Battery builder A123 Systems that won $249 million federal grant files for bankruptcy

No company has embodied Washington's hope for an American-built electric vehicle business like A123 Systems. The Massachusetts-based company was supposed to become the leading home-grown supplier of lithium-ion batteries for automakers in the United States and around the world -- fueled in part by a $249 million grant from the Obama administration. Today, A123 Systems filed for bankruptcy, saying much of its assets would be sold after losing $857 million over the past several years. Here's why it failed.

That photo above comes from an April 2010 speech in the Rose Garden of the White House, where President Barack Obama hailed A123 with Chief Executive David Vieux on his left, for its plans to create 2,000 jobs by 2012. A123 also won $125 million in grants and tax credits from Michigan state officials for building plants there. I was in the audience covering the event, and walked out of the White House while talking to two new A123 employees -- both grateful engineers who had lost jobs in the recession and spent months e-mailing resumes with few responses.

When A123 opened its plant in Michigan later that year, Obama called again to congratulate Vieux: "This is about the birth of an entire new industry in America -- an industry that's going to be central to the next generation of cars," Obama said according to a transcript released by the White House. "When folks lift up their hoods on the cars of the future, I want them to see engines and batteries that are stamped: Made in America."