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Ilika micro-battery production set for large-scale commercialisation


Ilika [LON:IKA] the AIM-listed, solid state battery technology company published its half-year report for the six months ended 31st October 2022 (19th January).

Total revenue for the period was GBP0.2m which was unchanged from 1H22. Also unchanged was grant funding of GBP0.2m. The company has GBP18.6m of cash on account, down from GBP27.7m for 1H22. Ilika made a GBP4.1m loss compared to a GBP3.3m loss for the corresponding period in 2021.

The company attributed the 1H22 losses to investments that it made into its Stereax fabrication facility and further research and development cost associated with its Goliath transportation batteries.

With the collapse this week of Britishvolt, and its attempts to build a GBP3.6bn gigafactory in Northumberland to provide electric batteries to the UK motor industry; the issue of providing the EV industry with necessary power units has come into focus, as the UK moves to a total ban on petrol and diesel engines in 2035.

However, Graeme Purdy, chief executive of Ilika explained in an interview with The Armchair Trader that Britishvolt’s plans were very ambitious. Britishvolt had vowed it would develop a factory on a 93-hectare site in Blyth that would produce batteries for 300,000 cars and vans a year and employ 3,000 people.

Collaborative approach

Ilika, by contrast, said Purdy would work in collaboration with other strategic partners to hone the technology for its solid-state Goliath range of batteries for transportation and cordless consumer electronics, as opposed to go into giga-scale production on its own.

The Southampton-based company is developing a range of solid-state, large format batteries. The transition from hydrocarbon-based electricity to renewable energy is a trend that has been well-covered by The Armchair Trader and elsewhere and seems both inexorable and inevitable.

The issue stymieing the transition has been capturing and storing power from renewable sources, for use at a time when the generation capacity from renewable sources doesn’t support consumption. We can still keep warm and turn our lights at any time just by throwing another bag of coal (or cubic unit of natural gas) into a furnace and producing electricity. Likewise, we can fill our cars up with a tank of petrol or diesel whenever we want and still get to where we are going.

Capture and storage

However, the sun and wind doesn’t work like that and the quandary with the transition to renewables has been capture and storage of generated power. As a result, a vast industry has grown up looking at battery technology and it has sparked an associated resource grab for minerals and materials that will support the transition, such as Lithium and Copper.

The transportation industry – especially the motor trade – has also been grappling with issues of the transition. The first hybrid and fully electric cars relied on lithium-ion batteries. However, the initial batteries developed were not only large in mass and volume, and had low range, but also had safety concerns.

From the first prototype EVs, the quest to refine battery technology has been at a premium. Car manufacturers despaired at the physical size and performance of first-generation batteries. Not only was range an issue – leading to a continued reliance on hybridization where models like the Prius would have both electric and petrol propulsion; but the volatility of the battery units, and the need to keep them cool – usually below 60o Celsius, meant that the battery packs had to include a complex system of pumps, fans and coolants. This caused size issues and in first-generation hybrid EVs, the electric component took up an inordinate amount of space – it was like fitting a second engine to a vehicle, as well as adding health and safety concerns.

Solid-state benefits

This sparked interest in the development of alternative solid-state technology. Unlike first-generation lithium-ion batteries, sold-state batteries, are composed of a solid oxide electrolyte and a silicon anode, don’t have the same volatility and have reduced concerns about operating temperature.

With a higher resistance to higher temperatures, solid-state batteries do not need as much associated cooling equipment and they are less complex to manufacture than lithium-ion batteries. This means that in manufacturing more power-carrying capacity can be crammed into the battery pack, which increases output, decreases size and weight, improves charging capacity, range and due to their higher operating temperature, most importantly safety. In terms of transportation power, this is where Ilika’s Goliath family of solid-state batteries reside, however unlike Britishvolt, Ilika exists in the development space, not the mass-production space.

Honing the tech

Purdey explained that the focus for Ilika was on its technology, and getting its battery units perfected for scale production, but allowing better capitalised partners to take on the responsibility of developing the “infrastructure” for giga-production.

Purdey noted that despite having a market capitalisation of around GBP66m, Ilika was not big enough as a corporation to assume the vast responsibility of project financing a facility like Britshvolt’s gigafactory; and there were much more suitable partners who had access to different and larger-scale streams of finance that were better-positioned to develop the kind of facility that could bringing Goliath into commercial production, that Ilika could work with.

Ilika – in the debate around production of transportation batteries at scale – is still a technology company, not a manufacturing company and that the area where it could add value was at the level of research and development and producing the best battery possible – which could then be licenced for scale production.

Purdey explained that the company was aiming to develop Goliath battery cells with targeted dimensions: 300mm x 100mm and was experimenting with new production processes, including Roll-to-Roll manufacture (the continuous process of unrolling a flexible substrate onto an assembly line and then depositing, cleaning, patterning, or otherwise modifying materials on that substrate.)

