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.