A123 to be acquired by Wanxiang Group

[Phoebus]

A123 Systems Inc., a struggling, U.S. government-backed manufacturer of advanced batteries for electric vehicles, is turning to one of China's largest auto parts makers for a bailout.

The Waltham, Mass.-based company said on Wednesday that Wanxiang Group Corp., a Chinese conglomerate, agreed to acquire up to an 80% stake in return for an up to $450 million investment.

http://online.wsj.com/article/SB10000872396390443991704577576881949308486.html

 

[docnjoj]

There goes more American money and technology down the drain! Yuk!
otherDoc

 

[flathill]

Told you so

"A123 has five plants in China, c-o-i-n-c-i-d-e-n-t-a-l-l-y located in Chiang's (A123 founder supposedly from Taiwan to gain trust) father's hometown of Changzhou, about two hours' drive west of Shanghai"
http://articles.latimes.com/2010/may/08/business/la-fi-green-manufacturing-20100509

Now remember Yet-Ming say's he from Taiwan
http://web.mit.edu/invent/iow/ychiang.html

Guess who Chiang's father is related to? Chiang's father was a spy in Taiwan

Remeber what I wrote earlier...
It was also a direct relative in the case of the Chinese Magnequench takeover which resulted in China now controlling 99% of the neo magnet market:
"In 1995, Magnequench was purchased from GM by Sextant Group, an investment company headed by Archibald Cox, Jr-the son of the Watergate prosecutor. After the takeover, Cox was named CEO. WHAT FEW KNEW AT THE TIME was that Sextant was largely a front for two Chinese companies, San Huan New Material and the China National Non-Ferrous Metals Import and Export Corporation. Both of these companies have close ties to the Chinese government. Indeed, the ties were so intimate that the HEADS of both companies were *******IN-LAWS******* of the late CHINESE PREMIER Deng Xiaopeng"

“There is oil in the Middle East; there is rare earth in China,” declared Deng Xiaoping, the architect of China's economic transformation, in 1992.

Chinese business model for key trim tab sectors: sell below cost for a 10 years until your competitors are out of business

French electrical engineering and power management company Schneider Electric SA (SU.FR) has relocated top executives to Hong Kong, including CHIEF EXECUTIVE Jean-Pascal Tricoire, who will share his time between Paris and Asia, in a bid to boost activity there.

A123 CEO was an executive in Schneider Electric

Chinese president visits Schneider Electric in Nice

-----------
A123 is effectively bankrupt and are doing the deal with Wanxiang with the Obama's administration cooperation to save face before the election
the Obama campaign doesn't want another Solyndra right before the election
wonder why after 10 years A123 only upgrade to cell tech put in a press "release" a couple months ago was a nothing burger (increased temp range big whoop)
no one else has been "granted" access to next gen A123 cell tech except for Wanxiang to ensure no competition to buyout A123

 

[flathill]

ROCKFORD — The day after a trade meeting with President Barack Obama, Wanxiang Group founder and Chairman Lu Guanqiu came to visit with a Rockford delegation that would like to see more than just a Wanxiang solar panel assembly plant in Rockford.

Manufacturing electric cars and development of a 200-acre solar field at Chicago Rockford International Airport were among topics on the table, but discussions were private.

 

[Lessss]

YES!
Another nail in the coffin of american anti-ev tech control.

 

[flathill]

YES!
Another nail in the coffin of american anti-ev tech control.

Not really a positive if China dominates the lithium battery market in a few years
short term positive for sure
but long term negative
look what happened after they cornered the neo magnet market, 1000% prices increases in last few years
blackmailed Japan by stopping rare earth exports forcing Japanese magnet makers to divulge high temp N60 tech and move mfg to China
the electricity prices have shot way up in Japan since the nuke accident and Panasonic is starting to move 18650 production to China

there was no concerted american gov sponsored anti-ev tech control, it was all established auto makers, both foreign and domestic
why do you think the DOE lent $465 million to Tesla
to ensure we stay one step ahead of the Chinese
but if China floods the market with quarter price throw away ev's...

 

[VoKuS]

Time to learn Chinese....

 

[migueralliart]

Time to learn Chinese....

The hell with that I wanna keep pronouncing the R.

 

[Jeremy Harris]

Come on guys. A blind man could see that A123 was going to be Chinese sooner or later, it's been pretty obvious for the past two or three years, at least to those of us outside the US.

The problem here seems to be that the US government seemed to believe that by bolstering a lost cause (given that China holds all the cards when it comes to lithium battery technology) they could somehow exert influence in a market that is overwhelmingly dominated by Far Eastern manufacture.

