A123 Bankruptcy Filing Underscores Slow Going for EVs


The electrified-vehicle business is bristling with news these days: General Motors said that it will begin production of a new Cadillac ELR plug-in hybrid by late next year, for instance. And Toyota has just begun bringing its new Scion iQ EV to the U.S., initially for car-sharing programs.

But by far the biggest news is a body blow to the fledgling industry: A123 Systems, one of the largest makers of batteries specifically for EVs and hybrids — and personally touted by President Obama as an exemplar of his “green jobs” policies — has filed for bankruptcy. Johnson Controls, a conventional-battery giant and growing manufacturer of batteries for electrified vehicles as well, wants to buy pieces of the expected carcass.

Mildly encouraged by greater traction for the Chevrolet Volt, a plug-in or “extended-range” hybrid that can run on a gasoline engine as well as in all-electric mode, GM said it will build the new Caddy in the same Detroit plant where Volt is assembled, and with a similar powertrain. When it goes on sale, ELR will be the first electric luxury coupe with an extended range, GM North America President Mark Reuss said.[more]

Meanwhile, Nissan has taken the opposite approach to extending the appeal of EVs, as it has indicated that it plans to introduce a budget version of the all-electric Leaf, whose sales have leveled off in the U.S. It also is shifting production of Leafs for the U.S. market to a new plant in Tennessee that will be less expensive than production in Japan. And in Japan, it is testing a new “Leaf to Home” system that will help Leaf owners store electricity on their premises for charging their vehicle in off-peak periods for the grid.

“Our expectations are that we’ll continue to grow sales,” Brendan Jones, director of EV marketing, sales and strategy for Nissan, told brandchannel. “Are sales coming as fast and furious as we want? No. Are we dissatisfied? No. The car’s a hit, and we believe fundamentally we’re making a lot of progress.”

But while Toyota’s introduction of the iQ EV for urban and campus car-sharing applications will excite early adopters, the truth is that Toyota recently backed away from major commitment to all-electric vehicles in favor of more fully backing its highly popular Prius brand of gas-electric hybrids.

And the failure of A123 Systems reflects not only on Obama’s questionable industrial policy when it comes to green jobs but also, even more fundamentally, on the fact that American consumers simply haven’t embraced highly electrified vehicles despite the many prods and lures being proffered by manufacturers and governments.

“The reality is that the business model isn’t there yet,” Brett Smith, co-director of manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor, Mich. “It isn’t there yet for volume. It isn’t there yet for reaching the mass consumer. And it probably isn’t going to be there for a while.”


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