The Fisker Karma was recalled late last year because of improper alignment of the batteries' hose clamps, but that was quickly resolved. Today, A123 Systems – the company that makes the Karma pack – announced a replacement program for "battery modules and packs that may contain defective prismatic cells produced at A123's Livonia, Mich. manufacturing facility." The $55 million program will kick off with shipments this week and does not affect any cells, prismatic or cylindrical, made at A123 facilities outside of Livonia.

A123's CEO, David Vieau, said in a statement that, "We have isolated the root cause of the defective cells and we are confident that we have pinpointed the source of the defect and corrected it. As a result of engineering analysis and testing, we believe this is not a safety issue, and we have determined the root cause and have taken corrective actions."

A123 has over 20 deals to supply lithium-ion batteries in vehicles as different as BMW hybrids and Via Trucks, the Chevy Spark EV and Tata's hybrid buses. Today's announcement did not mention any specific vehicle by name, but Green Car Reports reports that the Karma that recently died while it was being tested by Consumer Reports was indeed affected by bad cells from Livonia. A123 says that the defective cells do not pose a safety risk and that the cost of the replacement program will be spread out over the next several quarters.

*UPDATE: Fisker has issued a statement on the matter, adding that "A123 is replacing all impacted battery modules and packs for the Fisker Karma." Fisker is also extending the warranty period from 50 months/50,000 miles to 60 months/60,000 miles in the U.S. and from 48 months/100,000 km to 60 months/100,000 km in Europe. Fisker calls this a "significant upgrade to the VIP Customer Care Coverage" that all 2012 Karma buyers get. Read the statement after the jump.
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A123 Systems Launches Replacement Program for Potentially Defective Battery Packs and Modules

WALTHAM, Mass., March 26, 2012 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced that the company has launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at A123's Livonia, Mich. manufacturing facility. A123 has begun building replacement modules and packs and expects to begin shipping them to impacted customers this week. The company anticipates that the cost of replacing the affected customer modules and packs will be approximately $55 million and expects it will be funded over the next several quarters. A123 will host a conference call at 10:30 a.m. EDT.

"Recently, A123 has discovered that some prismatic cells made in our Livonia facility may contain a defect which can result in premature failure of a battery pack or module that includes a defective cell. We have isolated the root cause of the defective cells and we are confident that we have pinpointed the source of the defect and corrected it. As a result of engineering analysis and testing, we believe this is not a safety issue, and we have determined the root cause and have taken corrective actions," said David Vieau, CEO of A123 Systems. "We are working to get replacement packs and modules to impacted customers as quickly as possible. It is important to note that this defect has been discovered only in some prismatic cells manufactured at our Livonia facility. Prismatic cells produced at another A123 facility are not impacted. Further, the cylindrical cells we make at our facilities in China for a number of other transportation programs, as well as the majority of our grid energy storage systems and commercial applications, are also not affected by this defect."

Vieau continued, "In parallel with this field campaign, as we have discussed previously, we continue to implement actions that we believe will improve operations and minimize the possibility of quality issues going forward. This includes hiring a Chief Operating Officer, Ed Kopkowski, who has more than 25 years of global management and operational leadership in improving quality and reducing costs. A123 has produced hundreds of thousands of high-quality prismatic cells at another facility, so while the initial rapid ramp up of our Michigan operations to satisfy customer demand has resulted in near-term operational challenges, we are confident in our ability to overcome these issues. We are devoting our full resources to fixing this situation and moving forward to continue delivering high-quality products to our customers."

Additional information and ongoing updates about A123's Livonia prismatic cell field campaign can be found online at http://www.a123systems.com/media-room-service-campaign.htm.

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) is a leading developer and manufacturer of advanced lithium ion batteries and energy storage systems for transportation, electric grid and commercial applications. The company's proprietary Nanophosphate® lithium iron phosphate technology is built on novel nanoscale materials initially developed at the Massachusetts Institute of Technology and is designed to deliver high power and energy density, increased safety and extended life. A123 leverages breakthrough technology, high-quality manufacturing and expert systems integration capabilities to deliver innovative solutions that enable customers to bring next-generation products to market. For additional information please visit www.a123systems.com.

