Johnson Matthey Plc has taken a long, hard look at the surging costs to enter the EV battery materials market and is throwing in the towel.
Faced with “a number of critical investment milestones,” the board of London-based JMAT conducted a review of its high-nickel cathode materials business — which it calls eLNO — and concluded selling parts or all of it makes more sense than bankrolling commercialization. Although never disclosed, the cost was expected to be about £400 million and a portion of that has already been spent. The net assets of the battery materials businesses were about £340 million as of Oct. 31, 2021.
It’s a disappointing end for a technology that on the face of it showed promise for JMAT, including in semi solid-state batteries. Destined for the premium car segment due to its cost of production and enhanced performance versus alternatives, JMAT insists eLNO was gaining traction in ongoing tests with potential customers, including automotive OEMs. On display at COP26 was a two-seater formula race car developed by Envision Virgin Racing driven by JMAT’s eLNO cathode.
Other mobility clients were also taking a look. It’s thought one of them was a scooter manufacturer but details of customer relationships are always kept close to the chest in the world of battery materials. Sebastian Bray of Berenberg Bank speculated battery maker Freyr, and a couple of OEM suppliers, were among those testing eLNO.
According to JMAT, two customers had advanced from the full-cell testing stage, something that takes one to two years typically. The feedback from a “third-party technology company” confirmed eLNO meets or exceeds current automotive targets for energy, lifetime and power, a spokesperson for the company said today.
JMAT shares tumbled around 11% in London.
Where the volte-face leaves JMAT’s partially built plant in Poland is unclear. Chief Executive Officer Robert MacLeod backed the project with gusto, budgeting for a top-end facility befitting eLNO’s superior performance claims. Against a backdrop of a rapidly evolving EV and battery-materials market, no expense was spared to get the project moving at maximum speed.
There is no doubt the EV world is being divvied up.
Amid the strategic about-turn, JMAT announced separately MacLeod will leave the company in February, to be replaced by Liam Condon, currently an executive board member at Bayer AG leading the group’s Crop Science business.
What Condon will inherit is somewhat uncertain. As he surveys JMAT’s empire, he can surely bank on a healthy catalysts business, and a cash generating autocatalysts business whose marketplace is destined to dwindle in synch with the demise of diesel and petrol combustion engines. He could feel stuck with a Health division that includes a legacy controlled-opioid manufacturing business supplying the pharma industry that JMAT has been trying to sell. Apart from a highly promising fuel-cell components business, the rest of JMAT could be described, perhaps unkindly, as bits and bobs.
As tight networks of battery makers and materials suppliers are formed in the automotive heartlands of Germany and elsewhere in Europe, JMAT’s exit will be a blow to the UK.