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Battery materials specialist Nano One (TSX: NNO) has confirmed that it has seen positive results for its patented cathodes with solid state batteries, holding the prospect for some very interesting strategic relationships for the company.

The Toronto-listed technology firm announced last week that it has been working with “various automotive manufacturers” to evaluate its One Pot process and coated lithium manganese oxide (LMNO) cathode materials.

Ever since we first started covering Nano One, we have been impressed with its range of existing, patented processes and its ability to engage with very large, strategic partners like Volkswagen and Pulead Technology Industry.

The company also sits on the cusp of demand for lithium ion batteries that can be widely and safely used with next generation electric vehicles.

Nano One shares are bouncing back

Nano One stock has been picking up speed, having hit a low of CAD 0.81 on 16 March, the eye of the storm during the market sell off into the worst of the coronavirus crisis. At the time of writing Nano One shares were trading at CAD 1.19. They are still well off the CAD 1.64 it hit on 6 February going into the crisis but we see no reason why it can’t get back there.

“There is a tremendous industry effort to advance and commercialise solid state batteries and the goal is to improve safety and performance of lithium ion batteries,” said Dr Stephen Campbell, CTO at Nano One. “The objective is to replace flammable, liquid electrolytes with solid materials that improve safety, power and energy density in the battery.”

Campbell confirmed that Nano One is working with “a number of global automotive consortia,” so we can safely assume that there are other large car or vehicle manufacturers than Volkswagen and Chinese partner Pulead talking to Nano One behind the scenes.

Campbell also added that some of the focus is on the company’s high voltage spinel, with manufacturers using both polymer and ceramic electrolytes. Initial results are said to be “encouraging.”

Proprietary tech could change the future for electric cars

In summary, Nano One’s proprietary cathode materials have a uniform coating on individual single crystal particles which allow the fast transfer of lithium ions to the solid electrolyte, while protecting the cathode from expansion and side reactions when the battery is in use. This improves the durability of the battery with obvious implications for the life time, range and costs of such batteries.

As large car manufacturers look to roll out their ranges of electric cars, which they are going to have to do, and soon, the batteries are going to be a key component. Battery life remains a major concern for consumers looking to purchase electric cars – according to a 2019 Cox Automotive study, 46% of consumers considering an electric car are worried about the life of the battery in the car.

While many manufacturers currently offer warranties for electric car batteries (e.g. Hyundai is providing a battery warranty for electric cars sold in the US that extends to 100,000 miles), frequently these will only stretch to a complete loss of ability, or when capacity drops below a 60-70% (depending on the vehicle and the policy).

With the battery accounting for a substantial slice of the cost of the vehicle – over US$15,000 in the case of the Chevrolet Bolt EV – considerations like longevity and range are going to be paramount in the minds of vehicle makers.

Nano One also confirmed this month that it had received an additional CAD 250,000 in backing from Sustainable Development Canada, a one-time, non-dilutive contribution that is being provided by the Canadian government as additional support for the company and its technology during the COVID-19 crisis.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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