A Chinese firm’s investment in the troubled Waltham-based battery maker A123 may yet save the green-energy firm from becoming the next Solyndra. Yet even if A123 goes bust, it’s worth remembering that the Obama administration’s multi-billion-dollar plan to create a clean-energy industry in the United States always assumed that some grant recipients would fail.
Nonetheless, Republican critics of A123’s deal with Chinese auto-parts maker Wanxiang Group are right to highlight its risks: Wanxiang may be pouring up to $450 million into A123 in order to acquire its technology, which could lead to more powerful electric-car batteries. It would surely be preferable to keep such potentially groundbreaking technology in American hands, especially after the company received a $250 million grant from the US government. But it’s too early to say that the grant was wasted: The fresh cash infusion from China could also help preserve A123’s 1,300 jobs in Waltham and Michigan.
All people familiar with venture capital, including Mitt Romney, know that most start-ups fail, especially in emerging sectors. But venture capitalists also know those losses can be eclipsed by a few successes. In this case, success may do more than reward investors; it can also mean a new industry. That was the bet that the Obama administration made when it gave money to A123 and other promising manufacturers. The thought was that the US economy, to compete with Asian countries already investing in their own electric car supply chains, needed its own manufacturing facilities. That would cut costs for domestic automakers as they build next-generation vehicles.
Far from suggesting that advanced manufacturing is a bad bet, foreign investment into A123 reflects its long-term potential. Chinese leaders see this; in addition to Wanxiang’s move, its government is proposing a $10,000 rebate for electric car buyers. While markets haven’t yet embraced the new technology either here or abroad, America’s competitors aren’t willing to give up on the emerging sector. Neither should the United States.