If anybody understands what really happened to A123, the once heralded and now bankrupt advanced lithium-ion battery maker, it is the energy mavens at the third annual Advanced Energy Solutions symposium put on by energy storage consultant FullPower, Inc.
FullPower Principal Richard Smith says that “A123 was killed off by their own success – being the most successful supplier of batteries for electric vehicles at the wrong economic time cost them.”
Manufacturing, Smith explained, is a capital-intensive business, and ongoing work ties it up, Smith said.
“A123 had about twice the forecast order from the automotive industry than what was finally purchased. To get those orders, you have to show them you have factory capacity and supplier contracts to produce that volume.” But, Smith said, “all their contracts contain clauses which allow them to shape their order up or down, depending on the actual run rate of their factory. A123 probably would have had a substantial amount of factory capacity and work in progress. And then the orders were cut back, maybe as much as 30 to 50 percent.”
As an energy storage industry consultant with an ample roster of clients, Smith said, he hears things. “I have no indication A123 had any technical issues.”