A123 Systems' Battery Caused GM Explosion

It was revealed on Wednesday that an explosion at General Motors'

Warren Technical Center in Michigan was caused by a lithium-ion battery manufactured by A123 Systems

. GM confirmed that the battery leaked chemical gases into the lab, which caused an explosion. Rather bizarrely, the battery itself remained intact. It was under extreme testing when the explosion occurred. The results of the explosion were that fire crews had to be called to the battery systems lab on Wednesday morning. According to Warren Deputy Fire Chief Gary Wilkinson, the crews found a small fire and smoke when they first arrived, and two workers were still inside. One of those employees was admitted to hospital with chemical burns, though the injuries are not thought to be life threatening. This is the kind of bad news that A123 Systems just did not need right now. It has already had to deal with the fact that, on March 26, five people received batteries with potentially defective cells. Those batteries were manufactured in Livonia, Michigan. Subsequently, AONE said that it would be spending $55 million replacing defective batteries. While the company believes that it has found the problem (the incorrect calibration of an automated welding machine), the announcement saw AONE shares fall to an all-time low of $1.30. As if all of that isn't bad enough, AONE found itself slapped with a class-action lawsuit last week, filed in Massachusetts by shareholders. In response to the fact that GM's US share averaged 17.5% in 1Q12, a modern-era low and a level not seen since 1922, Thursday saw Morgan Stanley publish a research report stating that the old GM would pull out all the stops to hold onto any amount of market share. The new GM will take good pricing over market share any day of the week. Management view market share as an OUTPUT of a successful product strategy, not an INPUT of one. "There's no point in dividing one number by another if the impact on the bottom line is a diminishing return." Morgan Stanley added that GM's transition from a share driven company to a product driven company is evolving faster than consumer (and investor) perceptions can keep up. This will lead to lumpiness on monthly share results as GM's strategic compass finds its true north.