As Free Beacon notes, A123 Systems received a $249 million grant from the Obama administration.

What are the odds we will recoup our $249 million?

(DFP) — A123 Systems, the maker of electric vehicle battery packs, is replacing potential defective battery modules and packs made at its Livonia plant, in a campaign the company expects will cost about $55 million.

CEO David Vieau said company officials discovered the problem in certain prismatic cells late last week. The defect appeared to be caused by one of four automated welding machines, he said

“The actual defect rate is a fraction of what is produced from that machine, but once you put those defective cells into a pack, it increases the probability that a given pack could be defective,” Vieau said.

He added that the cost of replacing the batteries will “require us to adjust our fundraising strategy.” The company will give more detail on the defect’s financial impact during its next quarterly earnings call, he said.

The company’s shares tumbled more than 11% to $1.50 but early this afternoon.