Much of A123’s business depends on and is directly affected by the general
economic state of the United States and global automobile industry, and the
effect of the continued economic difficulties of major automobile manufacturers
have impacted their business. Two major auto manufacturers have recently gone
thru bankruptcy and one of their existing customers has entered into a debt
restructuring process, and it is possible that more of these companies may
encounter financial difficulties. The impact of any such financial difficulties on
the automobile industry and its suppliers are unclear and difficult to predict.
Possible effects could include reduced spending on alternative energy systems for
automobiles, a delay in the introduction of new, or the cancellation of new and
existing, hybrid and electric vehicles and programs, and a delay in the conversion
of existing batteries to lithium-ion batteries, each of which would have a material
adverse effect on their business.