Home / News / Artificial Intelligence / A battery, sweetie Our Next Energy receives a sizable $300M Series B to construct a gigafactory

A battery, sweetie Our Next Energy receives a sizable $300M Series B to construct a gigafactory

Charging a battery In an effort to start up its $1.6 billion gigafactory, Our Next Energy announced this morning that it had closed a sizable $300 million Series B round.

The two-and-a-half-year-old company, which closed a $25 million Series A in October 2021 and a $65 million Series A1 in March 2022, is now valued at $1.2 billion post-money, a stunning increase.

A123 Systems, Apple’s automotive effort, and Ford veteran Mujeeb Ijaz founded ONE, which has concentrated its search for low-cost, widely accessible materials for its battery chemistries. The in question gigafactory will produce lithium-iron-phosphate, or LFP, cells.

According to Ijaz, the Michigan plant’s first two gigawatt-hours of capacity will be operational by the end of next year, and the remaining 18 gigawatt-hours will be added gradually over the ensuing three years.

The new round was co-led by Fifth Wall and Franklin Templeton, and it included ONE’s Series A investors Breakthrough Energy Ventures, Assembly Ventures, BMW I Ventures, and Volta Energy Technologies. Growth equity investors Temasek, Riverstone Holdings, and Coatue, venture investors AI Capital Partners, and Sente Ventures also participated. Two unnamed strategic investors, “a manufacturer of EV technology solutions and a renewable energy provider,” are also investing in the round, according to the company.

The addition of Franklin Templeton is significant because it signals a change from just venture capital to growth equity. The company gains a board seat as a result of the investment and may be used as a source of debt to finance ONE’s equipment purchases. According to Ijaz, “We actually see that as the start of a long-term relationship that will go beyond Series B into Series C and possibly as we go public.”

The Inflation Reduction Act, which provides significant incentives for businesses to develop domestic supply chains and production, has recently given the U.S. battery industry new confidence. This is when ONE decided to transition into at-scale manufacturing. Because of this, American battery startups are starting to embrace their role as manufacturers instead of just R&D centers that license their technology from larger, primarily Asian companies like LG Energy Solution, CATL, and SK Innovation.

The choice to construct an LFP gigafactory is not without risk, despite the fact that ONE has received substantial government support, including $220 million in grants from the state of Michigan. Although LFP was created in the United States, China now produces the majority of the material.

This is partially due to the fact that A123 Systems, a pioneering battery company, placed a large bet on the chemistry only to watch the demand for its cells vanish. Because of this, the business went bankrupt and was later cheaply acquired by a significant Chinese auto parts manufacturer. Additionally, many LFP-related patents, some of which only came to an end last year, were purchased by Chinese companies.

LFP cells lost popularity in the U.S. and Europe after the successful introduction of the Tesla Model S because they couldn’t provide the range that consumers were expecting. Chinese businesses have built sizable factories that can produce cells at low costs over the past ten years.

One’s gigafactory project is similar in some ways to A123’s, and that one didn’t turn out well. Ijaz, a company executive during the company’s growth and after its sale in bankruptcy, was questioned about whether he believed this time would be any different.

As I closely followed that experience, I’ve given this a lot of thought, he said. There are, in my opinion, four differences.

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