WALTHAM, MASS. (Dec. 10, 11:45 a.m. ET) — China's Wanxiang Group Corp. is expected to take over lithium-ion battery company A123 Systems Inc. now that Johnson Controls Inc. has backed out of a competing offer to buy the firm's assets in a bankruptcy auction.

A123 — with headquarters in Waltham, Mass., and battery production in Romulus, Mich., and Livonia, Mich. — entered Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in Delaware in October, with a plan in place for JCI to buy the assets in a deal worth $125 million.

Wanxiang, based in Hangzhou, entered a competing bid of $257 million and representatives from A123 announced Dec. 9 that they accepted that higher offer. JCI said in a press release that it was withdrawing from the process.

"While A123's automotive and government assets were complementary to Johnson Controls' portfolio and aligned with our long-term goals, Wanxiang's offer was beyond the value of those assets to Johnson Controls," said Alex Molinaroli, the president of JCI's power systems unit, based in Glendale, Wis.

A hearing on Wanxiang's offer is set for Dec. 11.

Interest in battery technology is continuing to grow in the U.S., however, despite the bankruptcy by A123, one of the first auto-focused lithium-ion battery makers in North America.

Lithium-ion batteries use a polymer film at the core of every cell, and also use plastics extensively in structural parts, cooling systems and electrical connections.

JCI is part of a $120 million research project combining business, government and university researchers to improve battery storage and create next-general battery technology.

The U.S. Department of Energy's Argonne National Laboratory will lead the Joint Center for Energy Storage Research, which will combine the research and development operations of five Energy Department laboratories, four private firms and five universities.

The Argonne lab in suburban Chicago will host one development project site while two others are set for Ann Arbor, Mich., at the University of Michigan and Holland, Mich., home to Michigan State University's Bio-Economy Institute, federal officials announced Nov. 30.

Holland is also home to JCI's lithium-ion battery manufacturing facility.

Other partners in JCESR are Dow Chemical Co. of Midland, Mich., Applied Materials Inc. of Santa Clara, Calif., Clean Energy Trust of Chicago, Ill., Northwestern University, the University of Chicago, and University of Illinois' Urbana-Champaign and Chicago campuses. Dow also has its own joint venture lithium-ion battery operation, Dow Kokam LLC of Midland.