Mercedes sues Cobasys for failure to deliver batteries

Mercedes Benz filed a law suit against battery supplier Cobasys last week for failure to deliver batteries as required under their contract. The holdup in supply could push back production of the company's hybrid ML450 SUV (concept pictured), even though it is not due to hit the streets until late in 2009.

In its lawsuit, Mercedes is claiming that Cobasys misrepresented its own financial state to preserve its contract with Mercedes Benz. It is implied that the German carmaker would have switched suppliers if it had known that Cobasys was in the poor financial position that has since been revealed. The suit also alleges Mercedes Benz has paid Cobasys $6 million in advance for batteries to be produced, but Cobasys denies there was ever an agreement to make the batteries, and refuses to do so, reports Automotive News.

Cobasys is owned in part by Energy Conversion Devices, Inc. and a Chevron subsidiary the company uses for venture capital funding. It is also a supplier for GM's range of mild hybrids, including the Malibu. There was even speculation in early June that General Motors might buy Cobasys to help ensure its own battery supply, which was being jeopardized by the company's financial difficulties.

The company's two owners have been arbitrating a fight over the company since last September. Chevron has since accused ECD of failing to fund Cobasys adequately and of not honoring Chevron’s preferred interest in Cobasys.