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China & U.S. Battery Technology

Green America’s big-time battery innovator A123 got millions in taxpayer support. Now China’s snatching up the company, and its knowledge.

An A123 Systems Inc. high power Nanophospate Lithium Ion Cell for Hybrid Electric Vehicles battery is shown Thursday, Aug. 6, 2009 in Livonia, Mich. (AP)

An A123 Systems Inc. high power Nanophospate Lithium Ion Cell for Hybrid Electric Vehicles battery is shown Thursday, Aug. 6, 2009 in Livonia, Mich. (AP)

A123, the American company at the forefront of research and innovation in new wave batteries for electric cars, won a quarter-billion dollar nod of support from the US government.

Now it’s in trouble, and turning to a Chinese company to bail it out. After all that US taxpayer subsidy, it may end up 80 percent Chinese-owned. Is that a problem? It’s certainly head-turning.

New research on energy storage – batteries – is key to a green energy future. China and the US both know it. This hour, On Point: the energy storage frontier, batteries, and the A123 story.

- Tom Ashbrook

Guests

Michael Ramsey, automotive reporter for the Wall Street Journal.

Michael Dunne, president of the Hong Kong-based strategic marketing firm Dunne & Company and author of “American Wheels, Chinese Roads: The Story of General Motors in China.”

Donald Sadoway, professor of materials chemistry at MIT.

Ethan Zindler, head of policy analysis at Bloomberg New Energy Finance, a market research firm.

From Tom’s Reading List

Wall Street Journal “A company that two years ago was one of the most promising U.S. innovators in the clean-fuel auto industry was rescued from collapse Wednesday. Its buyer: A Chinese auto-parts company.”

Businessweek “A123 Systems Inc. (AONE)’s chief executive officer said the company’s financial rescue by China’s largest auto-parts maker will preserve U.S. jobs, after the agreement drew criticism from congressional Republicans.”

New York Times “Lauded during a visit by President Obama, A123 Systems was supposed to be a centerpiece of his administration’s effort to use $2 billion in government subsidies to jump-start production of sophisticated electric batteries in the United States.”

Excerpt: “American Wheels, Chinese Roads: The Story of General Motors in China”

Use the navigation bar at the bottom of this frame to reformat the excerpt to best suit your reading experience.

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  • http://www.facebook.com/leo.hart.9 Leo Hart

    so this kinda says it all.  China is an American “job creator” Our tax money does it’s job of supporting this kind of thing and the “commies” outmaneuver the American “businessmen”. All as we are bombarded by whether the Kenyan socialist is “American” enough…

  • ToyYoda

    I don’t understand why congressional Republicans would be angered by this move.  If A123 needs financial rescue, and the Republicans don’t want another bailout and want the free market to work, then the Republicans should applaud the Chinese for finding value in a failed business.

  • http://profile.yahoo.com/M2ZQZCYV34N6SWNX5C2VPYBMBY Ally

    A comment to the show’s editors. Can you be a bit selective with the music you play on the show? I like to listen while cycling, so I get a bit confused when I hear a track with a regular psh, psh, psh sort of sound ( what is that, brush on a cymbal?). It makes me think I’ve punctured, so I look down, which might be a bit dangerous in traffic.

    More to the point of the show. In Australia we regularly hear wailing and gnashing of teeth over the fact that “China’s richest man” made his fortune from manufacturing solar PV cells using the training that he acquired as a post graduate student at the University of NSW.

    I don’t know if he bought patents or not, but, luckily enough, the scientists at UNSW are still claimed to be leading the world in photovoltaic technology……just waiting for their next Chinese student to commercialise it, I guess

    • LinRP

       You should not have ear buds in the first place when cycling.

    • superfinehelios

      Dear Ally
      You’re a traffic accident waiting to happen. Don’t ride with earbuds on. It’s just plain dumb.

  • MadMarkTheCodeWarrior

     Thank you Ayn Rand, Richard Nixon, NAFTA, Ronald Reagan, Alan Greenspan,  Mitt Romney and Paul Ryan and all you other Lazy Fairy Free Market Mythonomics thinkers.

    Some people drink from the fountain of knowledge, others just gargle. (Robert Anthony.)  They gargled.

    • William

       You forgot Clinton, the President that signed NAFTA.

      • MadMarkTheCodeWarrior

        Not so fast… a number of Democrats were for NAFTA, but this was a Republican initiative. See Wikipedia – Negotiations dated back to 1986 (Reagan). On Dec 17, 1992, President George H.W. Bush, Prime Minister Brian Mulroney of Canada and President Carlos Salinas of Mexico, each responsible for spearheading and promoting the agreement, met to ceremonially sign it.

    • sickofthechit

       …and swallowed!!

