Thursday, May 31, 2012
Fisker Automotive Supplier A123 Heads Towards The Rocks
A major supplier to Anaheim-based Fisker Automotive looks to be in severe trouble, linked to issues uncovered in March by Fisker when one of that company's automobiles failed during testing with Consumer Reports. A123, a developer of battery modules which go into the Fisker Karma and other vehicles, said that--due to a field campaign to replace battery modules and packs with defective prismatic cells, including those used in the Karma--it is expecting to incur "net losses and negative operating cash flows" over the next several quarters, and that it needs financing to meet its cash requirements.
In a filing with the SEC, A123 said that there is "no assurance that the Company will be able to obtain such financing on favorable terms, if at all". In addition, A123's auditors have expressed "substantial doubt about the Company’s ability to continue as a going concern", based on those filings. It's unclear what the troubles at A123 mean for Fisker, which itself has seen troubles this year, including issues with gaining access to funding from the Department of Energy, and a subsequent layoff.