Select your localized edition:

Close ×

More Ways to Connect

Discover one of our 28 local entrepreneurial communities »

Be the first to know as we launch in new countries and markets around the globe.

Interested in bringing MIT Technology Review to your local market?

MIT Technology ReviewMIT Technology Review - logo


Unsupported browser: Your browser does not meet modern web standards. See how it scores »

{ action.text }

Batteries included: A123 supplies the battery pack that can be seen here in a rendering of Fisker Automotive’s Karma sedan.

After failing to meet the milestones required by a loan agreement with the U.S. Department of Energy, Fisker Automotive, a startup making high-end hybrid electric cars, announced this week that it will stop work on a factory in Delaware and lay off 26 people. Fisker’s troubles could prove disastrous not only for Fisker, but for A123 Systems, which supplies the automaker with lithium-ion batteries.

The events raise the prospect of two failures at a time when the DOE loan and grant programs are under scrutiny after the bankruptcy of companies that it had funded: Beacon Power, Ener1, and most famously, Solyndra, a solar-panel maker that received a $535 million loan as part of a federal loan-guarantee program.

Fisker is a key customer for A123, using its batteries for its Karma plug-in hybrid luxury sedan. On Thursday, after news of Fisker’s difficulties, shares of lithium-ion battery maker A123 Systems dropped 24 percent.

Although revenues for both companies have been increasing lately, both are operating at a loss and may need to raise more funds to stay out of bankruptcy. A123 Systems has numerous small contracts to produce batteries, and some larger ones that will come into play next year. But for now, it relies heavily on Fisker for revenue. Its fate could depend on whether Fisker can raise enough money from private investors or renegotiate its DOE loan terms.

A White House review of the DOE’s loan program is expected to be released this week. In the current climate, it could be difficult for Fisker to renegotiate the terms of its DOE loan agreement, especially since the DOE is under fire for renegotiating the terms of Solyndra’s agreement.

Fisker Automotive received a loan guarantee for $528.7 million, of which it has received $193 million so far. A123 Systems, a young company that was started with the help of government funds, was recently awarded a $249 million federal grant to build battery factories. It has used about half of the grant so far. Both companies have also raised large amounts of private capital.

Both companies have had good news in recent months. After years of delays, Fisker started selling its Karma sedan in October. It has now manufactured 1,500 cars and sold “hundreds,” according to a company spokesperson. A123 Systems, a public company, announced high revenue growth in its most recent quarterly earnings statement, in November.

52 comments. Share your thoughts »

Credit: Fisker Automotive

Tagged: Energy, DOE, A123, Solyndra, Fisker

Reprints and Permissions | Send feedback to the editor

From the Archives


Introducing MIT Technology Review Insider.

Already a Magazine subscriber?

You're automatically an Insider. It's easy to activate or upgrade your account.

Activate Your Account

Become an Insider

It's the new way to subscribe. Get even more of the tech news, research, and discoveries you crave.

Sign Up

Learn More

Find out why MIT Technology Review Insider is for you and explore your options.

Show Me