Demand for battery power is exploding. Electric vehicles sit at one end of the spectrum while tiny powered medical devices are at the other end. The connected world and rapid growth of the ‘Internet of Things’ saw 15 billion powered sensors installed in 2015, an increase of 200 per cent on the previous year. All this is a great opportunity for Ilika (AIM: IKA) which is on the verge of booking the first commercial sale of its innovative solid state batteries.
Innovative solid state battery design
Ilika’s design has several advantages over lithium-ion batteries. It provides six times faster charging times, the charge lasts four times longer and the battery is half the size. The cells can be stacked to enable higher energy capacities and they work at high temperatures.
For the last couple of years the company has been working closely with its potential customers and has three live licensing proposals on the table, on top of a pipeline of almost thirty other potential licensees. Ilika’s business model is asset-light – it will sell manufacturing licences and receive royalties on each battery sold. Chairman Mike Inglis used to work at ARM Holdings, so is very familiar with this approach.
Management are hopeful of signing their first licence during the current financial year which ends in April. The recent results announcement spoke of ‘intensified commercial discussions’. Assuming the first deals get done on this timeframe, the forthcoming financial year should see Ilika reach breakeven. It has also announced three research grant deals and funding for a development project, which CEO Graeme Purdy says could in time represent potential license sales as well as providing near-term income.
Ilika is well funded and its market cap of just £34 million looks low given the scale of the opportunity.