British chemicals and sustainable tech company Johnson Matthey has announced plans to sell off its battery materials business due to fierce competition and low returns in a blow to UK ambitions to nurture a domestic champion with a vital role in the electric vehicle supply chain.
EV batteries. Credit: HappyAprilBoy / Shutterstock
Credit: HappyAprilBoy / Shutterstock
The company's CEO Robert MacLeod also announced that he will be stepping down next year, in a further blow to the company.
Following the announcements, share prices in the FTSE 100 group plummeted by as much as 20%, with Johnson Matthey arguing that potential returns from the capital-intensive battery materials arm would not be adequate in a market that is becoming rapidly commoditised and that it was struggling to compete with more established large scale, lower-cost manufacturers.
"This decision will allow us to accelerate our investment and focus on more attractive growth areas, especially where we have leadership positions such as in hydrogen technologies, circularity and the decarbonisation of the chemicals value chain," CEO MacLeod said.
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Johnson Matthey has been developing eLNO, a black substance made from cobalt, lithium and nickel that is used in cathodes and the most costly part of an EV battery. Previously, the company had said its cathodes would allow for cheaper batteries with an increased range, and it had been constructing eLNO production facilities in Finland and Poland.
MacLeod added that the company would instead turn its focus to developing hydrogen technology and decarbonisation of the chemicals supply chain.
"While the testing of our eLNO battery materials with customers is going well, the marketplace is rapidly evolving with increasing commoditisation and lower returns. We have concluded that we will not achieve the returns necessary to justify further investment," he said.
The development is a major setback for British plans to establish itself in the burgeoning EV supply chain, which is largely dominated by Chinese companies such as CATL.
Earlier this year, the company made an unsuccessful attempt to search for a partner for its battery materials unit, which is valued at some £340 million (€398 million).
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Johnson Matthey is now making preparations for new leadership following MacLeod's resignation.
"After nearly eight years as Chief Executive, the time is right for me to move on... I am confident in our future growth prospects," he said in a statement.
He is set to be replaced by Liam Condon, the head of Germany's Bayer crop science unit that also includes Monsanto.
Bayer already announced Condon's departure, which it said would happen at the end of the year following disappointing results.
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