The pending purchase of a bankrupt maker of hybrid cars by the parent of A123 Systems provides an opportunity for A123, a Waltham battery maker, to bolster its ambitions to become a player in the hybrid and electric car markets, analysts and a company executive said.
A123’s owner, the American subsidiary of China’s Wanxiang Group, on Friday offered $149.2 million to buy Fisker Automotive in an auction overseen by the US Bankruptcy Court in Delaware, beating out Hybrid Tech Holdings LLC after 19 rounds of bidding. The purchase of the California automaker is scheduled to go before a judge for approval Tuesday.
At one time, A123 supplied batteries for Fisker’s Karma hybrid, and restarting Fisker’s production line would allow A123 to renew its focus on the automotive market. In recent years, the company shifted toward building more large-scale batteries for the electric grid and for commercial vehicles.
Pin Ni, head of Wanxiang America Corp., said the Fisker purchase could help propel the long-term growth that his company promised when it bought A123 out of bankruptcy about a year ago.
“One of the key reasons we wanted to buy this is A123,” Ni said. “A123 is the only supplier to Fisker, and if Fisker wants to make a car in the short term, it was just going to be us, one way or another.”
Wanxiang’s plan is to start making the $100,000 luxury Karma, while also looking to build a hybrid car that everyday customers wouldbuy, Ni said. That car would probably be powered by A123’s batteries.
“Fisker will be the foundation for the electrical car for Wanxiang,” Ni said.
Wanxiang, which owns several parts factories in the United States, has long been a presence in the auto industry, providing parts for one out of three cars made in America.
In more recent years, the company has invested in clean technologies, including advanced batteries and solar panels.
The purchase of Fisker may signal that Wanxiang is not as confident in the performance of A123’s grid-storage division and may be trying to bolster other divisions of the company, said Joshua Paradise, an independent consultant in Boston who used to follow clean technology companies for the Wall Street firm Morgan Stanley
A123’s grid storage division, called A123 Energy Solutions, employs roughly 125 people in Massachusetts.
“Perhaps they’re not seeing the volume or the sales they want to see,” he said.
The interest in Fisker could also stem from the dream of Wanxiang’s founder, Lu Guanqiu, to build cars. But given the Karma’s previously anemic sales and high cost, the acquisition doesn’t seem to make business sense, Paradise said.
“Fisker is a vanity car,” Paradise said, “and this looks like a vanity purchase.”
Cosmin Laslau, an analyst for energy storage at Lux Research in Boston, said a revived Fisker would be “all upside” for A123, but agreed that Wanxiang faces challenges to making the deal work. He estimated it could take hundreds of millions of dollars of investment by Wanxiang to revive and grow Fisker.
“It is a risky play for Wanxiang and A123,” Laslau said. “Fisker is going to need a whole lot more money.”
Fisker also has outstanding bills to pay, including a $168 million Department of Energy loan bought last year by Hybrid Tech, the failed bidder.
“Hybrid will consider taking all necessary steps and appropriate measures to protect its interests in this matter,” the company said in a statement it issued Friday.
Fisker’s A123-powered cars also would have to compete against those from Tesla Motors, whose popular hybrids run on Panasonic technology, and those from General Motors, which makes the Chevy Volt, powered with LG Chem technology.
“The battery business for cars is all about the right partnership, “Laslau said. “It doesn’t matter if you make a great battery if you don’t have the right partnership.”