China's Wanxiang looking to diffuse political fears over A123 purchase

Wanxiang Group has insisted A123 Systems will remain an American company operationally following intense scrutiny from US lawmakers. China's largest parts manufacturer purchased A123 Systems at auction after the company fell into insolvency, but the battery maker holds a number of defense contracts with the US government. Pin Ni, head of Wanxiang's US operations, told Reuters that A123 will not be folded into the group's lithium-ion battery unit and will instead remain an American company. The $257 million Wanxiang bid excludes the A123 defense contracts.

David Vieau, A123 CEO, said many of the concerns are overblown since his company has been manufacturing batteries in China for the past six years. The company has also worked to develop battery technology with SAIC Motor Corporation, a Chinese-state owned entity. Even so, insiders close to the deal say the battery maker hasn't shared some of its more important advancements with its partners, including tech that helps increase a battery's power density.

Meanwhile, Johnson Controls, the company that lost the bid to acquire A123 Systems by $6 million, has said it continues to be interested in the bankrupt company should the US government not approve Wanxiang's purchase.

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