Wanxiang Group, a large Chinese auto parts maker, won a high-stakes auction on Sunday for assets of A123 Systems, the bankrupt American battery maker that was a centerpiece of the Obama administration's loan program for electric vehicles, the New York Times reported Sunday. A123, which filed for bankruptcy in October after chronic losses and a damaging battery recall, said Wanxiang agreed to pay $256 million for its automotive and commercial operations, including its three factories in the United States. But the sale excludes A123's business with the U.S. government and its military contracts. That portion of the company will be sold to a small energy company based in Illinois, Navitas Systems, for $2.2 million, in order to quell concerns about transferring sensitive military technology to the Chinese. The deal, which requires approval of a U.S. bankruptcy judge, would expand Wanxiang's share of the global market for lithium-ion batteries used in new electric cars like the Fisker Karma. In addition to the approval of the bankruptcy judge, the deal requires the approval of the Committee on Foreign Investment in the United States, a broad-based group led by the Treasury Department that reviews foreign takeovers of American companies. A123, which is based in Waltham, Mass., was once one of the most promising recipients of federal loans under the Obama administration's $2 billion program to stimulate the electric-car industry in the United States. But consumers have been slow to buy electric vehicles in large numbers, crippling any chance for A123 to make a profit. It also stumbled when its first big shipment of batteries to Fisker proved defective and needed to be recalled.
