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A123 Systems discovers defects in some of its prismatic cells, launches replacement program for potentially defective battery packs and modules (updated)

Li-ion battery manufacturer A123 Systems has launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at A123’s Livonia, Michigan manufacturing facility. The defect can result in premature failure of the battery module or pack, including a decrease in performance and reduced battery life.

A123 has begun building replacement modules and packs and expects to begin shipping them to impacted customers this week. A123 says that there are five production transportation customer programs that currently have modules or packs from A123 that potentially contain defective cells. Because it supplies modules to some customers and packs to others, the company says it cannot define the total number of systems impacted.

Customers using A213 prismatic cells made at other facilities are not impacted. Similarly, the cylindrical cells used by BMW and other transportation customers, as well as for the majority of our grid energy storage systems and commercial applications, are not impacted.

The company anticipates that the cost of replacing the affected customer modules and packs will be approximately $55 million and expects it will be funded over the next several quarters. Although the company has sufficient liquidity to fund this campaign, it expects this situation will require an adjustment in its fund-raising strategy. The company plans to provide an updated outlook during the next quarterly earnings call.

Cause. According to the company, one of four automated tab welding machines in the prismatic cell manufacturing process at the Livonia, Michigan facility was incorrectly calibrated, causing a misalignment of a certain component in some prismatic cells. This defect was undetected by standard visual and electrical inspection.

When the defective prismatic cells were subsequently compressed as part of the module assembly process, a mechanical interference was created between the misplaced component and the foil pouch which contains the cell. In certain cases, this interference breaches the foil pouch electrical insulation causing an electrical short which can cause premature failure of the battery module or pack, leading to decrease in performance and reduced battery life.

A123 says it has isolated the root cause of the defective cells to this single automated welding machine, and has recalibrated it to conform with the other three automated welding machines at the Livonia facility.

The company says that cells made using these other three machines are not defective, giving A123 confidence that it has pinpointed the source of the defect and corrected it.

Recently, A123 has discovered that some prismatic cells made in our Livonia facility may contain a defect which can result in premature failure of a battery pack or module that includes a defective cell. We have isolated the root cause of the defective cells and we are confident that we have pinpointed the source of the defect and corrected it. As a result of engineering analysis and testing, we believe this is not a safety issue, and we have determined the root cause and have taken corrective actions.

We are working to get replacement packs and modules to impacted customers as quickly as possible. It is important to note that this defect has been discovered only in some prismatic cells manufactured at our Livonia facility. Prismatic cells produced at another A123 facility are not impacted. Further, the cylindrical cells we make at our facilities in China for a number of other transportation programs, as well as the majority of our grid energy storage systems and commercial applications, are also not affected by this defect.

In parallel with this field campaign, as we have discussed previously, we continue to implement actions that we believe will improve operations and minimize the possibility of quality issues going forward. This includes hiring a Chief Operating Officer, Ed Kopkowski, who has more than 25 years of global management and operational leadership in improving quality and reducing costs. A123 has produced hundreds of thousands of high-quality prismatic cells at another facility, so while the initial rapid ramp up of our Michigan operations to satisfy customer demand has resulted in near-term operational challenges, we are confident in our ability to overcome these issues. We are devoting our full resources to fixing this situation and moving forward to continue delivering high-quality products to our customers.

—David Vieau, CEO of A123 Systems



This is not very good news for local battery manufacturers. Do we have a workmanship problem?


The workmen don't make much money. The managers and executives make a lot of money. I'd say we have a leadership problem. When things go well all credit goes to management (and the money too) and when things go bad, fire the janitors, because they are obviously the problem. Somewhat of an over simplification, but it's clear that in the US, there is a lack of ability or desire on the part of all managers and executives in both private and public entities to recognize and promote the capable. We instead promote and encourage those who would follow and not threaten the careers and decision of their bosses by being more skilled. It's a pretty standard approach to career advancement in the US.


This may show what can happen in large scale production of EV batteries. They have to produce millions of cells per day in each factory, if some defect gets into the process it can cause major problems.


This never happened with hydrogen fuelcells because it's a better more complete technology. This is just one exemple of the numerous defect of the batteries, some tesla batteries got brick, some other saw a drop of capacity, some took fire. Even when it's new there is a short lifespan predicted and then it cost a lot to recyclate.


Karma just extended the warranty of those batteries by 20% in an effort to regain buyers confidence. What has started as a supposed hose alignment problem has developed into a major quality problem.

Do the made in China units have the same manufacturing problems?


Well lets hope they get the problem solved. Otherwise it will just put more fodder for the anti climate change people.


Toyota may have taken a wiser decision by using their home built NiMh batteries for their (almost 2M to date) very reliable HEVs in the last 14+ years.

Toyota may not rush into a switch to Lithium before they are sure of their reliability. The future Lithium batteries used by Toyota will also be built in house and probably have much higher reliability.


I think these factories are highly automated.. very suitable for high labor costs countries as long as they dont impose too many restrictions to industry. Looking at you USA


I would say they would have to be highly automated, it says this eluded detection by normal process tests, they need better tests.

william g irwin

Hey folks, easy does it! They found a problem in a new tech process, isolated it, fixed it, sorted out who got the bad ones as best they can, and they PUBLISHED IT! Lets see how many bad packs they fix for free under their warranty. Sounds reasonable so far. Why dump on them so hard?


Because with modern quality control, this should NOT happen. $50+ million worth of new packs is not a minor issue.

"The company anticipates that the cost of replacing the affected customer modules and packs will be approximately $55 million and expects it will be funded over the next several quarters"

Sean Prophet

With NASA's rigorous and modern quality control, the Hubble space telescope was launched with a lens ground improperly. Repaired in 1993 at a cost of $251 million.

With NASA's rigorous and modern quality control, in 1967 the Apollo 1 pad fire killed 3 astronauts, cost tens of millions and set the moon program back severely. But we still went to the moon.

Even the Challenger and Columbia disasters, as bad and preventable as they both were, didn't fatally wound the shuttle program.

It's ridiculous to dump on this company for making a mistake, especially when they've been pro-active in disclosing and taking responsibility for it. It's welcome news, actually. This is how solid institutional experience is built.


Hope that all the real problems have been identified and will be fully solved quickly......regardless of the fix it cost. Otherwise, USA's Lithium batteries industries will have a difficult PR campaign to do.


They can recover, but this is not moon shot stuff Sean and you know that. Those examples do not show what modern factory error rates are for similar processes.


BMW just announced a 1.3 million vehicle recall, because of a bad battery cable. I don't care how long you have been manufacturing something, things go wrong on occasion.

With NASA's rigorous and modern quality control, the Hubble space telescope was launched with a lens ground improperly.
That was actually Perkin-Elmer's error.  One supplier test discovered the error but the test results were not followed up (the other, "more accurate" test had a fault in the setup), and NASA relied on Perkin-Elmer's test results instead of putting money into the budget to do its own.

One of the consequences of this error is that QC will be changed to make sure that errors of this type never get out of the plant.

Sean Prophet

Thanks for clarifying that E-P. Always enjoy your contributions!


Good to see you around these parts again, Sean.

Robert Allaire

It is a pleasure to read a few posts from some of the more intelligent folks that actually understand the Problems that were caused by one machine being slightly misaligned.


That's another "Solyndra"...is the prefered of the Obama cabinet and DOE secretary...but is just green painted...

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