Lithium-ion (Li-ion) battery producer Electrovaya’s bold takeover of a state-of-the-art German factory is radically boosting the firm’s exports. Yet, this move is just one of the drivers behind the Canadian cleantech company’s steadily rising fortunes.
In 2015, the Mississauga-based manufacturer acquired Europe’s largest battery plant in a €1 million ($1.45 million Canadian) deal. The deal’s catalyst was Electrovaya’s groundbreaking technology, says co-founder and Chief Executive Officer Sankar Das Gupta.
The factory was initially built to supply Li-ion batteries for Daimler AG’s electric cars. However, the automaker decided to pull out due to tough German environmental regulations and cheap battery imports from Asia. The plant was slated to shut down.
To help strengthen its offer Electrovaya enlisted Export Development Canada (EDC) as its banker, and proposed a deal to take over and operate the plant, combining Canadian and German technology, says Das Gupta, who holds a PhD in electrochemistry from the University of London and is an adjunct professor at the University of Toronto.
Unlike other Li-ion battery makers, Electrovaya’s patented manufacturing process uses non-hazardous chemicals, which help slash production costs and give the company added edge over its rivals.
The German negotiators “saw that our non-toxic production was the only chance for saving the plant and keeping the jobs in Germany,” says Das Gupta. “It was a win-win for both of us.”
Since acquiring the factory near Dresden, Electrovaya has signed four major agreements potentially worth $460 million in international sales over three years.
That’s heady growth for a company that generated $47 million in revenue in the last five years combined.
EDC resources to help you export
Since it was founded as a specialist engineering company in 1996, Electrovaya has focused on exports.
According to Das Gupta, Canadian companies can’t afford to ignore the huge U.S. market. He says success south of the border helps buy credibility at home and abroad.
In 2000, the company went public. Since then it has delivered projects for specialized applications in the aerospace, automotive and personal electronics segments for organizations such as Chrysler, NASA, Tata and Southern and Scottish Energy.
Today, Electrovaya supplies Li-ion battery products to the U.S. and Europe, its main markets, plus a smattering of other countries. Exports now make up more than 95 per cent of total sales. About 200 employees work at its head office in Mississauga and the 25,000-square-metre plant in Germany.
Innovation and safety are driving the company’s export growth, says Das Gupta. Its flexible ceramic separator helps guard against the kind of fires that have been a big problem for other manufacturers. The batteries also last almost twice as long between charges.
“We are not trying to offer the lowest price, but we have a tremendous technology leap over our competitors,” Das Gupta adds.
Technology advances have been critical to Electrovaya’s growth, and helped the firm distance itself from competitors including several North American and European battery makers that have closed their doors, unable to compete with low-priced Asian imports.
Industry leaders LG, Samsung and Panasonic dominate the sector. The global Li-ion battery market is expected to reach $114 billion (U.S) by 2017 and $400 billion (U.S.) by 2030 as countries try to mitigate the effects of climate change and shift into clean energy, according to Lux Research and the Boston Consulting Group.
Going after new market segments has bolstered Electrovaya’s export growth. In addition to batteries for electric cars, the company supplies makers of electric buses and other vehicles. Its batteries are going into the world’s largest electric-powered passenger ferry now under construction in Denmark.
The company also landed a huge deal to produce residential energy storage units for a European customer. Meanwhile, New York power company Con Edison bought a utility-scale mobile tractor-trailer-mounted battery system to supply emergency electricity during power outages and help support the grid during peak power consumption times.
“We have more product rollouts coming to broaden the product line for different verticals and OEMs,” says Das Gupta.
The main challenge for the company now is working capital. Electrovaya must make sure it has sufficient funding to ramp up production and supply its rapidly growing export base.