Proving the pudding

Continuous manufacture would allow Ilika to move Goliath from its R&D phase to at-scale manufacturing. Purdey explained that the company first intends to scale-up to the MWh scale – probably in collaboration with the publicly-funded battery product development facility, UK Battery Industrialisation Centre in Coventry, which the company already has a framework agreement with, before licencing its technology for giga-scale production.

The process to move from research project to giga-scale production is envisaged, said Purdey, as a three-stage plan moving from kWh production to MWh, before introducing strategic partners to reach GWh production.

The company sees its market-entry point at 50GWh and is currently in the phase of moving from pre-pilot to pilot stage and hopes to be producing ‘A-sample’ units before the end of 2026, which will allow Ilika to move into a position where the company could respond to industry RFQs (Request For Quotations).

At this point the company could start discussions with scale manufacturers to licence its technology, and could work with partners to produce ‘B-sample’ batteries, proving the technology could be manufactured in larger quantities. The company hopes to start ‘B-sample’ production by 2027.

Giga-scale production

The exciting, inflection point for Ilika (and its investors) lies between ‘A-sample’ and ‘B-sample’ production – at least for its transportation and consumer electronics solid-state units – as it is at this point the big beasts start to take note and look to sign licencing agreements with developers with a mind to producing ‘C-sample’ units with an eye to going into giga-scale production. The key period – when the words ‘Ilika’ and ‘Gigafactory’ can be used consistently in the same sentence is 2028 to 2029, when the company hopes it will have developed Goliath to the point that it could become a real giant in the battery industry.

Getting Goliath to that point is a research-heavy process, which no doubt will have bumps and pitfalls on the road ahead. But research is where Ilika started, being founded in 2004 as a spin-out from the University of Southampton’s Department of Chemistry. The company has remained true to its roots, remaining headquartered in Hampshire port, which has a history of launching exciting new ventures – some of them like the Mayflower (ultimately) more successful than others, like the RMS Titanic.

In 2008, Ilika partnered up with Toyota to develop battery materials and within two years the company listed on the LSE.


The road that Ilika is travelling now is one it has walked before, with its other product – Stereax, a micro- solid-state battery for healthcare applications. At totally the other end of the scale to Goliath, Stereax is fitted to medical devices which are then implanted or attached to patient’s bodies.

Purdey explained that the micro-battery which is about 1mm thick, and 3.6mm x 5.6mm square and delivers 300 microampere of current, is the power source for medical machinery that is used to regulate insulin production in the pancreas, for neurostimulation equipment, in smart orthodontics (placed in dental braces trackers) and industrial Internet-of-Things (IoT) applications.

The company started Stereax production in 2015, was awarded ISO 9001: 2015 certification in 2018 and opened a fabrication facility in 2021.

Earlier this month, Ilika signed a Memorandum of Understanding with Minnesota-based, active implantable medical device manufacturer, Cirtec Medical, which operates three factories in the US that supplies the domestic market with medical devices.

The MOU with Cirtec outlines the transfer of Stereax battery manufacturing to Cirtec’s facility in Lowell, Massachusetts.

US commercialisation

At the time Purdey said: “Our partnership with Cirtec reinforces a pathway towards commercialisation of our Stereax battery technology. Cirtec brings a wealth of manufacturing experience and a strong track record of successful product commercialisation in the medical device industry.”

He explained that the US was the largest market globally for implantable medical devices, “so it made sense from a commercial perspective” to license the Stereax battery with a US partner as it gave Ilika access to the world’s biggest implantable medical device market. However, the company was also looking out for other potential partners, and was aware of the rising importance of Asia in global healthcare terms.

High-margin revenue stream

Berenberg Bank rate Ilika as a ‘Buy’ with a target price of 125p. The bank highted the flexibility of the Ilika business model. James Carmichael, an analyst for Berenberg covering Ilika said: “We expect Ilika to move to a licence and royalty model as the business scales up. This will shift the manufacturing burden to larger companies with more expertise in that area, providing Ilika with a high-margin revenue stream and enabling it to focus on the core research and product development capacity.”

Ilika opened trading today (20th January) at 40.1p. The company has offered a 67% year-to-date return, a -73.6% one-year return with its shares ranging between 22.5p and 160p over a 52-week period. The company has a market capitalisation of GBP64.7m.

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Carmichael said: “Ilika is ramping up commercial production of its smaller Stereax cells and has the right partnerships and now funding in place to enable large-scale production of the bigger Goliath battery. The EV market, in particular, could be transformational for Ilika and we point to partnerships with Honda, McLaren, Jaguar Land Rover, the UK Battery Industrialisation Centre and Comau as encouraging signs that the Goliath format is maturing.”

Deshe Analytics gives Ilika a ‘Hold’ recommendation. The analyst stated: “Ilika plc published its 1Q22 report on 13th July 2022 with positive results, but no significant factors particularly remarkable relative to its peers. This typically translates into the stock performing on par with market performance for the upcoming quarter. Therefore, they earned a total score of 70 out of 100 and a ‘Hold’ recommendation.”

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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