Paranoia or well-founded fears?

Some U.S. auto executives are expressing concern that the Chinese Wanxiang Group's investment in struggling lithium-ion battery maker A123 Systems may put trade secrets at risk. China may get first dibs on lithium-ion battery technology advancements if Wanxiang Group moves some of A123's research and development operations to China, Reuters reports, citing executives that declined to be identified (but Bob Lutz has gone public with his criticism). Pin Ni, Wanxiang's head of U.S. operations, downplayed such concerns, telling Reuters that the company will "do what's best" for A123.

Earlier this month, A123 reached an agreement with Wanxiang Group that could be worth as much as $450 million and may give Wanxiang Group as much as an 80 percent stake in A123. Republican House of Representative Cliff Stearns said at the time that the deal may compromise trade secrets of a company that has received Department of Energy funding.

This year, A123 has been hampered by issues such as a battery recall and lower than expected electric vehicle sales. The company, which was founded in 2001, said in a late May filing with the Securities and Exchange Commission that it expressed "doubt" over being able to continue after losing its primary line of credit. A123's customers include General Motors, BMW and Fisker.


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