I have been pondering this question for quite some time and cant figure it out. Maybe because I am an engineer and not a businessman. From a business (read monetary) standpoint, why would A123 systems only cell () to certain manufacturers? I understand they can probably sell the cells for a little more to those manufacturers if they sign a contract saying that they wont sell to anyone else. It seems that the revenue from this slight increase in sales price would be A LOT less than the revenue generated by openening up the market to Makita, Milwaukee, Porter-Cable, Craftsman, custom pack builders (E-vehicles: Bikes, scooters, RC hobby), Laptop manufacturers, etc. I dont get it.

Anyone with more business sense then I care to explain?

Here here ! ! !

BTW you cant tell Up East types how to do business !

or anything else for that matter.

Then again it may be Dewalt that is the Problem

Limited Exposure= More demand
More demand = higher prices
Higher prices = more short term profits

I am no expert but this is my view about the whole scenario. If and when the A123 and E-moli cells become mainstream (give it another year) you will see a drastic price reduction, just look at Lipo's their prices are slowly dropping and quality and capacity are increasing.

cooper998

What cooper998 said.

Originally Posted by Crashaholic

I have been pondering this question for quite some time and cant figure it out. Maybe because I am an engineer and not a businessman. From a business (read monetary) standpoint, why would A123 systems only cell () to certain manufacturers? I understand they can probably sell the cells for a little more to those manufacturers if they sign a contract saying that they wont sell to anyone else. It seems that the revenue from this slight increase in sales price would be A LOT less than the revenue generated by openening up the market to Makita, Milwaukee, Porter-Cable, Craftsman, custom pack builders (E-vehicles: Bikes, scooters, RC hobby), Laptop manufacturers, etc. I dont get it.

Anyone with more business sense then I care to explain?

Easy enough to explain. Controlled outlets mean controlled pricing and quantities. You can meet your obligations for supply, while maintaining the price structure you desire. If you over extend on a new product, you risk dismal failure due to complaints about variable pricing and lack of supply. I dont think it is a 'create a artificial shortage to drive up price' thing.

Originally Posted by cooper998

Limited Exposure= More demand
More demand = higher prices
Higher prices = more short term profits

The cost of producing batteries drops rapidly when production volumes go up. The demand is already there and since it is cutting edge technolgy, I think they can keep the prices fairly high. Not much competing with it right now. I would think they would try to capture the market NOW instead of waiting for the next best thing to come along. LiFe is not going to be the "best" for long at the rate battery technology is changing. Still dont get it. Anyone else?

I would hope that they would not be sacrificing "more short term profits" at the expense of more long term profits. Then again, maybe they need more $$$ for near term R&D or to build a new factory. Maybe their factory is already running at 100% and noone else can produce them... Just babbling...

Originally Posted by ImaBiggles

Easy enough to explain. Controlled outlets mean controlled pricing and quantities.

But isnt controlling the technology enough to control the pricing? Wouldnt they be able to set a price and say "take it or leave it" to everyone?

Are you saying you dont think they CAN produce any more than the current output?

I hope those chinese factories that steal everything else, start to produce A123 cells.

For a company like A123, the action is in transportation and industrial use. The "holy grail" is of course electric cars
http://online.wsj.com/public/article...f_main_tff_top

RC while interesting can never generate the volume of a GM or DeWalt. If fact it looks like A123 as a small start up is having a hard time keeping up with the current demand. The venture capital guys and Uncle Sam are investing millions to ramp it up.

RC with the retail arm A123 Racing had to be a low volume distraction, so why not sell it to Horizon Hobby?

Brad

Originally Posted by Eagleburger

I hope those chinese factories that steal everything else, start to produce A123 cells.

In fact these A123 cell are manufactured by a Chinese battery factory OEM.

I think I saw where Horizon Hobby will be the distributor, we used to say that exclusive rights leads to price fixing at least till the competition can really compete.

Eric B.

Originally Posted by rcmtl

In fact these A123 cell are manufactured by a Chinese battery factory OEM.

Isn't almost everything made in China?

Originally Posted by AirX

Hobby Lobby price fixing?

Eric B.

Hobby Lobby? Are they selling A123s?

I thought it was Hobby Lobby.

Eric B.

I think you are thinking of Horizon