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Indebta > News > ‘EV is boring, it’s all solved’: Why an Irish battery company is going off-road
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‘EV is boring, it’s all solved’: Why an Irish battery company is going off-road

News Room
Last updated: 2024/05/26 at 10:51 PM
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In a bright, surprisingly quiet factory in western Ireland, workers are putting the finishing touches to a battery pack so large they need a step ladder to reach the top.

Weighing in at around 1.5 tonnes, it is the biggest individual pack on the electric vehicle market today, delivering almost 300 kilowatt hours of power, according to Xerotech, the Irish company that makes it.

Once fitted into its white metal casing, this €150,000 pack — and six other identical ones, each containing 16,128 individual cells that are a little longer and fatter than AA batteries — is destined for an Australian mine truck. That is just one of the vehicles that Xerotech is supplying as mining, construction and other industries seek to cut their carbon emissions.

EV passenger car adoption is accelerating but chief executive Barry Flannery said Xerotech was targeting “the bigger-picture story of how does all this other stuff become electric?”

It is a niche market, selling “millions of units at best” a year globally, but with strong growth forecast over the coming decade.

It is also a new industry for Ireland, which is home to large tech and chip companies but only one other battery pack firm, Li-Gen, which supplies renewable energy storage, golf carts, camper vans, and some forklift trucks.

Most battery cells are made in China and elsewhere in Asia and Xerotech’s competitors are mainly in the US. The leading European battery firm is Sweden’s Northvolt, which is planning a $20bn IPO.

But 32-year-old Flannery, who founded Xerotech as a PhD student from his garage in Galway on Ireland’s Atlantic coast in 2015, spotted a gap in the market.

High volumes make for economies of scale in electric car batteries, but when it comes to “off-highway vehicles” such as trucks, diggers and heavy equipment “there are hundreds of different vehicle platforms, architectures, shapes, sizes — going from a system that needs a 5 kWh battery to a 5,000 kWh battery and everything in between,” Flannery said.

His solution was battery packs that can be stacked inside the majority of OHVs, so “you don’t have a thousand different production lines, a thousand different product variations”, and that can be sold “in volumes as low as one”.

Vehicle manufacturers feel “they’ve got a bespoke suit, but it’s off the shelf, basically”, he said.

A John Deere fully electric excavator on display at the Consumer Electronics Show in Las Vegas © Patrick T. Fallon/AFP via Getty Images

Nonetheless, some found it a tricky industry. Proterra of the US, an electric bus maker that moved into OHV batteries and floated in 2021, filed for bankruptcy last year after struggling to scale up different products simultaneously. It has been bought by Swedish vehicle maker Volvo. Electric truck start-up Nikola bought battery maker Romeo Power in 2022 but liquidated it less than a year later, amid high commodities prices and tough capital market conditions.

There are other examples of consolidation. Komatsu, a Japanese equipment manufacturer, has taken over American Battery Solutions; US machinery and heavy equipment manufacturer John Deere last year bought battery maker Kreisel and Caterpillar has invested in battery pack maker Lithos.

“Many [companies] have struggled and a lot of them have failed,” Flannery said. “There’s a major arms race in this industry right now.”

Meeting the huge variations in battery pack size requirements for different OHVs is one challenge for the industry. Safety, specifically fire, is the other.

Xerotech says its battery packs contain an insulating foam that stops fire from spreading and they can be pierced without blowing up. It has also developed battery safety technology for the European Space Agency.

The company produces hundreds of batteries a year, of hugely different sizes, and views Proterra, American Battery and Lithos as among its direct competitors in an off-road market with 30 or so global battery pack producers.

It keeps costs down by making the machinery to assemble the packs itself. With some 40 customers Xerotech had “800 per cent revenue growth last year and we’re on track for 250 per cent again this year,” said Andrew Crose, chief commercial officer.

“At least for the next five years, it’s not crazy to have 2x growth year-on-year,” Flannery said, something Crose said would put the business on a “unicorn trajectory” of a $1bn plus valuation.

The company could break even by the end of 2026 and Flannery said it had raised “just shy of $100mn” with no venture capital funding.

The European Investment Bank has put in €30mn; the rest has been raised from family offices in Ireland, he said. “In California, I’d have easily raised a billion at this stage.”

Takeover offers come “once a month,” said Flannery, who is expanding into a second site in Galway next year. He is also opening a sales support office in the US this year and planning a manufacturing plant in the US in 2026. Whereas a year-and-a-half ago, Europe accounted for 60 per cent of sales, now the US and Canada make up 60 per cent, with Europe on 30 per cent and Australia and Asia with 10 per cent.

Flannery, who studied applied physics before a PhD in mechanical engineering that he finished in a year to be able to focus on Xerotech, said the off-road market was “one of the most exciting fields of electric vehicles”.

From an engineering perspective, “EV is boring — it’s all done, it’s all solved,” he said. “So this is where all the new engineering is. What does a fully electric train look like? What does a fully electric haul truck look like?”

Read the full article here

News Room May 26, 2024 May 26, 2024
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