A123, the famous U.S.-based electric car battery maker has big problems. Yesterday, their shares closed at 82 cents, after news spread out on March 26 revealed they had issues with some of the batteries that had delivered and that they are going to replace them.
That meant a 49.7% drop since the day the news hit the front page of several newspapers and specialized blogs. However, this isn’t the biggest hit the company has been taking in its history. They started out at $26 per share in the day of their initial public offering in 2009, but the first half of 2010 brought them only bad luck. During that year, as you can see in the picture, they had dropped from over $22 per share to just over $10… and now 82 cents.
It’s also a bad day for them and the U.S. battery industry because in 2009 A123 had been helped by the government with $249.1 million, as a federal economic stimulus grant.
However, one hit doesn’t come alone: replacing the defective batteries would cost them another $55 million. The defect has been occurring because of a faulty welding machine they claim to have changed.
On the other hand, Chinese battery factories are blooming, and they’re doing that for a good reason: their products are cheap. Well, you know how they say: “you get what you pay for,” but eventually the Chinese EV batteries will end up reaching the quality of A123, because they’ll be forced by the market and car manufacturers to do so. Still, one may think the quality would drop if A123 would go bankrupt – it’s debatable, but I don’t think it’ll happen.
Battery prices are expected to fall below $400/kWh by 2020. This figure has been established by Boston-based Lux Research last month. However, the Chinese already sell them for $444/kWh, which only means they were referring to the U.S. market. No wonder only a few privileged ones are able to afford buying electric cars nowadays… but that’ll change, for sure.