Ambitious Plans
The past year has been a rollercoaster ride for the battery value chain industry, marked by significant highs and lows. Numerous independent gigafactories are progressing ambitious plans for the next decade, but many others have faltered.
NorthVolt continues to lead the industry, developing facilities in Sweden, Poland, Germany, and Canada. Their success has been bolstered by securing offtake contracts from automotive giants BMW and Volkswagen, enabling them to secure an additional $5 billion in project financing and a further $1.2 billion in convertible equity.
However, other manufacturers that were active a year ago have ceased operations, largely due to the lengthy A and B sample testing required to secure critical offtake contracts from OEMs, and to the challenges of raising finance for such capital-intensive projects.
As VP Operations at Basquevolt, Balbanuz Benavides is close to both the opportunities and obstacles facing the industry. Basquevolt aims to become the European leader in the next generation of solid-state battery technology by leveraging a proprietary gel electrolyte — a key technology that will unlock the mass deployment of electric transportation, stationary energy storage and advanced portable devices.
“We are developing sustainable, safer, and very competitive solid-state battery technology," says Benavides, “with the best materials and cells for EVs, heavy transport, renewable energy, and electronic devices. This is possible thanks to our proprietary gel electrolyte that results from more than 10 years of research at the CIC energiGUNE – one of the top research centres in Europe in energy storage and batteries.”
Proving scalability
Basquevolt’s goal now is to demonstrate the scalability of their technology. Currently, they are producing cells from A-sample production lines capable of producing up to 80 Ah capacity, which is within the range of EVs.
However, proving scalability is a crucial step. To achieve this, Basquevolt plans to establish a pilot plant with a capacity of 1GWh, effectively increasing their current capacity by 20 times. Their ultimate goal is to establish a gigafactory – a highly capital-intensive venture.
“Finance is a challenge at the stage we are now at,” admits Benavides. “But on the other side, we know our proprietary electrolyte technology can benefit other cell manufacturers.
Gaining traction with OEMs
In today’s rapidly evolving landscape, gaining traction with OEMs is not just a goal, but a necessity. This is a truth well understood by Ricardo Rodriguez, Chief Financial Officer & Treasurer of Aspen Aerogels, a technology leader in sustainability and electrification solutions, including the company’s PyroThin® Advanced Thermal Barriers which enhance EV battery safety and pack performance.
Despite increasing demand for these solutions, accelerating scale is a complicated process. “Introducing new technologies into an EV product roadmap can be tricky,” says Rodriguez. “If you’re trying to sell something to an OEM, the only time to really do it is when there’s a meaningful mid-cycle refresh on the vehicle platform.”
“Tier 1 supplier agreements are evolving to be as vague and non-committal as possible. That does pose a challenge.”
Ricardo Rodriguez, Chief Financial Officer & Treasurer, Aspen Aerogels
This timing constraint can pose challenges. For instance, Aspen Aerogels is working with clients to solve serious thermal runaway problems. However, the complex nature of automobile manufacturing often means it’s not always possible to implement the company’s solutions immediately.
“Given how difficult the overall industrial machine of making a car is, you might wait two years until the scheduled refresh is online,” continues Rodriguez, highlighting the need for patience, strategic planning, and a deep understanding of the OEM product lifecycle.
Rodriguez also believes that the industry could benefit from more transparency and commitment from OEMs. “It would be great if OEMs could be more forthcoming with offtake agreements. That would allow a lot more to get financed. Tier 1 supplier agreements are evolving to be as vague and non-committal as possible. That does pose a challenge.”
In today’s investment climate, it’s clear the importance of offtake agreements with OEMs cannot be overstated. These commitments serve as a lifeline, providing the financial assurance that investors seek, even for successful companies like Basquevolt and Aspen Aerogels.
Securing finance
Basquevolt’s initial funding came from a diverse range of private and public institutions, providing a critical foundation to advance their technology, accelerate their R&D efforts, optimise their manufacturing processes, and position them well for further investment.
“At this stage, we’re looking forward to securing A series funding by the end of this year,” says Benavides. “This will allow us to continue with our plans to develop and scale up the pilot plant, and then move on to the gigafactory. Despite the increasing challenges in the funding environment compared to the previous year, we see opportunities for growth in 2024.”
“Despite the increasing challenges in the funding environment, we see opportunities for growth in 2024.”
Balbanuz Benavides, VP Operations, Basquevolt
As a publicly listed company, Aspen Aerogels has had to adjust its plans to separate itself from other sustainability related public equity investments. The public equity markets have been even more turbulent than the private capital markets over the last two years. However, when it comes to funding future growth, Rodriguezi still sees strong support coming from Aspen Aerogel’s original investor base.
“We went public in 2014,” says Rodriguez, “and we’re fortunate that many of our investors from then remain loyal supporters of the company,” while admitting that the past two years has taught Aspen Aerogel a tough lesson on the cost of capital.
“In many ways, it was a blessing in disguise,” says Rodriguez. “It forced us to push out all capex and accelerate our path to profitability. If you were to compare the projections we’re looking at now – versus 2021 when our stock hit an all-time high – the company is now profitable and generating positive cash flow two years ahead of our original projections. We’re also deploying about half the amount of capital.”
Spotlight on government support
Elsewhere in the evolving narrative of the battery value chain, the spotlight is increasingly being turned on how governments are capitalising the industry. Are public institutions truly stepping up to the plate?
“If we compare the support that is given in the US and Europe, Europe has been a follower,” says Benavides. “The intention is there. Policymakers are very clear about sustainability. But in terms of financial support we’ve been behind the US. The Inflation Reduction Act has been a wake-up call for Europe’s governments, because they are seeing so many companies now aiming to invest in the US.”
“Policymakers are very clear about sustainability. But in terms of financial support we’ve been behind the U.S.”
Balbanuz Benavides, VP Operations, Basquevolt
As both Aspen Aerogels and Basquevolt continue to navigate the complex landscape of the EV market, their journey serves as a testament to the resilience and innovation required in this rapidly evolving industry.