I guess it's a hard lesson, but it's one that other countries that used to manufacture stuff, but no longer do, have already learned. Trying to compete with a cheap labour economy is like pissing into the wind. There's no way that ANY country with labour rates that are several times those in China can effectively compete for manufactured goods.

Things will change. As the standard of living, and worker expectations, increase in the Far East, then wages will increase, just as happened in Japan years ago. The result will be an increase in manufacturing cost that will bring things back into balance.

Until then, the rest of us just have to sit and wait, as there is diddly squat that can be done about it. Even military might is worthless when it comes to challenging the Great God of Mammon, and let's not forget that the US, just like pretty much every other Western state, is wholly controlled by commercial interests....................

 

[Punx0r]

Countries with high labour costs can compete in manufacturing, but usually only for high-tech or high quality premium products where worker skill is required for success.

From what I've heard, A123 made some industry-leading products. It's a shame they weren't quite good/unique enough to fall into the above niche.

 

[deVries]

This is not surprising to me, since the USA is "married" to China for so many export products that are more and more becoming higher tech manufactured products too. It's probable we will get continued lower pricing to A123 tech with more product shipping from China, and the USA plant can continue to wait/idle "grow slow" for a volume business to finally take hold here. This investment is good, imo, since A123 products will expand even faster in volume sales in China.

China's more planned and "command & control" directed economy can "mandate" & "subsidize" more growth in EV products and already is The Leader by far in volume and production vs USA, so A123's main business will continue to be in China. EV tech in the USA will continue to be for the wealthy & upper middle class in 4 wheel transport, unless quality foreign imports in volume drive prices down here. We no longer have the industrial base to rapidly drive prices lower vs China.

Learn to speak Chinese, have your children learn Chinese, realize China is the manufacturing giant that will win out in volume production. China is our strategic partner, and China will be the greatest powerhouse of manufacturing in our lifetime. It's in both our interests to be on friendly terms & share peaceful goals to help each other become better nations. The USA can still be great for R&D and production of products that depend on continued R&D, but once that tech can be transferred to China for volume production it will be. Even Japan has transferred a large percentage of its manufacturing to China, though the Japanese were traditional enemies/rivals of the Chinese for centuries.

Apple Computer anyone?

This has nothing to do with Labor Unions or high labor cost. Germany is a perfect example. It has everything to do with Wall Street, Foreign Investment vs USA Investment, and your "wonderful" politicians in DC controlled by this ideology that won't invest in its own population to expand the middle class. The wealthy class in the USA is far too powerful politically, and has already redistributed far too much wealth & power into their hands of control by destroying our own middle class and changing the rules/laws in their extreme favor to perpetuate their ruling class. Wall Street says they do "God's work"; they call it "creative destruction"... quiet arrogant and sociopathic, imo.

Imo, until the political climate changes in the USA to focus on reversing its rapidly shrinking middle class & preventing by active law enforcement the insane "criminal" greed of Wall Street's "legalized" financial rapes of the middle class & the corrupting power of far too much wealth in too few hands, then only the military industrial complex & aerospace & transportation favoritism that have the "political protectionism" will be decent manufacturing jobs for middle class "stability" that is already in far too limited numbers vs other worse options.

Maybe EV can expand enough to gain a permanent foothold of growth if fuel costs remain higher for other transport... but the cost performance ratio of EV batteries needs to double capacity for the same weight/volume & price we have now too.

 

[Phoebus]

I'm personally thrilled to see any government sponsored company go bankrupt for any reason. A123 is a crap company. We love their batteries, but their tech is behind the times (NMC) and their quality control is obviously a disaster.

Good riddance.

 

[liveforphysics]

The only guaranteed path to fail as a battery mfg is to stick with the same chemistry long term.

No amount of money pumped into a chemistry that can not meet energy density requirements to make EV's go mainstream will result in anything but prolonging failure.

To succeed in the battery game, you need to constantly evolve.

Look at CREE with LED technology. Rather than spending money in lawsuits attempting to block the whole rest of the world copying their LED technology, they invested it in developing constantly improving products, and have stayed a big leap ahead of anyone else. In this approach, you do the least harms to the world, the products improve, and the winner is all players involved and the consumer. When you get the lawyers involved, you just start creating a chain of harms that builds on harms and soon the good you were originally trying to defend is dead or no longer worth defending, and the lawyers are the only ones to leave with the resources and capital.

At least that's my $0.02

 

[deVries]

I'm personally thrilled to see any government sponsored company go bankrupt for any reason. A123 is a crap company. We love their batteries, but their tech is behind the times (NMC) and their quality control is obviously a disaster.

Good riddance.

