On December 11,, Chinese auto parts manufacturer Wanxiang Group Corporation received court approval to acquire a majority of U.S. battery manufacturer A123 Systems. Navitas Systems, LLC was approved to purchase the defense portion of the company. However, the sale is subject to review by the Committee on Foreign Investment in the United States (CFIUS). The Strategic Materials Advisory Council and dozens of Republican and Democratic Members of Congress are deeply concerned by the economic and national security implications of the sale to Wanxiang and urge CFIUS to carefully scrutinize the deal. The Council continues to assert that A123’s Lithium Iron Phosphate (LFP) technology is far more advanced than all known alternatives and cannot be separated by application or business sector.

In his Inaugural Address, President Obama said,

“The path toward sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries – we must claim its promise.”

Sign the White House Petition: Stop the Sale of Lithium Battery Maker A123 to China

Two Former Chairmen of the House Armed Services Committee pen bipartisan OpEd warning of national security risk associated with A123 sale to Wanxiang (14 Jan.)

Three Star Admiral: A123 deal could pose security risks (8 Jan.)

CFIUS Annual Report to Congress Report Period CY 2011 (Dec.)

Letter from Council to Treasury Secretary Timothy Geithner, Chairman of CFIUS (27 Nov.)

Bi-partisan Letter from Michigan Delegation (20 Nov.)


The following relates to the proposed sale of A123 Systems to Wanxiang Group Corporation. A review by the Committee on Foreign Investment in the United States (CFIUS) is expected to be complete in January.

Myth: A Li-ion battery is a Li-ion battery. This is “commercial off the shelf” and the sale should proceed.

Fact:A123’s underlying LFP Nanophosphate EXT technology is unique technology enabling batteries to operate effectively in much wider temperature ranges, delivering superior power more safely. Other lithium-ion batteries available today operate in a narrower temperature range and lose significant capacity at sustained high temperatures.  A123, however, has demonstrated severe cold and hot temperature performance (-30°C to +60C) while retaining 80% capacity.

Myth: There are plenty of reliable suppliers of Li-ion batteries to whom the U.S. Government could turn.

Fact:Nearly 70% of A123’s underlying patents for its Nanophosphate EXT technology have yet to be awarded, and the extent of its trade secrets (“learning from doing”) places A123 years ahead of its known competitors.

Myth: This technology is not critical because its contracts were mostly for development, which are now ending, and procurement contracts are insignificant.

Fact: While the technology is not widespread in military applications today, the capabilities of A123’s unique battery chemistry are ideally suited for the harsh operating environments of missile programs, special access programs, and defense and commercial satellites as well as stationary applications.

Myth: Wanxiang is a private company and has little to no ties to the Chinese government.

Fact: Members of the senior executive team at Wanxiang Corporation have been members of the Chinese Communist Party for decades and must be approved by the Politburo. Allowing this transaction will give the Chinese government direct access to the most cutting edge power technology for future satellite, power grid, and missile systems.

Myth: An American company (Navitas) acquired the defense portion of A123, so that technology is safe.

Fact:A123’s core Nanophosphate EXT technology cannot be segregated by application or business sector. If Wanxiang has access to the commercial applications, it will find it easy to engineer defense applications. Also, according to purchase agreements, Wanxiang will manufacture cells for Navitas in the same facilities which produce products for the commercial and stationary market segments and will supply Navitas with cells, cross-license the core technology and share certain physical assets for use in the government/military business.

Myth: Wanxiang is a model U.S. corporate citizen.

Fact:It has been a staple of Chinese outward direct investment since the late 1990s to acquire and obtain breakthrough technology from foreign countries, leveraging Chinese production of raw materials to draw high value-added manufacturing to China. This transaction follows the predictable pattern of the U.S. rare earth industry. In fact, Wanxiang has a track record of shifting an acquisition’s low-skill jobs to China to take advantage of the lower labor costs.

Additionally, in the recent CFIUS report to Congress (Dec.), the U.S. Intelligence Community noted its “moderate confidence”, upgraded from “unlikely” in 2011, that one or more foreign governments may be engaged in a coordinated strategy to acquire critical technology companies.

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