Ilika LON:IKA the Southampton-based, AIM-listed, solid state battery technology company announced today that it has received GBP400,000 in grant funding from the GBP2.7m Automotive Transformation Fund (ATF), 16-month collaboration programme.
The funds will be used to help scale-up Ilika’s Goliath pilot production facilities. As previously reported, Ilika is developing two variations of solid state battery: Stearax, its micro-scale solid-state battery for healthcare applications and Goliath, its large format battery for electric vehicles and consumer appliances.
As reported, Ilika dispatched its first revenue-generating customer samples of Stereax M50s and M300s from the firm’s UK production facility in April, which was welcomed by shareholders, as the firm took an important step towards revenue-generation and ultimately sustainability and profitability.
Triparty collaboration
The new funding is part of a collaboration with Mpac Group LON:MPAC, the Tadcaster-based, packaging automation company and cartoning machine manufacturer and the UK Battery Industrialisation Centre (UKBIC). Mpac already operates in the Clean Energy sector, designing and manufacturing automated production lines, and will work with Ilika to design, build and commission a 1.5MWh solid state battery (‘SSB’) assembly line capable of delivering Ilika’s Goliath SSB prototype large-format pouch cells to automotive OEMs and Tier 1 suppliers. The SSB assembly line is expected to be fully operational at Ilika’s facility by the end of 1H25.
UKBIC, a Coventry-based government initiative established in 2017, is there to bridge the gap between prototype and laboratory development of batteries, and commercial, mass production. Ilika has already collaborated with UKBIC on developing the battery manufacturer’s products the gigawatt scale.
Ilika scaling-up
The Automotive Transformation Fund was developed large-scale industrialisation of batteries in the UK and will mobilise GBP850m of funding to develop a high-value, end-to-end electrified automotive supply chain in the UK to acquiesce with the UK Government’s 10-point plan to decarbonise the nation’s transportation system. It is hoped that through the investment and collaboration with its partners that Ilika will be able to develop a factory that will manufacture solid-state batteries.
If the funding can help Ilika to get into commercial production on a second product line, it will definitely be share price accretive. Ilika opened trading today (9th October) at 31.1. The company has offered a 26.9% year-to-date return, but a -42% one-year return with its shares ranging between 22.5p and 72p over a 52-week period. The company has a market capitalisation of GBP49.3m.Sam Wahab, an analyst for Liberum Capital said: “With Stereax on track for commercialisation alongside Cirtec, increased focus appears to have turned to Ilika’s Goliath EV battery division, and it is a positive development to see further grant support awarded.”
He continued: “[The firm] is currently implementing a plan to increase the capacity of its existing pre-pilot production facility using automation and larger scale items of equipment, such as a roll-to-roll coater [the continuous process of unrolling a flexible substrate onto an assembly line and then depositing, cleaning, patterning, or otherwise modifying materials on that substrate]. The company has therefore increased the target capacity of this equipment from 0.5 to 1.5MWh/a to allow it to scale production volumes and mature its technology to the level required to respond to automotive requests for quotation by the end of 1H25.”
Proof of concept
The end-game, on Goliath, Graeme Purdy, Ilika’s CEO previously told The Armchair Trader was initially moving Goliath into mega-scale production, before licencing the product out for commercial production, as Ilika, on its own, didn’t have the kind of financial resources to produce a GigaFactory.
Once mega-scale production was secured, Purdy said, 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.
The CEO said in a statement this morning: “Our collaboration with Mpac will see the development of a scaled SSB assembly line which will be capable of delivering A-sample automotive pouch cells for testing in 2025. This is an important step in Ilika’s roadmap, enabling us to engage closer with OEMs (original equipment manufacturers) as we start to deliver SSB cells into their test programmes.”
Current valuation a compelling entry point
Wahab said: “Despite a 30% rally in Ilika’s share price YTD, we see the current valuation as a compelling entry point for investors ahead of several share price catalysts across its core divisions in in the final quarter of 2023 and early next year.” Liberum rates Ilika as a ‘Buy’ with a target price of 65p.
The battery manufacturer has also been progressing it micro-scale solid-state batteries, signing a 10-year licencing and royalty agreement with Cirtec Medical in August, to manufacture its Stearax line in the US.
In its last results, published in July, Ilika reported that both revenues and losses were up year-on-year with revenues of GBP0.8m, up 60% on GBP0.5m revenues in 2022, but losses also up 9.4% to GBP7m. This follows a period of R&D and investment into the development of its two key products, Stearax, its micro-scale solid-state battery for healthcare applications and Goliath, its large format battery for electric vehicles and consumer appliances. Loss-per-share was 4.16p and the company had GBP15.9m of cash in hand.
The funding success today is a calalyst for Ilika to develop its larger-scale product. With the developed world hurling toward Net Zero commitments in the coming decade, and the decarbonisation of transportation being a large part of that, Ilika is well positioned, should it get its Goliath products to mega-scale production to ride the crest of the transition wave into profitability.
