Wanxiang bought A123 out of bankruptcy and grew it into a global battery maker

A123 Systems, a Waltham battery maker founded on MIT technology, ran out of money in 2012: electric-vehicle adoption was slow, production costs were high, and a costly recall drained its cash. It filed for Chapter 11 in October with assets of about $459.8 million and debts of about $376 million, having received only $132 million of a $249 million US government grant.

In the bankruptcy auction, Wanxiang America Corp — the US arm of China's Wanxiang Group — outbid Johnson Controls and NEC with a $256.6 million offer for A123's automotive, grid and commercial battery businesses, including plants in Michigan, Massachusetts and Missouri plus a Chinese facility. After US national-security review, the sale closed in January 2013, and A123 Systems LLC was formed as a Wanxiang subsidiary that would keep operating and expand its US operations.

Wanxiang pointed the company at a different market: low-voltage 12V starter batteries for millions of start-stop cars rather than exotic EVs. Within a year A123 was profitable; by 2015 all three manufacturing hubs were at capacity, and the company announced a plan to double global capacity to 1.5 GWh with more than $200 million of new investment, forecasting over 50% growth that year.

Wanxiang paid $256.6M for the business, returned it to profit within a year, doubled capacity to 1.5 GWh, and opened a 600,000-unit Czech plant.

Chapter 11 gave A123 a court-supervised auction and clean exit.

Wanxiang's $256.6M bid beat JCI and NEC.

The pivot to 12V starter batteries found mass-market demand.

Capacity doubled and a Czech plant followed by 2017.

A distressed buyer with a different market in mind can rescue a failed venture: Wanxiang pivoted A123 from electric-car hype to mass-market 12V starter batteries.

A123 kept growing under Wanxiang. In March 2017 it opened a new plant in Ostrava, Czech Republic, capable of producing more than 600,000 low-voltage systems a year for European customers, adding to its US and Chinese factories. From a failed EV pioneer, the company became a global supplier of starter and low-voltage batteries — still bearing the A123 name as a wholly owned Wanxiang subsidiary.