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A123 fail?

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"Success is 90% failure"
-- Soichiro Honda


Electric car battery company hits road bumps - CBS News

Then the luxury electric car Fisker Karma failed. It was powered by a faulty A123 battery. "It's low, it's sleek, it's sensuous... it's also broken! " said Consumer Reports.Electric vehicles fall drastically short of Obama's 1 million goalA123 was forced to launch an expensive recall -- its second in four months. With $621 million in net losses since 2009, the company disclosed in SEC filings last month that there was "substantial doubt" about its "ability to continue."A123 has declined further interview requests. As for that battery breakthrough announced this week, many analysts seemed underwhelmed.

Is A123 Electric Battery A Waste of $263 Million in Government Funds? - Forbes

So what is wrong with this picture? There a many good examples of government helping to spur the creation of new industries — with the Defense Advanced Research Projects Administration (DARPA)’s work to create the Internet being among the most compelling.
And the goals of spurring the use of electric vehicles has worthy goals — such a reducing the use of gasoline sourced from politically unstable regions of the world and greenhouse gas production among them.
But the decision to put government money into A123 was missing two fundamental pieces of research that any respectable venture capitalists would do. The most important — by far– is talking to potential customers to determine whether an electric vehicle was a technology in search of a market or the answer to a widely shared and painful unmet need.
Although I have not done this research for electric vehicles, I think it would be worth talking to cross-section of 100 potential customers to ask them whether they see an electric vehicle as a cost-effective means of transportation.
At $40,000 for a car with limited range — given the shortage of charging stations — I would guess that not many people would want to be guinea pigs for these vehicles. In other words, a modest amount of customer research would have thrown cold water on the forecast of a million electronic vehicles sold by 2015.
Meanwhile, I’d guess that the world does not have many people with extensive experience running factories to make them in high volumes. But those who invested in A123 should have anticipated problems resulting from the learning that would be required as production volumes scale.
And a look at what caused the Fisker problems for A123 suggests that its quality control processes leave much to be desired. For example, Crain’s Detroit estimated in April 2012 that A123 was poised to incur nearly $67 million in charges — including a $15 million inventory write-off — due to a Fisker Karma plug-in hybrid fitted with an A123 battery that failed in April during a test byConsumer Reports.
 
Seriously, do a poll on the future? Why ask 100 people if they would buy an EV? It is commonly accepted that the ones wanting new stuff are a minority. The majority either doesn't want to risk money on a new horse, or doesn't have money at all, or cannot be bothered with anything new.
picture_rogers_adoption_innovation_curve.gif

As Henry Ford put it:
"If I’d asked people what they wanted, they would have asked for a faster horse."
 
This article was barely researched. A123 batteries aren't just used in the Karma. They're also used in VIA Trucks, for example, which I think could become quite a "big thing".

Also in my experience market research is completely useless for new product categories. The average person - even a sophisticated consumer - doesn't seem to have the imagination to see how they might use a product they've never seen before.
 
As you know Daniel, hardly any motor vehicle these days doesn't have a great deal of electronics in it. We already have millions of electronic vehicles. Of course, that just emphasizes the ignorance of some reporters, assuming that statement came from a reporter.
Precisely my point. You can't really trust a reporter who gets such fundamental things wrong. Many years ago, a local newspaper had a brief item about something I had done. It mentioned my age in passing. Several years later, there was another brief item about me, and they gave me the same age. The reporter had looked up the previous item and neglected to account for the three years that had passed. The news media are notoriously and massively incompetent. The "news" is mostly fiction. Sometimes because a reporter or publisher wants to distort public impressions, but mostly because they are just incompetent. Science and technology reporting is probably the worst because of our abysmal science education. Most people's ideas about science and technology come from watching fantasy programs on TV. (There is no science fiction any more. It's all just fantasy now.)
 
Haven't seen too much discussion about this here.

