Two US Senators Question Propriety of Chinese Investment in A123 Systems

A123 Systems was looking like it was on a downward financial trend until Wanxiang Group Corp. came in with an offer of $450 million, but is this tantamount to taxpayer dollars funding a technology transfer to China?

Questions along these lines were asked today by two U.S. senators marking the first congressional inquiry into the propriety of this deal in particular, and casting further doubt on President Obama’s green energy loans in general.

“Billions of U.S. taxpayer dollars have flowed to foreign companies through the Recovery Act,” said a letter to Energy Secretary Steven Chu by Republican Senators John Thune and Chuck Grassley, “and we are concerned that the recent announcement could lead to even more taxpayer dollars going overseas.”

About half of the $249 million grant the federal government provided to A123 Systems has thus far been used, and the intention was for expansion of U.S. battery production for electric vehicles and hybrids.

As part of the arrangement with Wanxiang, as Bob Lutz also amply pointed out in an editorial to Forbes, the Chinese company stands to gain a controlling share of A123, and thus its technology.

Critics are now questioning whether the U.S. government has essentially helped finance top shelf intellectual property to the Chinese-government backed competitive industry.

Last week, the Obama administration said none of A123 Systems’ $249 million grant would be permitted to pay for operations on foreign soil.

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  • Lad

    The best move I see for the good of our country and people is to let A123 fail and to have the courts award the IP to another U.S. company…a company that can manage and develop a market for the product.

    The idea of the Chinese buying the company is not for the good of the people but for the good of a few management people who have proven to be poor at their jobs.

    I believe the A123 products have great potential to sell well; their discharge rate of 23C is un-beatable and will make an excellent product for selling on the street. This product was financed by tax-payer funds and belongs to the American people. Poo! on this global economy crap…it’s us giving away our money and future!

  • Modern Marvel Fan

    Well, first of all, the tax payer loans were “loans”. As long as the Chinese pay it back, I am okay with it. As far as IP goes, well if that IP can become product, then it is useless. Maybe the Chinese can commericalize it correctly and cheaply…

  • Anonymous

    @Modern Marvel Fan — Your short-sightedness is typcial of what ails this country. All you seem to care about is that the taxpayer doesn’t lose money–anyone willing to allow technology transfer to the Chinese at fire-sale prices, should be considered a traitor.

  • TrasKY

    Can this investment be stopped? Is it too late?


    I find it interesting these senators don’t bitch and moan about GM moving all their production and sales to China.