Ilika is a successful British technology company with plenty of avenues for further progress.
The London-listed company is creating significant shareholder value, fueled by a pair of potentially transformative battery technologies.
One of the two is now on the cusp of a commercial and financial breakthrough.
Success: Ilika is a successful UK technology company with plenty of avenues for further progress.
The December opening of the Stereax solid-state battery manufacturing facility in Chandlers Ford, Hampshire, saw the company begin to prepare for commercial-scale operations in the second half of this year.
Stereax is a range of micro-batteries designed to power medical devices and industrial wireless sensors (IIoT) for use in harsh environments.
Understanding the suite of applications Stereax can be integrated into is quickly at the heart of the investment case for this side of Ilika’s investment proposition.
And the fastest way to get there is to understand what solid-state batteries are and why they’re such an exciting technology to invest in.
The clue is in the name, these batteries are solid.
They do not contain liquid or polymer electrolytes to separate the battery’s cathode and anode materials, as more common lithium-ion batteries do. Instead, they harbor a strong electrolyte barrier.
At present, due to their smaller manufacturing scale, solid-state batteries are more expensive than cheap mass-produced lithium-ion batteries (nearly 80% of which are made in China), but they promise particularly relevant significant benefits. new and emerging technologies.
Solid-state batteries provide higher energy density, which means more power can be stored in a smaller space. They are also safer and more stable, especially over a wider temperature range, or if impacted.
Such properties obviously lend themselves to the types of applications that Stereax targets, namely medical technology or devices designed for remote and harsh environments.
The other side of the deal, Goliath, could (as the name suggests) be pretty big.
Let’s quickly review the advantages of the solid state: high energy density, stable in a range of temperatures, safer in the event of impact.
All are distinct advantages when it comes to electric vehicles (EVs).
Additionally, the materials used in the solid state make the batteries more easily recyclable compared to their lithium-ion counterparts.
This is a particularly important issue given that electric vehicles are very much a technology for the ESG era.
EV battery systems will need to achieve similar mileage to traditional petroleum-powered cars — aka “internal combustion engine vehicles” or ICEVs — but current battery technologies can’t match the energy density of petroleum, regardless of the temperature of a Tesla. .
Electric vehicles need more power capacity while being smaller. Proponents of solid state believe this is the solution to this problem.
Not only are they denser, but another key benefit is that they dramatically reduce a vehicle’s weight by eliminating what is known as ‘parasitic weight’.
Basically, because the batteries perform better in a wider temperature range, they don’t require such extensive cooling systems.
Car designers can instead fit more battery power, hence greater range, into smaller vehicles.
In July 2021, Ilika raised nearly £25m from a mix of city institutions, venture capital funds, company directors, as well as retail investors via PrimaryBid and a associated open offer.
The product is said to be sufficient to support the development of Goliath to the point where it is “ready for manufacture”. The company has set this target before the end of 2023.
Ilika has earmarked around £5m of the money for a ten-fold increase in a “pre-pilot” manufacturing line for Goliath batteries.
The company’s facility, in Romsey, is expected to reach 10 kilowatt hours per week, from 1 kWh, by 2023.
Like Stereax, it is expected to be a company that has strong customer ties.
The company plans to provide first-generation battery products to its customers for use in their R&D and product development, while Ilika continues to perfect and develop the next-generation battery products which, with all this which goes as planned, will see a broader commercial launch. In the years to come.
Success in the electric vehicle market could evolve into an opportunity potentially several times greater than Stereax could become, although the electric vehicle market is also much more fiercely contested.
A look at US competitor Quantumscape highlights the scale of the bullish scenario for Ilika and its investors.
The US-based EV battery company like Ilika is currently in development and lab testing in its commercialization story. Although it is valued at several multiples above Ilika, with a premium valuation of around $7 billion.
Quantumscape is the child of solid-state battery technology.
With a Silicon Valley area code and an investor registry that includes Bill Gates, Volkswagen and a Qatari sovereign wealth fund, it’s perhaps easy to see why it’s in the spotlight.
Ilika’s product is called Goliath, but valued today at around £250m, the AIM-listed company would be seen as a David compared to Quantumscape.
But Ilika is not without its own renowned backers. It has a large partner base and ongoing projects with Honda, McLaren and Jaguar Land Rover.
Ilika remains under the radar, compared to Quantumscape, even if the British firm is considered a leader in solid state in Europe.
Meanwhile, the recent addition of a US stock quote on the OTCQX market should help increase visibility in the US.
For investors, Ilika looks a lot like the one to watch in 2022.
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