Our Next Energy Inc., the battery startup led by Apple Inc. veteran Mujeeb Ijaz, has started making prototype cells at its Michigan battery plant — an early milestone in its goal to become a homegrown US battery manufacturer.
The company so far employs about 70 people — 50 engineers and 20 production workers — making lithium-iron phosphate cells for both grid storage and automotive customers at its $1.6 billion plant in Van Buren, Michigan. ONE, as the startup is known, aims to have sample cells for prospective automotive customers by the first quarter of next year, Ijaz said in an interview.
“There is a need for a US battery company,” said Ijaz, who is chief executive officer of ONE. “Buyers are wanting domestic sources for more than just a few dollars off of the bottom line, or a tax relief. It’s also diversification and security of supply.”
ONE has been bolstered by President Joe Biden’s Inflation Reduction Act, which offers rich subsidies to companies making batteries on US soil. That agenda is now being tested as EV demand softens, with both General Motors Co. and Ford Motor Co. dialing back or postponing investments in fully electric cars, and Republicans in Congress amping up efforts to defund Biden’s signature climate law.
Ijaz said he’s hedging that risk by building a book of grid customers including Berkshire Hathaway Energy Co. He’s also making battery packs for commercial vehicle operators such as Shyft Group and Motiv Power Systems.
“The markets will ebb and flow. What we see in the early days is the utility grid has the money, because everyone needs more power,” he said. “If we put all our eggs in the automotive basket, we could end up getting whipsawed.”
Lithium-iron phosphate, or LFP batteries, have been gaining traction with western automakers because they are cheaper and more stable than the nickel-based batteries used in most EVs on American roads today.
China dominates the production of LFP cells, with Contemporary Amperex Technologies Inc., or CATL, the world’s biggest battery maker, supplying the technology to customers such as Volkswagen AG, Tesla Inc. and Ford. Korean battery manufacturers are also pivoting to LFP, part of a growing crowd of deep-pocketed incumbents that ONE will be competing against.
The startup plans to complete a pilot line with 2.7 gigawatt hours of capacity in a section of its 659,000 square-foot plant by the end of 2024. The end goal is to have 20 gigawatt hours of capacity and employ about 2,100 people by 2027.
The company has raised a total of $390 million from private investors including Bill Gates’ Breakthrough Energy Ventures, Franklin Templeton, BMW’s venture arm, and Detroit-based Assembly Ventures. ONE was valued at $1.2 billion in February and is in the process of raising another round of funding.
ONE has received at least $215 million in grants and financing from the state of Michigan for its battery plant. If it can scale successfully, it could be a coup for Michigan Governor Gretchen Whitmer, who has come under fire from Republicans for doling out incentives to Chinese battery company Gotion and Ford’s project in Marshall, Michigan, that will license technology from CATL, China’s national battery champion.
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