Federally-backed automaker threatened by A123 System’s bankruptcy

Posted on Monday, November 5th, 2012 at 8:37 pm    

The future of Fisker Automotive, a luxury carmaker that has received more than $200 million in federal grants, could potentially be at risk after its sole battery manufacturer for its electric sedan model Karma has filed for bankruptcy. A123 Systems, an also federally-backed company, filed for Chapter 11 bankruptcy last month.

Because Fisker received federal money, taxpayers would also be negatively affected if a bankruptcy judge allows A123 Systems to terminate its contract with the luxury auto manufacturer. A123 Systems, which made electric car batteries for Fisker, says its contract with Fisker was below market value.

Fisker is fighting to have the contract upheld, claiming that taxpayers, its suppliers, and its customers would suffer. According to the Washington Times, the car maker also claims that A123 supplied them with defective batteries and have yet to replace them.

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