A123 Predicts a Good Year, Providing Electric Cars Sell
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Despite losing over $250 million last year, the company remains optimistic.[/font]
Thursday, March 8, 2012
By Kevin Bullis
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A123 Systemsthe battery maker that's central to the Obama administration's efforts to establish an advanced battery industry in the United States and to greatly increase the number of battery-powered vehicles on the roadannounced today that it lost $258 million in 2011, compared to $152 million in 2010. In spite of the loss, the company remains optimistic, predicting lower operating and capital costs and a 45 percent to 89 percent increase in revenue in 2012. But hitting those targets will depend on more consumers buying electric vehicles, and so far, demand has been lower than A123 expected.
Things initially looked good for A123 in 2011. Revenues increased from $18 million in the first quarter to $64 million in the third quarter, as the company sold batteries to
Fisker Automotive for the Karma extended-range electric sedan. But later in the year, the Karma was delayed, and Fisker stopped ordering batteries from A123, with the intention of using up the batteries it had already ordered. That left much of A123's factory idle.
On top of that, A123 ran into production problems that decreased yields in the fourth quarter of 2011, and it had to deal with costs for repairing battery systems for the Karma and another heavy-duty battery pack made for BAE Systems.
A123's revenues dropped to $40 million in the fourth quarter last year, and the company expects revenues to fall still lower this quarter, returning to the level from the first quarter of last year, erasing the temporary gain it had from the Fisker deal and other contracts.
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