It's going to be another disappointing quarter for one of the highest profile battery makers in the market. A123 Systems
This is a long-running trend for A123 Systems, which has come up with excuse after excuse for why customer demand isn't coming in as expected. The bottom line is that the bet the company made on batteries was probably too big and too early.
The partnerships A123 has built are definitely impressive and may pay off eventually. Fisker, GM
The story isn't exclusive to A123 Systems. The build-out of battery capacity began at a fevered pitch when manufacturers began leveraging Department of Energy money to expand. A123 got a $249 million DOE grant and Ener1 got $118.5 million to build capacity in the hope that economies of scale would bring down costs and make electric vehicles more competitive.
But electric vehicles have suffered from a chicken-and-egg conundrum of weak demand and high costs. Costs won't fall until demand picks up and demand won't pick up until costs fall. So Nissan, Ford
Up to this point, Tesla Motors
The lower guidance for A123 Systems doesn't come as a huge surprise to those following the industry. I pointed out recently that chasing the mass market is a risky bet for companies like A123 that don't have the balance sheet to make mistakes. Shareholders who have hung on have found that out the hard way.
Right now A123 Systems and Ener1 are against the ropes while smaller rival Valence Technology
Fool contributor Travis Hoium does not have a position in any company mentioned and does not own an electric vehicle. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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