Advanced battery maker A123 Systems Inc. filed for bankruptcy protection Tuesday after burning through more than $100 million in taxpayer money, thrusting the Waltham company into the middle of the presidential sparring over energy and economic policies.
Shortly after A123 filed in federal court in Delaware, the campaign of former Massachusetts governor Mitt Romney renewed its attacks on President Obama’s support, through federal grants and loans, of emerging clean energy companies. In the first presidential debate, Romney sharply criticized Obama for the failures of government-backed firms, including California solar panel
maker Solyndra LLC, which defaulted on more than $500 million in federally guaranteed loans.
“A123’s bankruptcy is yet another failure for the president’s disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply does not work,” said Andrea Saul, a spokeswoman for Romney.
The Obama campaign responded that Romney would provide billions of dollars in subsidies to oil companies, while neglecting investments in new technologies that could reduce the nation’s dependence on foreign oil and reshape the world’s energy future.
“Despite the bipartisan support for a clean energy economy,” said Obama campaign spokesman Michael Czin, “Romney would give up on this progress, abandon the president’s goal of out-innovating the rest of the world, and cede those jobs to countries like China and Germany.”
A123’s bankruptcy filing represented a stunning fall for a company once viewed by both the Obama and Governor Deval Patrick administrations as a key component of a clean-energy driven economy. The Department of Energy awarded nearly $250 million in stimulus money to A123 to build plants in Michigan, more than half of which was spent by the company.
Massachusetts made a loan of $5 million to A123. Richard K. Sullivan Jr., state secretary of Energy and Environmental Affairs, said his office would monitor the proceedings and recoup the state’s money if possible.
A123 filed for Chapter 11 bankruptcy, which means it could reorganize and emerge from the process as an operating company. A123 employs 1,763 people worldwide, including 322 in Massachusetts.
As governor, Romney did not provide taxpayer money to A123, according to the state energy department. But a few weeks after taking office in 2003, Romney announced $9 million in grants for alternative energy companies, including Lowell solar cell maker Konarka Technologies Inc., which went bankrupt earlier this year.
A123’s bankruptcy was largely the result of slower-than-expected adoption of hybrid and electric vehicles as the economy struggled and fuel prices moderated. A123 tried to shift away from autos, expanding into power storage for utilities and other markets, but that came too late, analysts said.
“It cost AOne more to make the product than it could sell it for,” said Andrea James, senior research analyst at Dougherty & Co. LLC in Minneapolis. “It does no good to be an industry leader in a money losing business.”
A123 warned investors in recent months that it was in danger of running out of cash. But in August, it looked like it found a savior in Wanxiang Group, a Chinese autoparts conglomerate that agreed to invest up to $465 million. Under the pact, Wanxiang could have ended up with control of A123.
That deal ended with A123’s bankruptcy filing. Instead, A123 said it would sell the assets of its automotive business — including plants in Livonia and Romulus, Mich. — to a rival US battery maker, Johnson Controls Inc. of Milwaukee. The deal is valued at $125 million.
The deal needs to be approved by the court, which could award A123 assets to a higher bidder, if one emerges.
In a statement, A123 chief executive David Vieau said the Wanxiang deal ran into unspecified, but “significant challenges to its completion.” Vieau and the company declined further comment.
A123’s deal with Wanxiang drew sharp criticism from congressional Republicans because it risked giving a Chinese company control of cutting edge technology developed with US taxpayer money. The deal would have required several approvals by the US and Chinese governments, a potentially time consuming process.
Republicans senators Charles Grassley and John Thune also criticized A123’s bankruptcy Tuesday as a bad deal that has left taxpayers hanging.
“The bankruptcy raises the prospect that the taxpayers will get little or no return on their investment in A123 and will lose millions of dollars,” Grassley said.
A123 listed assets of about $460 million, debts of more than $376 million, and 86 pages of creditors in its filing.
Whether concerns about China killed the Wanxiang deal is unclear, but possible, said Steve Minnihan, an analyst at Lux Research in Boston.
Theodore O’Neill, an analyst with Litchield Hills Research in Connecticut, said he would not doubt that the Energy Department played a role in the A123’s bankruptcy filing and asset sales to Johnson Controls. It was a way to keep the taxpayers’ money in clean energy while keeping the technology in American hands, analysts said.
Jen Stutsman, an Energy Department spokeswoman, said the deal was worked out by Johnson and A123. “These are business decisions made by the companies themselves.”
A123 raised about $380 million in an initial public stock offering in 2009. At its peak three years ago, A123 stock traded above $25 a share. It closed Tuesday at 6 cents.Erin Ailworth can be reached at firstname.lastname@example.org. Follow her on Twitter @ailworth.