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A123 Systems Withdraws from Fiat 500 EV Project

The Detroit Free Press reports that Chrysler is looking for a new battery supplier after A123 Systems withdrew from the Fiat 500 electric vehicle project after the battery maker reported a second-quarter loss of $34.2 million, compared with a loss of $21.9 million a year earlier.

“A123 will not be supplying battery systems for the Fiat 500 EV production program,” said Katie Hepler, a Chrysler spokeswoman. “A123 has been a good development partner in this program and we appreciate their support. We have nothing else to announce at this time.”

Chrysler and A123, a Watertown, Mass., company with a battery plant in Livonia, announced their partnership last March. They planned to start producing an undisclosed number of battery-powered Fiat 500 EVs in 2012 at Chrysler’s Toluca, Mexico, assembly plant where assembly of gasoline engine 500s will begin late this year. A123 CEO David Vieau said a competing supplier came forward who was “willing to buy the business below current market price in a program which has significantly diminished in scale from our earlier expectation.”



In spite of Government money these start ups are being killed by the big Japanese and, above all, Korean manufacturers.
123 may find the price that has been offered 'below current market price', but can only speak out of knowledge for it's own cost structure. People like LG Chem and SK Energy have existing contracts with major manufacturers which they can tack the production of the batteries for this onto, so their marginal costs will be far lower.
This reminds me of a discussion I had with an American battery researcher, days before the price of the Leaf was announced.
He was maintaining that lithium battery costs were, from memory, around $1,000- $1,250kwh, with little prospect of dropping for a long time.
I feel he came to this misjudgement because he only had access to the comparatively small scale American companies data, and not all of that.
The centre for lithium battery development remains firmly in the East, and the gap is widening, in spite of Obama's efforts.


Davemart makes some sobering remarks, yet surely there's hope for US EV battery production because:

EV battery production is only just beginning.

If impressions from GCC, MIT, etc. are correct, the US isn't behind in battery research and patents.

Battery production isn't more complicated than the microprocessor production the US still leads.

Battery production isn't more automated than the microprocessor production the US still leads.

Considering that American companies innovated and own the battery chemistry, NiMH, that a dozen years of hybrid vehicles exist on - we should not be behind.

Unless, of course, America would somehow crush it's own rechargeable battery lead and live in a 'hydrogen age'.

At least Obama is giving energy storage the obvious importance and funds it should have had at least an administration ago.


a123systems is backed by some companies with a lot of experience in manufacturing (GE, Qualcomm, Motorola) not to mention MIT.


Maybe this is a good outcome for A123. If you get involved with one big customer, you can lose some of your options later. Japan and Korea have a LOT of government support, not just a bit of support from one department. China will just go ahead and BUILD the plants right off. When we have a "free market" model and the others are targeting directly, it can make all the difference.

HarveyD market....?

A 100% free market does not really exist, even in USA and Canada.

USA and Canada crude oil industry and alternative fuels have been subsidized with many $$$B for decades and it is still going on.

Our farming industries (and many others) are very heavily subsidized.

Our car industries (ICE and EVs) are currently very heavily subsidized.

USA's real estates, banking, insurance industries were subsidized at the rate of $$$B in the last 2 years.

Aircraft manufacturers have been subsidized via military contracts for decades.

Towns, Cities, States and Feds dish out $$$B in direct and indirect subsidies every years.

EU, Japan, China, Brazil and many other countries, regardless of their political structure, subsidize their industries by various direct and indirect means.

There are so many cross subsidies that the total is not known.

And the list goes on and on.

We do not live in a free market environment, even though we like to believe we do.


Let's not also forget that, despite what Dave said about the lithium market being concentrated in the East (which is correct), there are also huge finds of the metal in Australia, Bolivia, and the US.
This issue is that no American company wants to jump up and take charge of extraction because it is very expensive to do so and they're all too goddamn worried about the shareholders to take any positive steps. Also, if the US could improve its relations with countries like Bolivia, we wouldn't have to worry so much about the Eastern market.
China has had it's hands in the extraction process for years, their infrastructure is already built, and US companies would rather drag their asses and satisfy the shareholders than take any positive action that would prove fruitful in the long run for the US economy.


"a program which has significantly diminished in scale from our earlier expectation.”

Apparently Chrysler only plans to make a token Fiat EV and accepted a low ball bid. They were given a $73M Electric Drive Battery and Component Manufacturing Initiative grant compared to $250M for A123 which suggests why they have shrunk their EV project. A123 chemistry and cycle life is far superior to others and will find its way into more dedicated, better funded EV programs.

Fiat 500, a foreign brand made in a foreign country does not support the regrowth of U.S. manufacturing which is key to countering foreign trade imbalances.


shecky... there are half a dozen outfits in your backyard mining lithium in Clayton Valley. There is no shortage and any suggestion there of comes from oil or speculators.

Nevada will likely become a major source for lithium in the near future and will remain so until a new chemistry lowers demand.


Reel$$ - Thanks for the link, I didn't know we had any real lithium prospects in my state. Everything I read lead me to believe Idaho and Colorado (i think) held the most deposits.
But I still stick with my point that we could stop fretting about China so much if we improved our foreign relations and took the shareholders out of the picture.


Half a dozen lithium mines may open in Canada within the next 24-36 months, if the lithium market is there.

How soon will post-lithium batteries/ultra caps appear. Lithium glorious days may be short lived.


That is why I put free market in quotes. To some that is the end all be all. We will not see the U.S. government building battery plants nor fuel plants, they leave that up to the private sector, who will never build them...ever...not profitable enough.


This is one of the main problem with unregulated free enterprise. They produce (mostly) what is more profitable for them, regardless of what is best for society, people and environment. Selling many useless (and often very harmful products) is easy with continuous Ads aimed at our weakness, starting with children. Tobacco industry has done that for 1+ century.

Look at what has happened to the sugar industry with lower cost high fructose sugar from excess corn and associated ill effects on our health. The cheapest and most profitable products are not always good for us.


This isn't a pricing issue, it's an issue of where A123 should focus their limited resources. They need volume customers, not token programs which roll out a few cars at press conferences and auto shows.

It killed A123 to lose the Volt. They were never in the running for LEAF or Tesla; those guys don't need 4000 cycles.

I've always wondered why A123 doesn't OEM starter batteries for sports cars. 30 pounds makes a difference for Porsche, BMW, Lotus, Corvette, Miata, etc.


The whole 'the country needs it but we won't make' it scenario can be fixed with public/private partnerships. Whenever we faced this situation, by working together we make it work. To just sit and wait is not an option.

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