Canadian firm reaches for its ‘Tesla’ moment
batt ery game Changer
Sankar Das Gupta is hoping that his company Electrovaya Inc. can ride on the coattails of Elon Musk, who last week announced the transformative Tesla Energy battery solution that could change the way homes and vehicles are powered in the near future.
Only days before Musk’s news, Mississauga, Ont.-based Electrovaya made a transformative announcement of its own with the purchase of Europe’s largest lithium-ion (or Li-ion) battery ‘gigafactory,’ Evonik Litarion GmbH. While Gupta would not divulge financial details, the gigafactory was built at a cost of $1 billion and boasts $100 million in assets.
“You always need two or three major players to create the market — and Tesla is terrific at creating the market,” Gupta, Electrovaya’s CEO and founder, said in an interview from Kamenz, Germany, where Evonik’s plant is located.
“We just bought the largest gigaplant in Europe, which has been providing batteries to electric vehicles in Germany — so not so different from Tesla.”
Musk’s Tesla Motors Inc. is building a gigafactory in Nevada, but that’s where the comparison ends. The Palo Alto-based electric car manufacturer is a US$29 billion behemoth, while the Canadian battery maker’s valuation is just a shade over US$40 million.
But Gupta is dreaming big as he believes his company holds a key piece of the world’s foremost energy puzzle: storage.
“Electrons are one of the few commodities in the world that you cannot store. When you generate it, you have to use it,” said Gupta.
With utility companies across Ontario and elsewhere increasingly switching to solar and wind to power homes and businesses, energy storage solutions are mounting, as storing sunlight and wind is notoriously difficult. Tesla’s ‘ Powerwall’ technology aims to address that issue.
Consultancy Lux Research believes energy storage could be a US$117 billion business by 2017, while Boston Consulting Group pegs it at US$400 billion within a few decades.
A key driver of this technology will be in Electovaya’s sweetspot: Li-ion batteries that are becoming increasingly popular in the energy storage space as they are lighter and cheaper than nickel-metal batteries.
Electrovaya is differentiating itself from its competitors by using nontoxic materials and a “ceramic composite separator” that ensure electric cars don’t spontaneously burst into a ball of fire — a common sight in recent years.
But unlike Tesla, and other major battery players such as Panasonic Corp., Samsung Group and LG Group, Electrovaya has primarily been an “ideas” company with a smattering of contracts.
Gupta, an electrochemist, started the company in 1996, but acknowledges the market did not move as quickly as he had anticipated. Even as it bided its time, the company earned its stripes with “low-volume, high value” contracts from NASA, Toronto Hydro, Wal-Mart Stores Inc. and Glencore Plc., among others, over the years.
“In terms of the projects they have been able to execute on, they definitely punch above their weight, compared to much larger firms, especially out of Asia,” says Anissa Dehamna, a senior research analyst at New Yorkbased Navigant Consulting Inc. “That said, all companies of that size struggle with scaling their operations.”
Electrovaya posted revenue last year of $7.4 million, with cash of $1 million, as the company remained under-financed and unable to leverage its technology.
“Even last week, people would say to us, ‘You guys are an ideas company, but can you convert it into money?’ ” said the 64-year-old Gupta.
His answer is the German gigafactory, which gives Electrovaya a foothold in one of the world’s largest renewable energy markets.
Gupta said Electrovaya may be “cash-poor, but we are technologyrich.”
“We told them (Evonik), ‘ we are the white knights from Canada who will save you, and we are not going to save you with money, we are going to save you with technology.’ ”
Electrovaya claims its green nontoxic process will cut production costs by 50 per cent, and slash energy costs at the German plant by about 80 per cent.
The acquisition brings 200 German employees to add to Electrovaya’s 100-strong Mississauga workforce, and broadens the merged entity’s target market to utilities, energy storage of wind and solar, aerospace, micro-grids and marine apart from the automotive industries.
As a company that manufactures its own batteries, Electrovaya is limited only by its own resources and ingenuity in how they are going to scale up, says Navigant’s Dehamna, noting the Evonik acquisition will play a key part in the company’s push to scale up.
“This is going to be their make-orbreak time. Either they are going to really scale the business in the next couple of years, or they will remain a niche player.”