Natron Closure- Is The Sodium Ion Battery Market Set For Chinese Dominance As Well?

Outside of the overwhelming dominance of LFP batteries today, the technolifies closest to commercial reality are solid state batteries and sodium ion batteries. It says something about China's sustained investments  and dominance that in all three, the most likely market leaders continue to be from China.  European and American efforts to spark a Venture Capital backed counter have increasingly faltered, as firms have simply failed to find enough backers with the long term capital and patience to back what many feel is a very uphill battle against the Chinese giants who continue to showcase gains across technoligies. Natron Energy's closure simply underlines this reality. 

The sodium-ion pitch was simple: cheap raw materials, better cold-weather performance, and thanks to a more stable chemistry, safer operation. That was enough to get investors excited, as catching up with China in Lithium ion chemistries was considered a lost cause as far back as 2015.  Both sodium ion and solid state batteries, besides a host of others like Redox batteries and Air (Zinc, Iron ) batteries have been backed to break the Chinese dominance. With very limited success. 

Non-China Battery Startups Littered With Struggles 

The funding issue has been well illustrated by the challenges faced by Quantumscape in solid state batteries, and now, Natron Energy. Natron raised $163 million in private funding and another $25 million from the Department of Energy. But 12 years after it started, the firm has admitted failure, on  commercializing its Prussian blue technology.

UK-based Faradionwas acquired by Reliance in December 2021 for £100 million, with another £25 million promised for commercialization. Three and a half years later, the company has gone nowwhere, and is surviving with a skeletal staff. Will Reliance make something out of its Sodium Ion technology? Time will tell. 

Another US battery firm, Ambri, which had also attracted funding from Microsoft, Reliance and others, also filed for Chapter 11 due to a tough fundraising climate and delays in scaling manufacturing last year. The firm is now focused on scaling its 3rd generation liquid metal cell technology quickly.

Peak Energy, which had raised $65 million for sodium-ion cells, is actually considering a pivot toward high-temperature LFP.

Many others, like Altris, Tiamat and Unigrid are surviving with scaled down ambitions or by pivoting to battery management or services, rather than manufacturing. 

A Chinese Duopoly?

While these firms struggle, two of China's leading battery makers, CATL and BYD have between them, captured over 50% of the BESS market, be it in mobility or stationary storage. Not just that, these firms are leading the industry in innovation and IP today, with most western firms and the rest playing catch up. While their leadership is built around Lithium ion chemistries today, these firms are ahead of the rest on solid state as well as sodium ion. From full-scale demonstrations, to start of manufacturing, it is Chinese firms that are leading in newer chemistries as well. 

Lessons For Others

While there is zero doubt that it is Chinese investments and innovation that has brought the market to where it is today, especially in terms of lower costs, countries that want a degree of energy security by not depending on the dragon face a tough route. Besides being prepared to oay a higher price, they also have to contend with supporting startups and firms in the space that depend on China for raw materials as well today, especially in Lithium chemistries. Or even the manufacturing equipment, as we see in Solar. At current prices, LFP batteries have pushed back viability for many alternatives by years, further hurting their case for commercial adoption.    

And then there is the by now familiar Chinese playbook of building massive overcapacity. If that doesn't put off firms, then the lower prices that result certainly hurts all but the strongest, depending on the kind of prtection they can manage in their home markets. With batteries, China has already shown both sides of the picture, as prices crashed over 40% in the past year, when efforts were being made to prop up domestic champions in Europe, the US and elsewhere. And then we have seen the spike in Lithium carbonate prices since July, a warning of price volatility that will surely make many startuos and governments wonder if it is worth the effort to build domestic manufacturing. However, considering the long term stakes involved in the energy storage business, one believes governments in India, Japan will persevere. Industry needs to do its bit by investing more aggressively and smartly in R&D, besides higher engagement with academic institutes to ensure a focused effort and outcomes.