A couple weeks back I jumped the gun in lumping in A123 Systems, a car battery maker that received $279 million in Obama loan guarantees, on a list of bankrupt green energy companies. I promptly corrected the post when the company flagged the mistake. Yesterday my pal Robert Bryce, writing over at National Review Online, says it’s only a matter of time until A123 become the next Solyndra:
Here’s my prediction: Within 18 months, A123 Systems, the battery maker that got a $249 million grant from the Department of Energy, will be bankrupt.
My prediction doesn’t have anything to do with the explosion that occurred on Wednesday at a GM laboratory near Detroit, sending one worker to the hospital. The explosion occurred while the worker was testing a battery made by A123. . . [P]redicting A123’s failure doesn’t depend on the latest news, or require any special analytical skills or inside market knowledge. It requires only a quick look at the company’s financials.
I’ll add one little detail to this unfolding scene. An investor I know who is backing a startup effort to develop grid-scale batteries for utilities (think something the size of your dining room table, that is, way too big for a car) went to the Obama administration in 2009 to see whether his startup might qualify for one of the loan guarantees. But he was sent packing, with the message that the Obama team was only interested in backing car battery projects, because they just know so much better what we need. A small, grid-scale battery would have significant applications for electric utilities, who will be ready customers if a good, fast-charging, neighborhood-scale battery can be made at a reasonable cost.
What was that about hubris, and Hayek’s “knowledge problem” again?