* A123 would remain a U.S. firm under Wanxiang - executive
* Wanxiang's bid for A123 under regulatory scrutiny
* Lawmakers, experts oppose sale for security reasons
* Johnson Controls is still interested in A123
By Norihiko Shirouzu
BEIJING, Dec 21 A senior Wanxiang Group
executive stressed A123 Systems Inc, at the centre of a U.S.
political storm after the Chinese firm won an auction for the
electric car battery maker, would operate as an American
company, while those close to the deal say they believe national
security concerns are overblown.
China's biggest auto parts maker beat out rivals with a $257
million bid for the bankrupt pioneer of electric car batteries
but while the takeover has received court approval, it must
still be cleared by the U.S. Committee on Foreign Investment.
"A123 is an American company and will be an American
company," Pin Ni, head of Wanxiang's U.S. operations and
son-in-law of the group's founder, told Reuters, in comments
seeking to allay concerns about potential job losses.
"We have been creating and saving jobs in our investments in
the U.S., and I am proud of that," said Ni, who has spearheaded
Wanxiang's takeover bid, adding that A123 would not be folded
into the Chinese group's lithium-ion battery unit.
U.S. politicians have objected to A123's
taxpayer-financed lithium-ion technology ending up in the hands
of an economic rival and pressure has mounted on Treasury
Secretary Timothy Geithner, the head of the foreign investment
panel, to block the deal. Those politicians include lawmakers
based in Michigan, where A123 has several facilities.
Ni declined to comment on concerns about U.S. national
security, saying it was a U.S. government matter. "There is a
process in place to deal with such concerns, and I am all for
it," he said.
As Chinese firms invest more overseas, U.S. suspicions about
their intentions have often erupted. The U.S. has rejected a bid
to build wind farms by Ralls Corp, owned by two executives of
China's Sany Group, and multiple deals by Huawei
Technologies Co, a Chinese telecom equipment maker.
A123's technology is used in U.S. military hardware and in
America's power grid systems and Wanxiang's bid excludes A123's
defense contracts. But a group of former military leaders and
industrial consultants said in a statement this month that
A123's commercial and defense businesses were too similar to
allow the sale to a Chinese company.
HOW MUCH AT STAKE?
People close to Wanxiang's deal, however, believe some of
those concerns, especially on those over losing A123's know-how
to China, are overblown because some of the technology is
already available in China through A123's previous business
David Vieau, chief executive of A123, also said the Waltham,
Mass.-based company has about 1,000 workers in China producing
battery systems. The deal with Wanxiang was carefully crafted
and doesn't involve A123's business with the U.S. government and
its military forces, he told Reuters by phone.
"I don't personally see any national security considerations
associated with making batteries in China. We have been doing
that for the last six years," Vieau said.
"I am not sure how that can be perceived as a threat, but
that is not for me to decide."
A123 has for two years been working closely in technology
development with SAIC Motor Corp. - a Chinese
state-owned automotive group in Shanghai which is an equal
manufacturing and sales partner here with General Motors Co.
and Volkswagen AG. SAIC is also a producer of
cars for its own brands.
A123 also has a manufacturing base near Shanghai where it
assembles lithium-ion batteries using materials and battery
cells it also produces there.
"A123 has lots of engineers in China already," one of the
individuals close to the deal said.
But some experts and industry insiders, while declining to
be identified due to business interests in China, say there is
still much for the United States to lose since A123 has not
really made the most important part of its technology available
to the Chinese.
That know-how involves technology that helps shrink lithium
particles to nano dimensions, helping boost a battery cell's
energy density, and putting more power into a smaller box.
Vieau said A123 was not sharing that nano technology nor the
cell-making technology but was providing those cells as
'black-box' technology to SAIC.
A123 filed for bankruptcy in October as demand for electric
vehicles did not live up to expectations and it was forced to
recall defective car batteries. Its customers include Fisker
Automotive, General Motors Co and BMW.
Johnson Controls, which narrowly lost the auction
with $251 million bid made with NEC, has said it
remains interested in A123 if Wanxiang fails to get approval
from the U.S. government.