Chinese giant Wanxiang wins bid for bankrupt A123 and its battery tech - [URL="http://gigaom.com/cleantech/chinese-giant-wanxiang-wins-bid-for-bankrupt-a123-and-its-battery-tech/"]GigaOm
- Cleantech News and Analysis[/URL]

Wanxiang Takes Control Of A123. Again. As It Wins Bankruptcy Auction - InsideEVs

Four months ago to the day (August 8th, 2012) A123 and Wanxiang agreed to a deal that would save the US battery maker, but have the Chinese part giant take over 80% for a total commitment of about $450 million dollars.
...
Two months ago, A123 thought it could do better by not fufilling its obligations to Wanxiang and allowing itself to go bankrupt and tying itself to Johnson Controls in a $125 million dollar sale of its automotive assets and battery plants in Michigan.
...
Now for $260 million, Wianxiang gets 100% control of the company, free of debts for $200 million less. On a personal note, and a former shareholder, I’d like to be the first to say, nice job David Vieau.
Talk about a bad play on A123's part.
 
Don't think for a moment China will sit back and let all the development happen over here in the states.

Love what Apple is doing with the new iMac - to be "assembled" here in the states beginning late 2013 - though still by Foxconn... Apple has the money to subsidize this. We (USA) simply can't compete on price, which is what it eventually always boils down too.

For right now, TM seems to be the only viable mass market EV producer. We need Elon to keep pushing, keep innovating, to keep it here... to sell 20,000, to make a statement that this a viable market with the right car characteristics.
 
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This is not a good development, IMO:
Despite opening several plants, developing highly-touted new technology, including a battery that could operate in extreme heat or cold, and signing deals with top automakers like General Motors, Chrysler and India's Tata Motors, the company never posted a profit. In August, it reported an $83 million loss for the second quarter. At the same time, A123 said it reached a financing deal with Wanxiang Group for up to $450 million to help it stay afloat.

But still short of cash, the company sought bankruptcy protection in October, and said it would sell its automotive unit to Milwaukee-based auto parts marker Johnson Controls Inc. (JCI) for $125 million.


Wanxiang challenged Johnson Controls' role as the primary bidder, and stepped in to provide bankruptcy financing to when the U.S. company declined to do so. In a statement Sunday, Johnson Controls said it officially withdrew from the auction when it declined to match Wanxiang's bid, because the price was higher than the value of the assets to its operations.
Johnson Controls would have been a much better fit for the automotive application, at least; it distresses me to see (as @SCW_Greg noted) US-developed technology bought for cheap on the auction block for commercialization abroad.

This episode points to an interesting difference in how R&D is done this days, compared to 50 or 100 years ago. Instead of industrial giants fostering R&D funded by profits, the entrepreneurs are off in little start-ups. Remember Bell Labs?
 
http://www.m-cam.com/sites/www.m-cam.com/files/P-PO-20121026-A123 Systems-Special Bulletin.pdf

...National security concerns on the uncontrolled transfer of military technology are front and center in this case.
A123 technologies have been adapted for US military purposes. Once that occurs, the Federal government can exercise
controls over any proposed transfer of the technology itself. At least three of A123’s manufacturing facilities are outside
the United States, including plants in China and South Korea. Although it is possible that the technologies have already
been comprised, the Federal military and intelligence establishment still retains broad discretion to control the legal use
of the technology outside the United States.

Development of the A123 battery technology was primarily funded by US Department of Energy research grants and
contracts, initially provided to the Massachusetts Institute of Technology (MIT). MIT in turn “spun out” a company that
became A123 Systems, Inc., while retaining a research linkage for future technology development to flow from the
university to the company. And remember, that was research funded by US taxpayers. When the US government funds
research, it creates rights for the government to access and control the resulting technology.

And now for another complication: A123’s patent portfolio has been signed over and title is now recorded for Wanxiang
America Corporation, a subsidiary of China’s largest auto parts firm, Wanxiang Group. The Federal government can
intervene and prevent Wanxiang America or its parent from exercising any rights with respect to the patent portfolio on
national security grounds. Until it does so, the title to the patent estate is encumbered by the financial security
agreement that gives control to Wanxiang...
 
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I am a lowly ground pounder ... no connections whatsoever. Anyone here on the forum have any friends in places that can stop this on the basis of potential military information leaking outside the "friendly axis"?

Seems like it is our only shot.

I mean, batteries are batteries ... but our country has created a vehicle that is moving our country forward. I would cry if I thought it would help. I agree ... let's not lose this.