Tag Archives: Altair Nanotechnologies

Crowded Lithium-ion Battery Market Sends Ener1 (and Others) Out to Sea, Yielding Bargains in its Wake

Posted on by

Lithium-ion (Li-ion) car and grid storage battery manufacturer Ener1 declared bankruptcy in January after massive debt and limited revenues became too much of a burden for the fledgling company (client registration required) to shoulder. This event should come as no surprise to investors or the industry. Ener1 has been in the headlines several times over the last six months due to its failed investment in Think and its December 2011 delisting from the Nasdaq exchange (client registration required). This bankruptcy adds to the woes (client registration required) of the U.S. Department of Energy, which had provided Ener1 with a $118.5 million matching grant in August 2009. This recent news reiterates the fact that companies touting government support as a major feather in their cap may be enticing investors with false wares. In these cases, government funding provides just enough capital for a company to prove its technical viability despite failing commercially, teeing it up at a bargain price to larger players and investors in the market, much like Beacon Power’s recent fire sale to private equity firm Rockland Capital.

 Ener1 is not the only company struggling within the crowded Li-ion battery space. On January 11, 2012, Altairnano Nanotechnologies (client registration required) was again warned by Nasdaq to get its share price above $1 or it will also be delisted from the exchange. Li-ion batteries must compete not only with each other, but also with the negative press that pounces on the slightest safety slipup (client registration required), including the Chevy Volt that caught fire (client registration required), and the evacuation at the new Saft battery manufacturing plant in Florida. As with many maturing industries, there will be many failures before a few winners emerge. Amidst a pending oversupply of Li-ion batteries and intense competition from low cost manufacturers in China, readers should be wary of Li-ion battery suppliers without a clear competitive advantage or a proven foothold in the market. Also, watch for Chinese companies blessed with deep pockets, government support, and no aversion to low margins. Many are eager to acquire valuable IP and assets from recently broke or struggling companies in order to rid themselves of the low-quality stigma attached to Chinese Li-ion batteries. Case in point: Boston Power’s recent move to China (client registration required).

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Johnson Controls looks to break with Saft

Posted on by

Last week, Johnson Controls (JCI) filed a petition to dissolve its joint venture with the French battery-maker Saft, which is opposing the proposed breakup. According to a Saft press release, JCI would like to expand the markets for JCI-Saft beyond the originally planned automotive applications, while Saft would prefer the JV not encroach on areas “where Saft is already strongly positioned and enjoys a rapid development.” The JV has found some traction in the automotive market, including agreements to supply batteries to both Ford and Daimler, and both sides indicated that the recent events will not compromise current supply and development relationships.

The dissolution of JCI-Saft would significantly shakeup the intensely competitive electric-vehicle battery market. While governmental support has primed an aggressive build-out for lithium-ion (Li-ion) batteries destined for electric vehicles, growth has been slow and the number of players grabbing firm supply contracts are few and far between (see the report: Small Batteries, Big Sales: The Unlikely Winners in the Electric Vehicle Market – client registration required). LG Chem has emerged as a clear front-runner, while other substantial suppliers like SB LiMotive and JCI-Saft have found more limited success. Trailing the pack are emerging suppliers such as A123 and Ener1 (see also the May 11, 2011 LREVJ – client registration required) which have taken major financial hits due to overly aggressive estimates regarding their electric-vehicle businesses. JCI likely surveyed the landscape and saw that it would be wise to target applications outside of the automotive realm to find more market opportunities for the JV’s Li-ion batteries.

While the consequences of the falling-out remain to be seen, this scenario shows that both parties don’t view the automotive market as the strong growth opportunity that likely drove the original partnership. JCI realizes that it has already missed out on the opportunity to take the initial front-runner position for automotive applications, while Saft appears not to value the automotive market as a big enough opportunity to risk exposing its utility business to JCI via JCI-Saft, where it could be forced to cannibalize existing business.

