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Another technology has lithium-ion in its sights 

Another technology has lithium-ion in its sights 

If you’re like us, you will be fascinated by lithium and electric vehicles (EVs). Before delving into the latest fascinating development, I thought it might first be worth reminding ourselves of the challenges of investing in new technologies. 

Investing in technology that advances the world must surely be a good thing? Well, evidently not. 

Back in the 1930s, the transformative impact of the car and plane were underappreciated by many, but there was enough hope that the U.S. ultimately harboured 2000 car manufacturers. Today, only four of scale remain, and, if my facts are correct, three of them only exist thanks to government or private equity bailouts. From 1908, the work of Alan Archibald Campbell-Swinton, Karl Braun, Philo Farnsworth and Vladimir Zworykin put the world on the path to television, and millions and millions have been sold, but while the U.S. and Australia had many television manufacturers, none exist today in either country. 

When it comes to commercial airlines, you only need to look at the long-term net returns published by the International Air Transport Association (IATA) to discover that wealth creation has been virtually non-existent. According to the IATA, over the most recent five years (including a forecast for 2024), the commercial aviation industry has collectively lost U.S.$147.1 billion. Yes, it’s great for consumers but no good for investors. 

While much of new and life-changing technology offers enormous social returns, the aggregate financial returns can be, and often are, far less attractive. 

In order to invest successfully in the new or transformative technology, you need to pick the right companies at the right time—and you have to be smart enough to get the entry and exit timings right, too. 

This is a difficult job for any investor to consistently succeed at. So, we are left with the idea that it is far better to invest in far more mundane enterprises with less audacious goals than transforming the world.  

And the latest development in the battery storage story is a case in point. Much has been made of the transformative potential of electric vehicles with their lithium-ion batteries. But can anyone be sure that in 10, 15 or 20 years time, lithium-ion batteries will be the dominant source of vehicle locomotion? Developments in stationary battery storage solutions reveals an industry in constant flux and constantly advancing.  

In a significant move that appears poised to reshape the energy storage landscape, Natron Energy has launched commercial-scale production of its sodium-ion batteries. This pioneering technology offers an alternative to traditional lithium-ion batteries, potentially disrupting global lithium demand due to its sustainable and abundant material sourcing. 

Founded in 2013, Natron has been developing sodium-ion battery technology in a laboratory setting. However, with the commissioning of a new production facility in Holland, Michigan, Natron has transitioned into a major commercial producer of sodium-ion batteries.  

Natron, somewhat predictably, says its new batteries boast several advantages over their lithium-ion counterparts, including higher power output, faster recharge rates, and a much longer lifecycle estimated at 50,000 cycles. They also feature non-flammable and stable chemistry, making them safer for a variety of applications. 

In 2022, an article in Chemical & Engineering News rated Natron’s sodium-ion batteries at 70 Wh/kg, which is near the bottom of the sodium-ion energy density scale and half the density scale being pursued by mobility players. Natron, however, claims its batteries charge and discharge at rates 10 times faster than lithium-ion, a level rendering them ideal for backup power storage for data centres, for example, and for EV charging stations.  

And as these batteries do not require conflict minerals or environmentally damaging materials, it positions the company and its solution as an eco-friendlier option, which could help to drive demand. 

Sodium, the primary material in Natron’s batteries, is estimated to be 500 to 1,000 times more abundant and less environmentally taxing to extract than lithium. Additionally, the batteries are composed of commonly available materials such as aluminium, iron, and manganese, all sourceable from geopolitically stable and reliable supply chains. 

The potential impact on the lithium market with be worth watching as industries seek more sustainable and cost-effective alternatives to lithium-ion technology, which relies on materials like cobalt and nickel that are often sourced under geopolitical tension. 

With plans to ramp up production to 600 megawatts annually, Natron is establishing a precedent for future gigawatt-scale facilities. The company, somewhat predictably, says it plans to expand into other industrial power markets, including telecommunications and EV fast-charging. 

As the global push for electrification and sustainable energy solutions continues, a sodium-ion battery becomes another player and potential disruptor in the ever-evolving technology landscape, proving it is challenging to predict who will win or how. 

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Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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