  • Imran Nasrullah

    My view is that politicians on both sides of the aisles should stop placing bets on companies, not because they are necessarily putting tax dollars at risk, but because company creation (especially technology and biotech) is tough and risky business. People seem to forget that; and politicians seem to jump on the politics of failure of their opponent. They should focus on creating open platforms from which companies can leverage to launch, build and sustain themselves at lower costs.   That is what is going to keep companies here.

  • http://twitter.com/WandaFry Wanda Fry

    I bet the next thing is a buyout of shareholders in AONE at a low price .
    The then privately held company will be very profitable.
    For China of course.
    Fire sale prices on U.S. technology due to ‘liquidity’ in the stock markets will make sure there is no new industry or job creation in the U.S.

  • LinRP

    Let’s see…. a Republican senator says this technology is a matter of “national security.” All good Repubs will tell you national defense is one of the (few) jobs the federal government rightly has. Ergo, Obama’s providing support to A123 in the first place was the right thing to do since it matters to our “security.” The Repubs, however, are denouncing Obama for investing in the company. The hypocrisy makes your head spin.

    Why aren’t we fighting for the US to step in and save this company? This is one of the preeminent battery technology companies in the world. They have created more than a thousand jobs. Sounds like a good place to step in and use my tax payer money, if you ask me.  

  • http://profile.yahoo.com/EY4GHWHOZC24L22CFAKD63JAA4 Mary

    WE threw some $$ at this company, but until we get ready to match the Chinese $ for  $, we won’t be able to beat them… Simple as that.

  • http://www.facebook.com/profile.php?id=1816544 Dan Trindade

    Yes A123 received millions of dollars in support from the federal government and now they are being bought by the Chinese and from a nationalistic stand point this is pretty disheartening. But, given the fact that A123 was working to help create a battery manufacting industry in America from scratch is it possible that even after a quarter of a billion dollars A123 needed more government help? The Chinese have given billions to develop homegrown industries from smartphones to automobiles. Should we be doing the same thing? Would it have helped?

  • William

     What are you willing to cut to give this company more money? Food Stamps? WIC? DoD, what? And why this company? Why not a different company? Is this company the “right one” or just another tech company looking for a handout?

    • sickofthechit

       Defense.

  • http://www.facebook.com/julia.liu.50364 Julia Liu

    Either the Americans have amnesia or they are too young to know that Japanese got rich by standing on the shoulder of the giants, us.  The giants, individual or corporation, that invented fax machine, copy machine, CD/player, Camcorder, DVD, system on chip, etc., enable Japanese to bring in hundred of billions dollars each year through export the perfected products.

    It’s absolutely obsurd that the Repblican party stayes sideline to watch its slipping away except a very faint voice from congressional Republicans.   

  • https://openid.aol.com/opaque/862139a4-e557-11e1-bc17-000bcdcb2996 Webb Nichols

    Look at Russia and China’s position on Syria. That is all one needs to know. They play rough and should never be considered  “good guys”. There is nothing they would like better than to see the USA on its knees begging. 
    As soon as the developing nations have markets capable of replacing the United States, Russia and China will pull whatever investments they have in the United States and China will cash in its treasury bills. China owns us. And will continue to purchase 
    whatever benefits them in the long run. They can afford it.

  • sickofthechit

    Where did the initial research for this technology take place?  Most likely it was a University setting, funded in part by government dollars.  Hmmm makes one wonder if maybe government does maybe have a place in innovation, in job creation…and maybe this or that company didn’t do it all alone.

  • TribalGuitars

    Perhaps there should be some moratorium for such cutting edge and integral technology companies that if they received a bailout of any kind from the government, that they can’t be sold to a foreign company?  It sounds isolationist, but what’s to stop China from packing every iota of it up and off to China? Nothing. 

    It seems that the American car companies could be working jointly with the government on this.  Let America lead further by making a few standard batteries that will work in several cars instead of batteries that are proprietary to one specific car maker or ever to one specific car. 

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Follow the money – may be a Chinese company is investing, but many of those investing in this Chinese company are likely American – with lobbyists in Washington.

    The question is whether this whole scenario was planned out in advance.

    To start with, what’s the Chinese company? Or do they deserve some sort of anonymity?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    From a consumer perspective – wouldn’t any company likely mass produce batteries overseas, anyway? What difference does it make whether the company making these batteries is Chinese or American? Either way, it’s US tax dollars spent on some corporation instead of US citizens.

  • TinaWrites

    If powerful people and their dupes don’t stop theoretically lauding the Free Market, and instead think about what’s best for our country, our democracy, and our citizens, we will lose ALL the various strengths we have had.  

