Tuesday, another green company that received hundreds of millions of taxpayer dollars in stimulus-grant money from the Obama administration filed for bankruptcy.
The Massachusetts-based company called A123 Systems was supposed to become a leading home-grown supplier of lithium-ion batteries, but will instead join a growing list of alternative energy companies gone belly up after a few years despite massive transfusions of taxpayer cash, according to Bloomberg Business report.
Despite receiving a $249 million grant from the Obama administration, A123 Systems claims much of its assets will be sold after the company posted $857 million in losses over just three years.
A123 also received $125 million in grants and tax credits from Michigan state officials for building plants in that state.
"This is about the birth of an entire new industry in America -- an industry that's going to be central to the next generation of cars," President Obama said according to a transcript released by the White House. "When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America."
In reality, General Motors executives chose South Korea's LG Chem company to supply batteries for the Chevy Volt, which is now out of production, saying the Korean company was the “more established firm and a safer bet.”
Among its failures, the company was forced to spend about $66 million on a recall of its Karma battery packs in 2011. Those A123 manufactured batteries had a “charging” problem.
Meanwhile, Obama's goal of putting one million plug-in hybrids or electric vehicles on the road by 2015 will fall short by about 600,000 vehicles, according to Pike Research. A decrease in demand coupled with an abundance of battery components has changed the dynamics of the lithium-ion battery business. Despite global historical spending on electric vehicles, there has been no breakthrough that makes EVs as practical and cost-efficient as petroleum-powered vehicles, however there is now a mini-glut of battery makers
At the same time, government cutbacks required to gain control of a runaway federal budget in the U.S. have made lavish grants to green companies an economic and politically risky business.