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A123 Recalling $55M In EV Batteries Made In Livonia

WALTHAM, Mass. -- The Massachusetts-based battery maker A123 Systems said Monday it will spend $55 million recalling defective automotive batteries used in the Fisker Karma and other vehicles.

The batteries, produced at A123's Livonia plant, failed during a highly publicized test of the Karma by Consumer Reports, as well as in other instances.

A123 wouldn't name the other automakers who used the batteries, but said in a statement that "five transportation customer production programs ... have received products from A123 that potentially have defective cells. We are working with these customers to develop a schedule to get them replacement packs and modules to quickly remedy the situation."

The company said a welding machine in Livonia was miscalibrated during battery production. Later in the assembly process, that miscalibration caused a component in the battery to pierce a foil electrical insulating pouch. During battery use, that resulted in a short circuit and the failure of the battery.

The company said it discovered the problem after inspecting battery packs after they failed in the field.

The company said that it had begun building replacement modules and packs and expects to begin shipping them to affected customers by the end of the week.

In a prepared statement, A123 Systems David Vieau CEO said: "A123 has produced hundreds of thousands of high-quality prismatic cells at another facility, so while the initial rapid ramp up of our Michigan operations to satisfy customer demand has resulted in near-term operational challenges, we are confident in our ability to overcome these issues. We are devoting our full resources to fixing this situation and moving forward to continue delivering high-quality products to our customers. ... We have isolated the root cause of the defective cells and we are confident that we have pinpointed the source of the defect and corrected it. As a result of engineering analysis and testing, we believe this is not a safety issue, and we have determined the root cause and have taken corrective actions."

The recall affects only the so-called prismatic, or pouch-contained, cells. The cylindrical cells A123 manufactures in China, which are used by BMW and other transportation companies, as well as for grid storage and commercial systems, are not affected.

The company said it has sufficient funds to cover the cost of the recall, but in a statement said it expects "this situation will require us to adjust our fund-raising strategy."

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