California Autos Examiner

Tuesday, August 19, 2008

Getting the Lead Out: Manufacturers Sue Battery Makers

Chrysler is suing Johnson Controls because of a discrepancy over lead content and Daimler has filed a suit against Cobasys LLC, alleging the company won't provide battery packs as agreed for a planned Mercedes hybrid sport-utility vehicle. What gives?

Chrysler is having a spot of trouble with a number of suppliers, not just Johnson Controls. Dana Holding Corp. is trying to get out of its existing Chrysler contracts because it says the contracts are unprofitable. Plastech Engineered Products declared bankruptcy shortly after Chrysler attempted to pull its tooling and machines from Platech's plants. Suppliers have indicated concern about Chrysler's future and are hesitant to seek further work from the company. Also, some companies may have been rubbed the wrong way by new purchasing chief John Campi, who has followed Nardelli from GE to Home Depot to Chrysler. From what I've read online, folks weren't happy with Campi's idea to import batteries from India. Many considered such a plan to be ill conceived.

The Mercedes/Cobasys relationship is a bit different. Daimler paid Cobasys $6 million in connection with development of the batteries which Cobasys later said it could not deliver, mostly because it could not get funding from Chevron Technology Ventures to meet production commitments.

In tough economic times, relationships can become strained. I'll be watching to see how these suits resolve themselves and if there are more on the way.

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