A123's Bankruptcy Reignites Obama's Green Critics

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A123 Systems has filed for bankruptcy. The company makes lithium ion batteries for hybrid and electric cars — or it did. The company's automotive assets are being sold, and the bankruptcy filing will likely be controversial. A123 received a $249 million grant from the government in 2009.


NPR's business news starts with echoes of Solyndra.

A Massachusetts manufacturer of electric car batteries has filed for bankruptcy. The company, A123 Systems, had received hundreds of million dollars in federal support, including a $250 million grant.

As NPR's Tovia Smith reports, its failure is reigniting criticism of President Obama's green energy policies.

TOVIA SMITH, BYLINE: A123 was considered a model of government investment in an emerging industry. The Obama administration, and the Bush administration before it, offered praise and money, hoping to keep manufacturing of electric vehicle components in the U.S.

But A123 has struggled, as electric cars caught on more slowly than expected, and James Pethokoukis with the American Enterprise Institute says the company's failure proves again why government should not be in the business of trying to pick winners.

JAMES PETHOKOUKIS: This is a highly inefficient use of taxpayer dollars with a really, really poor track record.

SMITH: Indeed, Republicans cast the news as another Solyndra story, the solar energy company that went bankrupt after more than $500 million in federal support.

The Romney campaign called it another failure of the president's, quote, "gambling away billions of taxpayer dollars." But the Obama administration counters that investments were made with bipartisan support, and they note that two A123 plants will be bought by a Wisconsin company and kept open. They say it's the kind of consolidation you'd expect in an emerging industry.

Speaking on CNN, Obama deputy campaign manager Stephanie Cutter insisted the riskiest strategy would be to sit on the sidelines.

STEPHANIE CUTTER: The question is whether we want to cede these industries to India and China. And the president says, no, we're not. We're going to develop these industries here in the United States. And that's what he's been doing.

SMITH: President Obama reiterated the point in general terms in last night's debate, but if the A123 bankruptcy had come up specifically, Cutter says, Romney would have had to explain similar investments he made as governor of Massachusetts that also went bankrupt.

Tovia Smith, NPR News.

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