You're quite naive to target A123 a government sponsored company that should go bankrupt for *any* reason. Its QC is not a disaster. A123 found a problem with one production line, and it removed that product from further sales in short order. Sure, it was a stupid mistake that cost the company millions, but the high quality of their products are still "proven" vs other options. Furthermore, the Macro Economy is what has prevented pioneering companies like A123 from operating in a favorable business environment, since its inception as a public company. Obviously, the Chinese see real value in this company long-term despite its ongoing financial problems, and I think they're smart to invest big in A123. In 5-10 years I think A123 will be a healthy company producing great products; it just has to remain in business long enough for the Macro economy to recover for EV to become viable and affordable.

The only real government sponsored companies in the USA are dependent on the Military Industrial Complex. Boeing, for example.

A123 is not government sponsored. It can still go bankrupt.

Shareholders don't have enough power to remove terrible leadership in companies that are paying themselves outrageous salaries when their companies under-perform. It is the power elites that have become a disease of destruction for the companies they lead unsuccessfully.

The Chinese government does sponsor many key industries with greater subsidies and political support, but its economy is growing faster than any other nation and is the wonder of the world in that respect.

No amount of money pumped into a chemistry that can not meet energy density requirements to make EV's go mainstream will result in anything but prolonging failure.

To succeed in the battery game, you need to constantly evolve.

I certainly agree with this thinking. Until energy density "doubles", then I don't think the growth curve will go up very fast. A123 has stated their prices can come down significantly, since raw materials costs are low. But the volume sales are lacking. I'm all for government tax breaks if that will increase volume sales enough to lower sticker prices too beyond just the tax breaks. That's something government could negotiate with giving the tax break with price breaks too, so this would increase volume sales with dropping prices too.

A123 can also acquire or discover new technologies too, and they have announced a 10% gain in capacity with more temperature tolerant operating ranges too. I do think A123 must announce some major improvements in capacity within the next 5 years, but they deserve some understanding that as a new public company we can't know what the performance of R&D will be with too short a history to determine such things.

 

[flathill]

Labor costs have nothing to do with china's advantage
It is all about commodities
The gov orchestrates a negative profit (subsidized) raw materials supply chain

This is all a lesson in outsourcing and corruption
Nokia, Motorola, Ericsson outsorced cell phone production to htc/etc and now htc competes
Lenovo was the contract manufacturer for ibm before they bought thinkpad
Same thing is going to happen to apple as releasing a new phone every 12 months is no longer fast enough to beat your old CM

Remember a123 always used contract manufacturing
Even their usa plant was "set up" by the koreans

And LiFe is in no way a dead end tech
A123 has it working at close to 6v with high cycle life
The 5v cell will be rolled out soon
3-5 years the 6v

 

[whatever]

I was watching a documentary on china recently, I had no idea about all the internal conflict ( civil wars I guess) that had occured, I had never heard
of those things before, who knows chinas fast rise may be followed by an even faster fall........who knows.

 

[alfantastic]

Will any of this affect the availability or quality of these batteries?
The reason I ask is that I was gonna buy one of Cellman's triangle battery packs later on in the year, but am a bit sceptical now :?

 

[Punx0r]

who knows chinas fast rise may be followed by an even faster fall........who knows.

Almost certainly.

There's still something like a 30 or so year gap (at current growth rates) in GDP between China and the U.S.A. I really can't see the current 10% growth rate being sustainable for nearly that long. Government corruption, civil uprising, financial collapse, all issues primed to bring about disaster.

China is also dependent on the U.S.A as they consume something like 25% of all exports. Likewise, the U.S.A is dependent on China as a source of foreign borrowing.

 

[Jeremy Harris]

If you look at the enormous gap between the standard of living in some big Chinese cities and the standard of living in rural areas, then it's clear that there will be some major internal difficulties before too long. Many Chinese cities are now very similar to cities in the west in terms of standard of living, some might say they are ahead. This is rapidly driving labour prices up, and creating expectations for the young. Meeting those expectations will place further pressure on wages and after a while China will no longer be as cheap a manufacturing hub as it is now. Imagine a time when all those ladies that you see winding hub motors for a few dollars a day demand western pay rates? How much is a motor going to cost then? At that point things will tilt back, just as they've always done.

 

[Phoebus]

The average income in China is $8,382 - and that's adjusted for purchasing power (and thus gives the highest possible estimate of Chinese income).

For reference: This puts China right between Belize and Ecuador. This is one sixth the average income in the US.

China has gone from the most miserable nation on earth to a low-middle income nation - a low income nation with endemic corruption, no civil liberties, and few civil rights. The Chinese government's leadership seems to want to expand on the market friendly reforms which caused the rise in income; let's hope that they follow through.

