Waltham lithium ion battery maker A123 Systems Inc. filed for bankruptcy protection in a Delaware federal court Tuesday, saying it was calling off a major deal with a Chinese auto parts conglomerate that was expected to save the firm, and announcing it would sell its auto-related assets to another US battery maker.
It’s a stunning fall for an alternative energy company once viewed by the administrations of President Barack Obama and Governor Deval Patrick as a key component of a clean-energy driven economy. The US Department of Energy pumped hundreds of millions of dollars into A123, including a nearly $250 million grant to build an automotive battery plants in Michigan.
The bankruptcy quickly became an issue in the presidential election. The campaign of former Massachusetts Governor Mitt Romney stepped up its attacks on both Obama’s energy and economic policies, noting Obama had pledged to create 5 million green energy jobs when he ran in 2008.
Obama administration officials did not immediately respond to requests for comment.
A123’s bankruptcy follows the failure of several other high profile clean energy companies, including California solar panel maker Solyndra LLC, which received more than $500 million in federal support.
The Waltham company’s decline was a result of the slower-than-expected adoption of hybrid and electric vehicles as the economy struggled in recent years and crude oil prices moderated. In recent months, A123 tried to shift its product line further away from autos, expanding into power storage for utilities and other markets.
But it was too late for a company that analysts said was fighting for survival, balanced on a knife’s edge.
“AOne sold the majority of its products at a gross loss, meaning it cost AOne more to make the product than it could sell it for,” said Andrea James, a senior research analyst who followed the A123 for Dougherty & Co. LLC in Minneapolis.. “It does no good to be an industry leader in a money losing business.
For months, A123 had warned investors that it was in danger of running out of cash. But, in August, it seemed it would be rescue after it struck a $465 million deal with Wanxiang Group, a Chinese autoparts conglomerate that has invested heavily in US technology. Wanxiang could have ended up owning a controlling interest in the company.
That deal, however, ended with g A123’s bankruptcy filing. Instead, A123 said it has entered into an asset purchase agreement with Johnson Controls Inc., which has also received hundreds of millions in federal grant money to build its battery business.
In a transaction valued at $125 million, Johnson Controls plans to acquire A123’s automotive business assets, including its plants in Livonia and Romulus, Mich.
“We determined not to move forward with the previously announced Wanxiang agreement as a result of unanticipated and significant challenges to its completion,” A123 chief executive David Vieau said in a statement Tuesday.
A123 declined further comment. In early summer the company employed 2,400 people globally—including nearly 400 in Massachusetts. A company spokesman would not say how many of those employees remained, or how many layoffs might come as a result of the bankruptcy filing and Johnson Controls deal.
In 2009, A123 held an initial public stock offering, raising about $380 million with its initial stock offering. Also in 2009, A123 received a $249.1 million grant from the US Department of Energy to build battery manufacturing operations in Michigan.
At its peak in 2009, A123 stock traded above $25 a share. Shares were trading a 6 cents Tuesday afternoon.