A123 Systems Announces $125 Million Q1 Loss

It hasn’t been a good year for A123 systems. The battery company, which produces lithium ion units for electric vehicles, notably the Fisker Karma, has posted a $15 million operating loss for the first quarter of the year.

A significant contributor to the loss, revolves around a recall campaign, following the highly publicized “breakdown” of a Fisker Karma while undergoing testing by Consumer Reports.

Additional factors contributing to the loss are alleged under utilization of the firm’s Metro
Detroit factory and the hiring of new employees. Although not many details are currently being disclosed regarding the loss, a spokesman for A123 did say that low plant use “contributed to significantly reduced gross margins on products sold as anticipated cost savings related to volume production were not realized.”

A123 announced back in March, that it was recalling battery packs, incurring a loss of some $51.6 million due to warranty expenses. Further costs of some $15.2 million are also anticipated for recalling batteries that had already been placed in inventory but not yet shipped to customers.

Given that a A123 received a $249 million grant from the federal government to help get its Detroit plant up and running, the loss will likely come under close scrutiny from some quarters, though it will be interesting to see what emerges once the company publishes more detailed financial results for the quarter; scheduled for May 15 during a conference call.

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  • Chris C.

    Typo in the first paragraph, 125 vs 15.