A123 Systems

Electric vehicles not as easy as A123

November 15, 2010: 3:00 AM ET

The hot battery maker has a balance sheet problem -- lots of inventory of expensive EV batteries. It looks like the adoption curve for electric vehicles is flatter than anyone thought.

Battery maker A123 was supposed to rev up the electric vehicle revolution. When the company went public in September 2009, Wall Street loved it. But recently, A123 (AONE) has had a hard time pleasing the Street, missing earnings estimates even though it's producing a good product on schedule. Why?

Basically, A123 was ready for customers that couldn't ramp up production of electric cars when they predicted. This meant that A123 couldn't sell the number of batteries they'd hoped in the time frame that they expected to sell them.

"They need to wait for the customers to have their factories up and running before they're ready to sell batteries to customers," says Ben Schuman, a senior research analyst for Pacific Crest Securities who specializes in energy management technologies. More

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