There are still ~100 million people in China making less than $1.25 per day. Foxconn pays its workers ~$6 per day. China isn't going to run out of cheap labor anytime soon. Nor is Vietnam, nor India, nor Africa.

Finally, the real story in China is growing equality.

 

[Jeremy Harris]

The average income in China is $8,382 - and that's adjusted for purchasing power (and thus gives the highest possible estimate of Chinese income).

For reference: This puts China right between Belize and Ecuador. This is one sixth the average income in the US.

China has gone from the most miserable nation on earth to a low-middle income nation - a low income nation with endemic corruption, no civil liberties, and few civil rights. The Chinese government's leadership seems to want to expand on the market friendly reforms which caused the rise in income; let's hope that they follow through.

There are still ~100 million people in China making less than $1.25 per day. Foxconn pays its workers ~$6 per day. China isn't going to run out of cheap labor anytime soon. Nor is Vietnam, nor India, nor Africa.

Finally, the real story in China is growing equality.

The snag is, as you've mentioned, the huge range of income across the country. That average figure hides the fact that there are some people in the cities making a great deal of money, whilst others earn, as you say, maybe a dollar a day. That has to be creating enormous social unrest, as people aspire to the things they hear of, or see, in the cities, yet don't have the income to have them.

Here we have a minimum income for someone over 21 and working of around $19,000, and an average wage of around $42,000, so an average to minimum ratio of around 2.2:1. In China it seems that the average to minimum ratio is much greater, close to 20:1

 

[docnjoj]

Unfortunately those huge disparities in income often lead to revolution. I expect that the Chinese military is paid well by their standards, and therefore is less likely to openly revolt. China does have a relatively recent history of revolution. Remember Mao? I hope this does not happen but there are warning signs.
otherDoc

 

[Jeremy Harris]

Unfortunately those huge disparities in income often lead to revolution. I expect that the Chinese military is paid well by their standards, and therefore is less likely to openly revolt. China does have a relatively recent history of revolution. Remember Mao? I hope this does not happen but there are warning signs.
otherDoc

I can't begin to imagine how those tensions must be affecting population of China, or how the Chinese government is trying to deal with them. Talking to some friends who originally came from rural China, they say that the impact of young people moving away from the rural areas to work in the big manufacturing cities has been devastating, and is now impacting on the effectiveness of farming. Population control had already skewed their demographic, leading to a higher proportion of older people, and now it seems that there is a very real risk that there won't be enough younger people to take over the running of farms in rural areas, as many will have moved away.

For now the government still has some control over the media, and can limit how much information gets out to rural communities, but for how long? Many of the young people who have moved away to earn better pay are sending money and consumer goods back home, so it's only a matter of time before the poor realised the enormous disparity between rich and poor and start something akin to another revolution. Our problem is that we probably won't be able to tell if, or when this might happen, given the limited insight we have into the inner workings of the Chinese government.

 

[liveforphysics]

I visit china fairly often.

Beautiful country. Happy smiling folks everywhere you look.

Its hard to imagine an average income of $8k when I see more new high dollar cars everywhere I look than here in the SF bay area.

As far as 5v and 6v chemistries, there have been no shortage of them for a decade. The problem is all the high voltage chemistries are useless until someone makes a solvent that doesn't offgass after a cycle or two.

 

[Phoebus]

Sorry to break up the Marxist love fest, but inequality doesn't cause violent revolutions, changes for the worse in people's everyday lives do.

The closest the US has come to revolution in the 20th century was probably during the Great Depression. Why did everyone choose that particular time for discontent - because the Gini coefficient suddenly spiked? I think not.

Why did the French population choose to overthrow their monarchy when they did? Because of it's decadence - which had been present for centuries - or because of the acute famine that year?

Why are the British, Dutch, Belgian, and Scandinavian monarchies (mostly) still in existence? Because of their beneficence, or because those nations have remained relatively wonderful places to live throughout recent history?

Why was the German monarchy overthrown in 1918? Because of inequality? Same for the Russian monarchy, inequality or the mass slaughter of the populace via WWI?

To the extent that inequality does cause discontent, it is horizontal inequality (poor blacks treated worse than poor whites; politically connected poor Sunnis receiving better treatment than politically outcast poor Shia, poor Catholics v poor Protestants, and so on) rather than vertical (rich vs poor). This horizontal inequality may yet haunt China, but I rather doubt it. Any "revolution" there (and I very very very much doubt anything of the sort will occur) will be over civil rights, not "the rich."

Its hard to imagine an average income of $8k when I see more new high dollar cars everywhere I look than here in the SF bay area.

Rich Americans tend to be subdued in their consumption - ever since the G.D., haha.

Steve Jobs drove an SL500. Nice car, sure, but won't turn any heads in Hong Kong! (or anywhere?)