In
September 2010, President Barack Obama spoke to A123 Systems Inc. CEO David
Vieau and Michigan Governor Jennifer Graham about the opening of a new electric
car battery plant in Livonia, Michigan. President Obama proclaimed that “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.” Unfortunately, the results from a new project can be wildly
different from capital budgeting projections. Today, A123 filed for bankruptcy protection. Part of the reason for A123’s bankruptcy lies in the fact that the
government targeted sales of 1 million electric vehicles by 2015, but as of
September 2012, only 50,000 electric cars have been sold in the U.S. A
potential suitor for A123 is Wanxiang Group Corp., China’s largest auto-parts
maker. Such a bid would likely result in car batteries made in China, not the
U.S., a stated goal of U.S. government support of A123.
