Senators Question Green Tech Company’s Pending Deal with Chinese Investors

Massachusetts-based auto battery maker A123 may lose a portion of the $249 million in federal grant money if two Republican senators have their way. On Tuesday, Senators Chuck Grassley (R-IA) and John Thune (R-SD) asked Energy Secretary Steven Chu to provide answers to questions they have about the struggling company’s announcement that it will receive up to $450 million in assistance from China’s Wanxiang Group Corporation.

In a letter to Secretary Chu, Senators Grassley and Thune said, “Billions of U.S. taxpayer dollars have flowed to foreign companies through the Recovery Act, and we are concerned that the recent announcement could lead to even more taxpayer dollars going overseas.” The infusion of cash could also potentially give the Chinese company a controlling stake in A123.

To date, A123 has received about half of the $249 million it received from the federal Recovery Act. The program was designed to help U.S. green technology businesses expand their research and manufacturing capabilities.  At the time the grant was approved, A123’s business model was hailed by the Obama administration as being a blueprint for reviving the ailing U.S. manufacturing sector.

Grassley and Thune’s letter to Secretary Chu comes amid growing concerns about the Obama administration’s investments in a number of green companies.  Some fear the A123 / Wanxiang deal would be tantamount to U.S. taxpayers funding the transfer of American technology to Beijing.

In addition to the $249 million A123 was awarded by the federal government, the company also received $238 million in support from state and local governments in Michigan. These funds were to be used to build its battery manufacturing facilities in Livonia, Michigan, which opened in 2010.

The Thune-Grassley letter asked a litany of questions, including, “Considering that A123 has already received millions of U.S. taxpayer dollars and could potentially receive up to $450 million from a foreign company, does A123 need additional taxpayer dollars to continue its operations? What assurances, if any, does DOE have that the A123-Wanxiang transaction and additional DOE funding through the Recovery Act will not lead to a transfer of taxpayer-funded intellectual property to a China-based company, or that the taxpayer-funded manufacturing jobs will remain in the United States?”

The Obama administration has said that none of A123’s federal grant money will be allowed to be used to fund overseas facilities.  About half of the original $249 million in grant funds is reportedly still available to A123.

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