    We’ve already let our knowledge about Manufacturing go overseas.  IF we had to mobilize for something like World War II right now, we wouldn’t have the advantage of any of our self-grown knowledge and craftsmanship.  

    The globalists are all about money knowledge ONLY, whereas, there are many other forms of wealth that a nation must possess:  including the wealth of Design knowledge, Building and Manufacturing know-how, mobilization of workers, etc..  To sell any of that off, is to threaten our national security!  

  • fifibrains

    I find it ironic that the Republican party is pushing to cut entitlements for the poor and have no problem with some 1%ers to make tons of money off this A123 Chinese deal and, once again, send American jobs overseas.  Who’s ENTITLED here?

  • http://www.facebook.com/people/Spence-Blakely/1251757037 Spence Blakely

    Please discuss whether or not A123, before going to the Chinese, sought financing from American VCs or from American auto makers. If yes, what were the reasons for being turned down? If no, why not?

  • DrewInGeorgia

    Individuals in the US are still coming up with viable means of advancing electrical power sources. The problem isn’t that no one is able to break The Battery Barrier, it’s that no one is allowed to. Brilliant new ideas are bought, evaluated, then scrapped once the Purchaser/Investor decides that furthering Electric Storage Technology is detrimental to their current profit model. But we’re surprised when policies We have allowed to come to exist result in a needed US company being bought by a foreign power? I’m not surprised, not at all.

    It’s the same as it ever was: It is not what we are capable of doing, it’s what we are willing to do that causes continued stagnation.

    http://web.mit.edu/newsoffice/2011/flow-batteries-0606.html

  • NPR_Listener

    No, you cannot compare Chinese companies to the same way companies in the U.S. or any other countries. In China, all the big companies are somehow controlled by the chinese government. The central party’s influence is even stronger than those of any other asian countries. There is no such thing as “strictly business” in China, it’s all about national interests.

  • http://www.facebook.com/people/Spence-Blakely/1251757037 Spence Blakely

    If the Chinese were the only investment players, why couldn’t the deal have been for guaranteed discounts on the batteries, rather than 80% ownership?

  • TinaWrites

    The reason I disagree with the caller who said that this does not need to be a “war” is this:
    1)  We, the taxpayers, paid for some of the development of this battery for our own advancement.2)  Wall Street is already acting in a Supra-national way:   they are going to make profits, and tax havens, without regard to national borders.  When THEY control our government, as the caller from Massachusetts said, we are left with nothing but Service jobs here within this country.  In other words, if Americans are not involved in finance, their opportunities across the board will be extremely reduced.  We are blessed with people with many different types of talent, yet, our country is going to be reduced to High Finance and Service Jobs.  3)  The definition of a “fiduciary responsibility” is NOT just to make the most money for someone.  It also involves “loyalty, responsibility, honesty” and a few other attributes.  The trouble with Wall Street is that they focus on Free Markets because they probably DO make the most money for people, but sometimes other values should pertain, but Wall Street doesn’t give those values much attention.4)  Think of it this way:  loathe as I am to say it, the Swedes kept selling steel to Nazi Germany during World War II.  THAT is an example of the values of the Free Market, and the value of “neutrality” being exercised in the extreme, when other values would have been so much better, and more ethical, to operate under!!!

  • JGC

    But  Captain! The dilithium crystals! Our economy is about to implode!

  • http://www.facebook.com/parker.dooley.54 Parker Dooley

    I was recently in Thailand & observed that they have converted all large commercial vehicles as well as the urban taxi fleets to liquified (LNG) or compressed (LCG) natural gas or liquified propane gas (LPG). This required conversion of all filling stations to handle these fuels which was done rapidly). It occurred to me that this can be a transitional step to using hydrogen (generated by solar energy through electrolysis) as a transportation fuel. Hydrogen (or LPG/LNG/LCG) can be used either as an internal combustion fuel or in fuel cells to power vehicles, or as a storage medium for electric power (eliminating intermittency problems). This changes the discussion, as it could take advantage of existing internal combustion technology as well as reducing carbon fuel dependence. If the Thais can manage this conversion, surely we can.

  • Morgan King

    What about this claim from a Texas company? “…a kind of battery-ultracapacitor hybrid based on barium-titanate
    powders, will dramatically outperform the best lithium-ion batteries on
    the market in terms of energy density, price, charge time, and safety”?

    Sounds pretty good, this was from back in June…is this a possibility?

  • http://twitter.com/EastDakeezy Sam Dakota Miller

    The conversation so far only talks about lowering the cost of batteries in the market…what happens when the cost of natural gas power goes up though?  These competitive markets provide us with necessary power and if our government stopped subsidizing and giving tax cuts to natural gas companies, would it even the market out?