Additionally, virtually all the major Li-ion producers have recognized that applications outside of automotive will be crucial to justify the major build-out of capacity – with grid storage the most common target. Examples include A123 and Altair Nanotechnologies, both of which made rapid shifts to grid applications once their automotive efforts slowed. While grid storage could be a significant area of growth for Li-ion (see the report: Grid Storage – Islands of Opportunity in a Sea of Failure – client registration required), it remains nearly as uncertain as the automotive market, as the U.S. Federal Energy Regulatory Commission (FERC) still has not determined how energy storage for the grid will be regulated. FERC is considering a pay-for-performance framework in the regulation market, which could potentially place a premium value on Li-ion batteries’ ability to balance supply and demand (frequency regulation). A final determination, however, is not due until sometime in 2012. In the meantime, battery-makers must place bets in both automotive and grid storage knowing that each holds as much peril as promise.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Canon Investment Holdings expands battery presence on the cheap with Altair Nanotechnologies investment

Posted on by

Lithium–titanate battery manufacturer Altair Nanotechnologies announced last month that Canon Investment Holdings will purchase a 51% stake in the company, for a total investment of $48.9 million. Altair will reportedly put the cash toward construction of a China–based manufacturing unit and other capital requirements.

In addition, the two companies inked a conditional supply and technology license agreement whereby Altair will sell its ALTI–ESS 1 MW system along with battery cells and lithium–titanate electrode materials to Canon Investment Holdings affiliate Zhuhai Yintong Energy (YTE). This side deal will generate another $6.6 million in revenue for Altair by the end of 2011, beginning with a $2 million advance for the lithium–titanate materials, repayable to YTE should Altair prematurely terminate the agreement under certain conditions. The deal stipulates that Altair will ship 20 metric tons of lithium–titanate anode material to YTE by the end of 2011, and further provides YTE with an exclusive license to manufacture cells using the material for all of China. 

Previously, we reported the tenuous financial position of Altair and its struggles to maintain a stock price in compliance with NASDAQ’s minimum bid price rule. The company holds valuable IP for high-power-density lithium–titanate anodes. Yet its Q1 2010 burn rate far exceeded 2009 revenues (see the September 8, 2010 LRPJ – client registration required). Clearly, Canon Investment Holdings identified these dire circumstances and pounced at the opportunity to quickly enhance their Li–ion presence under very favorable terms: The company will buy in at approximately $0.39 a share, a 44% discount on the day’s $0.69 closing price.

As venture capital financing for energy storage shifts to more mature technologies (see the Lux Research report “Alternative Power and Energy Storage Financing: How to Play a Buyer’s Market“), it’s likely that more early–stage companies will find themselves in similarly difficult situations. This deal stresses the need for clients to monitor emerging Li–ion companies with strong technical assets but vulnerable financial positions, as heavy competition ensures that attractive acquisition/partnering opportunities may disappear very quickly.

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin  

Nano-enabled battery makers on the Lux Innovation Grid

Posted on by

Graphic of the WeekEnvironment and energy, or “cleantech,” applications have become a target for more and more companies developing nanointermediate products, such as batteries for electric vehicles. Developers targeting this segment incorporate nanomaterials like lithium titanate and lithium iron phosphate nanoparticles into battery electrodes.

In a recent report*, Lux Research summarized the opportunities of this space, and applied its proprietary assessment tool, the Lux Innovation Grid, to compare the field of competitors and identify its most likely winners. The Grid scores each company on three attributes – technical value, business execution, and maturity, and then assigns a relative position on the Lux Innovation Grid’s four quadrants.

Overall, the report found little technological differentiation between firms targeting this segment. A123Systems, alone, pulls away from the pack due to its solid business execution. Like many of its competitors, the company develops nanostructured lithium iron phosphate battery electrodes for the automotive market. But A123Systems was the only nanotech company to go public in 2009, and signaled one of the year’s most successful IPOs in any technology category.

Electrovaya, which scored highest in technical value, is developing nanostructured polymer electrolyte technology for three different battery cathode chemistries. A relatively strong revenue-to-employee ratio of $41,538 and a strong partnership list that includes Tata Motors also help distinguish it from the competition.

Alone in the Long Shot quadrant is K2 Energy Solutions that, despite two recent battery-development deals, hasn’t yet landed a large partner in the lucrative automotive sector. The aforementioned deals include a $30 million grant from the Chinese government for a joint venture with DLG battery, and another with an undisclosed customer in personal mobility (e.g. scooter and e-bikes).

Also, Altair Nanotechnologies’ status has changed for the worse since Lux issued its report in March. With a Q1 burn rate five times its 2009 annual revenues and a stock price below $0.40, Altair is in danger of being delisted from NASDAQ by the end of 2010. Although an updated score for Altair is as yet unavailable, its position on the Grid has likely drifted into Long Shot territory.

* Source: Lux Research report “The Governing Green Giants: Makers of Cleantech Nanointermediates on the Lux Innovation Grid” (client registration required)

Share this
Facebook facebook   Twitter twitter   Email email   Linkedin linkedin