer. The discovery in March that a defective batch of prismatic cells was likely to cost the company 50 million bucks may have been the last straw.

Critics of the Obama administration’s support for high-tech manufacturing companies were jubilant, including the Wall Street Journal, which detailed the woes of American battery makers in a feature article. Commentators on the other side of the street voiced fears that the US may be abandoning the fast-growing battery business to giant Asian firms that are heavily subsidized by their own governments.

 

Source: A123 Systems
Image: A123 Systems