A123 Wants to Void Contract with Fisker, Fisker Says That Would Disrupt “Ongoing Business”

While Johnson Controls and China's Wanxiang Group have competing bids to acquire the assets of advanced battery maker and Fisker supplier A123, a more serious battle is occurring in U.S. Bankruptcy Court in Delaware between the startup automaker and what is arguably its most important vendor. A123 wants the bankruptcy judge to void its contracts including those for supplying batteries to Fisker. That could stop production of Fisker's only car, the Karma. A123 says that the existing contract with Fisker is burdensome and that the amount they are getting paid for those batteries is below market value. Fisker attorneys, in a filing with the court, have challenged A123 and said that "Fisker's ongoing business and operations will be severely disrupted and harmed" if the court voids the contract. The pas de deux between the two companies may be spinning into a danse macabre. Twenty five percent of A123′s revenue comes from its deal with Fisker, while A123 is Fisker's sole supplier of the lithium-ion batteries it needs to make the extended range EV Karma. There is no way that Fisker can find a supplier who can engineer a replacement battery pack quickly enough to keep the Karma in production. Electric vehicle batteries are not like AA cells that you can pick up at the corner store. While there are standard lithium ion battery formats, the Tesla Roadster is the only high profile EV that uses standard format Li-Ion cells. All other electric cars, including Fiskers, use cells specifically designed and engineered for them. The Fisker 20 kWh battery pack manufactured by A123 is made up of 315 individual Li-ion cells. Of course this is about money. One reason why A123 is in bankruptcy court in the first place is because of the financial hit the company took due to a recall of defective batteries supplied to Fisker. Since the companies are interdependent, my guess is that if the judge does throw out the contract, a new one will be cut, either between A123 and Fisker, or between whichever company, Johnson or Wanxiang, ends up owning A123′s battery factories. With such an important vendor in bankruptcy court, Fisker is between a rock and something that would peg a Rockwell tester. According to Fisker attorneys, " the rejection of the Fisker contract represents an immediate threat of significant disruption and harm to Fisker's business, with a corresponding negative impact on Fisker's lenders, suppliers, customers and investors." One of those lenders, of course, is the United States Treasury, American taxpayers having loaned Fisker almost 200 million dollars. Ronnie Schreiber edits Cars In Depth, a realistic perspective on cars & car culture and the original 3D car site. If you found this post worthwhile, you can dig deeper at Cars In Depth. If the 3D thing freaks you out, don't worry, all the photo and video players in use at the site have mono options. Thanks for reading– RJS   from The Truth About Cars http://www.thetruthaboutcars.com

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