A123 Announces Battery Defect
Fisker to Replace all Karma Batteries

After lithium-ion battery supplier A123 announced that they have discovered manufacturing defects in some of the battery cells produced for the Fisker Karma by their new Livonia, Michigan plant, Fisker has started to roll out a battery replacement program for all 2012 model year Karmas. The manufacturing problem was discovered during the investigation of the breakdown of the Karma that Consumers Reports had purchased for testing.

A123’s CEO, David Vieau made the following statement:

“Recently, A123 has discovered that some prismatic cells made in our Livonia facility may contain a defect which can result in premature failure of a battery pack or module that includes a defective cell. 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.”

Fisker spun the news as part of an upgrade to their VIP Customer Care Coverage program:

The enhanced customer care package includes:

  • A complete battery replacement at no cost for all affected 2012 MYFisker Karma owners
  • All North American customers will receive a full vehicle warrantyextension from 50 months/50,000 miles to 60 months/60,000 miles.In Europe, coverage also will be extended from 48 months/100,000 km to 60 months/100,000 km.

No word on how much this is costing Fisker but A123 put a price tag of $55 million on their costs to replace every battery that they’ve sold so far to Fisker. Fisker recently announced that they’ve built 2,000 Karmas. That $55M works out to a bit more than $27K for each car. To bear the financial burden, A123 says that the battery replacement program will be “funded over the next several quarters.”

Press releases below the jump.

A123 Systems Launches Replacement Program for Potentially Defective Battery Packs and Modules

WALTHAM, Mass., March 26, 2012 (GLOBE NEWSWIRE) — A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate® lithium iron phosphate batteries and systems, today announced that the company has launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at A123’s Livonia, Mich. manufacturing facility. A123 has begun building replacement modules and packs and expects to begin shipping them to impacted customers this week. The company anticipates that the cost of replacing the affected customer modules and packs will be approximately $55 million and expects it will be funded over the next several quarters. A123 will host a conference call at 10:30 a.m. EDT.

“Recently, A123 has discovered that some prismatic cells made in our Livonia facility may contain a defect which can result in premature failure of a battery pack or module that includes a defective cell. 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,” said David Vieau, CEO of A123 Systems. “We are working to get replacement packs and modules to impacted customers as quickly as possible. It is important to note that this defect has been discovered only in some prismatic cells manufactured at our Livonia facility. Prismatic cells produced at another A123 facility are not impacted. Further, the cylindrical cells we make at our facilities in China for a number of other transportation programs, as well as the majority of our grid energy storage systems and commercial applications, are also not affected by this defect.”

Vieau continued, “In parallel with this field campaign, as we have discussed previously, we continue to implement actions that we believe will improve operations and minimize the possibility of quality issues going forward. This includes hiring a Chief Operating Officer, Ed Kopkowski, who has more than 25 years of global management and operational leadership in improving quality and reducing costs. 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.”

Additional information and ongoing updates about A123’s Livonia prismatic cell field campaign can be found online at http://www.a123systems.com/media-room-service-campaign.htm.

Fisker Automotive Reinforces Commitment to Quality with Enhanced Customer Care

Anaheim, California USA – March 26, 2012: Fisker Automotive has announced a significant upgrade to the VIP Customer Care Coverage included with the purchase of all 2012 Model Year Karma vehicles. This new initiative will apply both to existing and future 2012 Model Year Karma customers.

Fisker decided to make this enhancement in response to the fact that its high-voltage battery supplier, A123 Systems, discovered a latent manufacturing defect in some prismatic cells made in its Livonia, Michigan facility that could result in battery underperformance and decreased durability. As a result, A123 is replacing all impacted battery modules and packs for the Fisker Karma.

Read A123 Systems’ press release here or at http://www.a123systems.com

The enhanced customer care package includes:

  • A complete battery replacement at no cost for all affected 2012 MY

Fisker Karma owners

  • All North American customers will receive a full vehicle warranty

extension from 50 months/50,000 miles to 60 months/60,000 miles.

In Europe, coverage also will be extended from 48 months/100,000

km to 60 months/100,000 km.

Fisker CEO Tom LaSorda said, “The entire Fisker Team is committed to the complete satisfaction of our customers and their experience with our vehicles. As a new technology start-up Company, we have stepped up to many challenges in our short history as we have launched one of the most advanced electric vehicles with extended range in the world.”

Fisker has been working closely with A123 Systems regarding a high-voltage battery power loss experienced in one of our customer’s vehicles, belonging to Consumer Reports.

The problem was traced to the A123 battery pack by Fisker’s Quality SWAT Team. The top management from both companies immediately established teams to work together to find the actual root cause. Fisker Automotive’s CEO, Tom La Sorda visited the A123 facility to support this initiative.

“We especially want to thank our valued customers for their ongoing support and continued confidence in us,” said LaSorda. These “early adopters” have the vision to embrace this new technology and become brand advocates as we launch the Fisker Karma in the many markets around the world. To them, we say a special “Thank You” and know they will appreciate these added customer care benefits,” he added

Fisker will work with our distributors, retailers and customers to communicate the details and status of this voluntary battery exchange program.

In addition, Fisker’s Quality SWAT Team also has been working aggressively on the next generation vehicle software upgrade to improve the vehicle experience to customers, with a release planned in the next few days.

“We have delivered over 630 vehicles to customers in North America and Europe since sales began at the end of last year. Our customers continue to report the excitement they feel when they drive their Karma. The design is so unique that the car draws attention like no other; the electric powertrain is so quiet and the handling is exhilarating. We look forward to satisfying many more customers in the months and years ahead,” adds LaSorda.

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