* 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 (Reuters) - 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.
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 dealings.
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.