The Strategic Materials Advisory Council, in a letter to U.S. Treasury Secretary Timothy Geithner, warned that is the transaction went through there would be a loss of U.S. jobs and a transfer of U.S. technologies "critical to our nation's infrastructure and military hardware to China."
"For over 30 years, China has pursued an overt economic strategy of acquiring both natural resources and promising technologies," SMAC said. "This strategy creates Chinese dominance of entire supply chains for selected materials and related technologies.
"Allowing Wanxiang (Group Corp.) to acquire A123 Systems would continue this trend and make the U.S. dependent on an unreliable foreign source for yet another critical defense component."
"The U.S. must not allow China to acquire a similar position with A123's lithium-ion battery technology and dominate its supply chain as well," it said.
A123 Systems, which is in Chapter 11 bankruptcy, manufactures advanced lithium-ion batteries and are used in civilian and military vehicles, renewable energy sources, and deployable power systems. The U.S. government gave nearly $250 million in stimulus grants to the company.
A federal court last month interim approval to A123 Systems receiving a $50 million loan from Wanxiang, which has said it wants to bid for the U.S. company's assets.
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