  • http://twitter.com/DoOp11 Do_Op27

    One thing that doesn’t seem to be being asked.. Instead of selling the company to China, why not just have China buy the batteries so they can keep the company going

  • plutozp5

    What if this technology sale is a mature but stale technology. This stale tech for cash exchange is not a new concept, and is a way to discard less useful tech and move on to more promising prospects. China Caveat Emptor

  • LoganEcholls

    How does this story relate to the recent big buy up of rare earth mineral mines around the globe by china?  When that story first came out I suspected it was because China wanted the world to be dependant on it for energy needs since batteries and electric cars are the future.   This battery factory story seems to reinforce that theory.

  • CMflywheel

    Good show as usual.  I was expecting a discussion on energy storeage devices. Show was a bit slanted to only battery tech.  The savior in this race of energy storeage will be fly-wheels.  Yes fly wheels.  Beacon Power of Watertown MA. is the leader in the field.  And you say What.  Cutting to the chase batteries are old technology. Fly wheels are where it will be at in the years to come.  Did you know that Formular One auto racing uses onboard generated electrical power that is stored in on board fly wheels to be used later on in the race as extra power as they race.??  You did not hear of it from your guests because if you switch from batteries to fly wheel research a number of their grants from DOE will cease. Fly wheel can store power as they are spun up or energized at night and converted to generators during the day.  Fly wheels supported by magnetic leviataion ( sp) the same way trains in Japan and Europe are propelled.
    Now please gow back with your guests and have the discussion again and consider fly wheels.

    Craig

  • Kberg95

    As a former employee of the now defunct Evergreen Solar – all I can say is – “Isn’t it ironic.” 

    I also know that A123 was sniffing around Evergreen looking for folks to go there but word on the street was A123 was not well managed and so engineers and programmers (including me), stayed away. Good thing we did.

  • arydberg

    With 100 year old technology we could have a 2nd electric car that would get 50-60 miles per charge.   it could be recharged every night (just as we are)  It would be useful in 50 to 80% of all our trips.   We do not want it.  

  • maryintheburg

    Caught part of this while walking to a meeting and tried to get in on the live conversation, but called in too late – and wanted to add Terry McAuliffe purchased of a Hong-Kong based venture – My Car that uses a lithium-ion battery pack and rolled the first car off the plant in Mississipi in July and is building a factory in China to produce cars for that market, but core componets (powertrain and guts of the car) will be made in the US. Sure it’s a neighborhood electric vehicle, but we need public transport to replace long haul driving.

  • cassandra17

    Tom, please stop interrupting everybody!!!

    • Emitr

      Most of the time, he artfully cuts in because they have made their point and it’s time for others to interact with it.  Tom is the best for grasping and summarizing a person’s point without letting that person run on and on and on and annoy astute listeners.  Occasionally Tom does interrupt less than perfectly, but can we demand perfection of a host who is so much better than other hosts already?

  • Emitr

    Not even the government can invest in the market without risk. And maybe this investment will even pay off as intended, if the intent was to boost production of batteries and create jobs in U.S. plants.  We can’t have it both ways: our politicians can’t both invest U.S. dollars in private industry and also nationalize that industry.  If it’s a private company in a free market, then it has to be private and free enough for a Chinese company to buy it.  And if it is so private that the government shouldn’t invest in it in the first place, then let’s not consider energy or defense a matter of national security.

  • JGC

    In the U.S. Technology and China category, I just read another piece in Bloomberg Businessweek about a startup, Colorzen,  that is revolutionizing the dying of cotton fabric.  Their process uses 90% less water, 95% fewer chemicals, 75% less energy, 50% less dye in less than one-third of the standard eight hours, making it a huge environmental boon. A testing institute certified their treated cotton free of harmful substances. To use Colorzen cotton, dye houses will not have to hire more personnel or retrofit any machines. 

    As I read it, it just kept getting better and better…until I got to the line “Colorzen, which treats the cotton at its factory in southern China…”  Here we go again…

  • The_Truth_Seeker

    We should just outsource the USPTO to the Chinese – they are already taking all our technology anyway

  • Michelle Litteken

    This show was not put up on itunes as a podcast. It would be much appreciated if the On Point episodes were put up on a reliable and consistent basis.

  • TyroneJ

    What was left out of the show was the real reason A123 needs a savior to buy it out. A123 was founded on MIT electrode technology that promised to be vastly superior to other electrode technology for lithium ion batteries. In the end, the “superiority” was vastly overstated and A123 was left as just another ordinary lithium ion battery maker in a highly competitive field. This scenario is actually very common for companies spun out of Universities. It’s one thing to publish an academic paper and file a patent or two making great claims. It’s quite another to really make it work in a mass produced product.

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