A123 Runs Out of Juice

Out of juice.

Not so long ago, I was long A123 Systems. But over the course of 3 years, I went from long to wrong.

I was enthusiastic about the company's products, its lineup of investors (GE, Qualcomm, Sequoia Capital), and its partnerships with leading electric vehicle manufacturers, such as Fisker.

And, back on October 2, 2009, when $AONE stock hit its all-time high of $25.77, I along with others felt pretty good about it.

That is, until the stock started its long, slow dive towards .06 a share. (I sold the last of my holdings in July at a pretty significant loss.)

Yesterday, A123 joined an illustrious list of US government-backed companies seeking bankruptcy protection, a list that includes Abound Solar, Ener1, Beacon Power, Open Range Communications, and Solyndra.

Not very good company, I'm afraid.

What happened?

It all comes down to price. The cost of producing A123's batteries didn't come down fast enough so that, it "cost them more to make them than the could sell them," according to an industry analyst quoted by Bloomberg this morning. "The more they sold the more they lost."

Coupled with the still too-high costs of electric vehicles and consumer "range anxiety" and you have a volatile mix of factors that led to the company's failure.

But that's not all. The company had been plagued by contract and warranty issues over the last couple of years, competition from Asian giants like Panasonic, LG, and others, along with increasing potential safety concerns.

AONE Flatlined.

In August, a Fisker Karma caught on fire in Woodside, CA. The fire was apparently unrelated to the car's A123 battery pack, but it nevertheless fueled concerns about Lithium-ion battery safety. A earlier recall of Karmas for a battery coolant leakage issue didn't help matters.

Even a Chinese lifeline couldn't save the beleaguered company, as "unanticipated and significant challenges to its completion" scotched a deal with Chinese automaker Wanxiang.

Now Johnson Controls (another company whose stock I once held) has agreed to purchase A123's automotive business assets for $125 million and the rest of the company may be sold at auction on November 19th.

Consolidation happens. Companies fail. A123's bankruptcy is just another example of a bet gone bad.

For every cleantech failure, however, it gets tougher and tougher to recharge investor and consumer confidence.

Green Skeptic Friday LinkFest - 08/13/10

(photo Erika Nortemann/TNC)

It's a special Friday the 13th edition of The Green Skeptic Friday LinkFest!

Some spooky news this week:

A quartet of earnings reports came out this week in cleantech: SunPower, Cree, and A123, LDK: Earnings
 
While there was some good news for Solazyme, which netted $52M for its algae fuel biz: Green with Algae

Not so scary is my old pal Sanjayan from TNC who is profiled in Outside Magazine. The guy is "Mr. Nature" on cable TV these days and looks pretty hot in a tee shirt (look out Anderson Cooper): Sanjayan
 
TechCrunch covered Philly-Based Incubator DreamIt Ventures as 14 Startups were graduated from the Summer 2010 program: DreamIt

Meanwhile, Philly VCs are keeping a close eye on Massachusetts. Technically Philly explains why: Philly VCs

Rapidly becoming one of my favorite greentech reporters Katie Fehrenbacher reported on the joint efforts of  Google and Vinod Khosla to save California's greentech market.
 
Razor sharp insights from Lucy Marcus on why companies need active, engaged, independent, and interested board members: Non-Exec Boards
 
My pal Andy Swan pointed me to this article that explains why cash is the ultimate vote. Do you have a list of people that will BUY what you are selling? 10 Buyers
 
And in case you missed it, here's a link to my appearance on FOX Business with Varney & Co this week, talking about $BP oil spill: Wheres the Oil in the Gulf?

Have a great weekend everybody!

(Disclosure: I hold long positions in $CREE and $AONE. This post is for informational purposes only and is neither intended to be investment advice nor an offer, or the solicitation of any offer, to buy or sell any securities.)