Safe Harbor Disclosure

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks, uncertainties and other factors, including statements with respect to the availability of replacement modules and packs, the timing of the commencement of shipping of replacement packs and modules, the anticipated cost of the field campaign and the number of affected battery packs. Among the factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: delays in A123's ability to produce replacement modules and battery packs and other risks detailed in A123 Systems' 10-K for the year ended December 31, 2011 and other publicly available filings with the Securities and Exchange Commission. All forward-looking statements reflect A123's expectations only as of the date of this release and should not be relied upon as reflecting A123's views, expectations or beliefs at any date subsequent to the date of this release.


Fisker Automotive Reinforces Commitment to Quality with Enhanced Customer Care

Anaheim, California USA – March 26, 2012: Fisker Automotive has announced a significant upgrade to the VIP Customer Care Coverage included with the purchase of all 2012 Model Year Karma vehicles. This new initiative will apply both to existing and future 2012 Model Year Karma customers.

Fisker decided to make this enhancement in response to the fact that its high-voltage battery supplier, A123 Systems, discovered a latent manufacturing defect in some prismatic cells made in its Livonia, Michigan facility that could result in battery underperformance and decreased durability. As a result, A123 is replacing all impacted battery modules and packs for the Fisker Karma.

The enhanced customer care package includes:

A complete battery replacement at no cost for all affected 2012 MY Fisker Karma owners
All North American customers will receive a full vehicle warranty extension from 50 months/50,000 miles to 60 months/60,000 miles.
In Europe, coverage also will be extended from 48 months/100,000 km to 60 months/100,000 km.

Fisker CEO Tom LaSorda said, "The entire Fisker Team is committed to the complete satisfaction of our customers and their experience with our vehicles. As a new technology start-up Company, we have stepped up to many challenges in our short history as we have launched one of the most advanced electric vehicles with extended range in the world."

Fisker has been working closely with A123 Systems regarding a high-voltage battery power loss experienced in one of our customer's vehicles, belonging to Consumer Reports.

The problem was traced to the A123 battery pack by Fisker's Quality SWAT Team. The top management from both companies immediately established teams to work together to find the actual root cause. Fisker Automotive's CEO, Tom La Sorda visited the A123 facility to support this initiative.

"We especially want to thank our valued customers for their ongoing support and continued confidence in us," said LaSorda. These "early adopters" have the vision to embrace this new technology and become brand advocates as we launch the Fisker Karma in the many markets around the world. To them, we say a special "Thank You" and know they will appreciate these added customer care benefits," he added

Fisker will work with our distributors, retailers and customers to communicate the details and status of this voluntary battery exchange program.

In addition, Fisker's Quality SWAT Team also has been working aggressively on the next generation vehicle software upgrade to improve the vehicle experience to customers, with a release planned in the next few days.

"We have delivered over 630 vehicles to customers in North America and Europe since sales began at the end of last year. Our customers continue to report the excitement they feel when they drive their Karma. The design is so unique that the car draws attention like no other; the electric powertrain is so quiet and the handling is exhilarating. We look forward to satisfying many more customers in the months and years ahead," adds LaSorda.

ABOUT FISKER AUTOMOTIVE, INC.
Fisker Automotive is an American car company, founded in 2007, committed to producing electric vehicles with extended range (EVer) that deliver uncompromised responsible luxury. The company is designing and developing the world's first line of premium electric plug-in hybrids representing the company's firm belief that environmentally conscious cars need not sacrifice passion, style, or performance. Fisker Automotive is a global company that is redefining luxury for the modern sports car buyer. For more information on the brand and the Fisker Karma Sedan, please go to http://fiskerautomotive.com.


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