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Rowan Dartington comments on the race for UK battery investment

In the week that Jaguar Land Rover announces plans to go fully electric and the City of Coventry seeks planning permission for an electric car battery ‘gigafactory’, Donald Maxwell-Scott technical investment manager at Rowan Dartington, part of St James’s Place Group, looks at opportunities for investment in British battery businesses:

“It is imperative that UK companies step up to this challenge. Under the trade deal with the EU, we have six years to establish domestic production of batteries and parts if we want to export cars tariff-free to the Continent. If we don’t, any cars produced in the UK would be subject to a 10% tariff. This would be disastrous to the UK car industry. Boris Johnson has repeatedly promised that Britain will be the home of electric vehicles powered by British made batteries. It could well be that the Brexit deal we have struck has started the race to develop EV batteries of our own.

“The UK government launched the Faraday Battery Challenge to address this future demand. One of the recipients of UK grants from the Faraday challenge is a company called Ilika, listed on the AIM stock exchange. Despite being valued at a fraction of QuantumScape, they have already developed solid state batteries for Internet of things (IOT) devices and within medical instruments. It has partnerships in place with Jaguar Land Rover, Honda and Mclaren Automotive for the development of batteries within EVs. The company has seen its share price surge. It was trading at around £1 per share three months ago, but now trades at £2.70 (FE analytics).

“Of course, there are still many hurdles to overcome before solid state batteries are a reality, but if COVID-19 has taught us anything, when we are faced with immense challenges we are able to overcome these difficulties to find a solution. If we escalate the climate emergency to the same level of COVID, there should be no doubt that solid state batteries are a technology that will be developed sooner rather than later.

“While some investors might see this as a race between a few companies, it is likely that there will be many successful manufacturers of this technology, again, in the same way as there isn’t just one COVID vaccine. For those that want a more diversified approach there are even exchange-traded-funds that specifically invest in battery technology.

“Investors have an important part to play in this technology, ensuring its future development. Of course, many companies developing solid state EV batteries are at early stage development, so there are no guarantees that every company will be successful, but the direction of travel is unquestionable; batteries are part of the future.”

 

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