In the 1990s, a Harvard professor, Clayton Christensen, invented the term disruptive innovation.
Marketing people loved it.
Some products (Airbnb, Smart phones, Uber, Netflix) earned the label.
Many companies employed the term as a sloppy way to say, “we are different”.
“Over the years, marketers and mainstream media co-opted the term, “disruptive innovation” and drove it so deep into our collective psyches that every industry now hungers for disruptive innovation. Nothing less will satisfy.”
Disruptive is sexy.
But “disruptive” is not always where the money is.
Incremental change (small efficiencies inside a big industry) will often generate more revenue than the sparkly new gizmo that’s trying to jam its flag into parched ground.
Nano One (NNO.V) is a $73 million Canadian company that has developed a patented incremental change in the lithium-ion battery manufacturing process.
Simply put, NNO’s proprietary technology will help battery-makers save money.
On August 2, 2017, NNO filed a patent to promote yield improvements in the manufacture of cathode materials for use in advanced lithium-ion batteries.
On November 16, 2017 Nano One announced that is has “successfully piloted nickel rich cathode materials for high density energy storage applications such as next generation lithium ion batteries for electric vehicles.”
“These pilot tests were conducted at approximately 100 times normal lab scale,” explained CEO, Dan Blondal, “and the results provide added confidence that these nickel rich materials can be manufactured at commercial scale. Electrochemical testing of battery cells made with these pilot materials is showing initial capacity measurements in excess of that achieved in the laboratory.”
NNO has demonstrated that its scaled process can make nickel rich cathode materials using the cheaper lithium carbonate in place of the more expensive lithium hydroxide.
The company is prepping up engineering packages for 3rd party evaluation.
By any reasonable measure, NNO’s pilot program is beating its own stated milestones.
“Increased energy density at a lower cost are key drivers for electric vehicle batteries and to achieve this the automotive sector is trending towards higher ratios of nickel and lower ratios of cobalt in cathode materials.”
The global addressable market for cathode materials is 500,000 kg/day.
Conversations about lithium-ion batteries tend to drift quickly towards Tesla (TSLA.NASDAQ) and its giga-factory.
But according to Bloomberg, China currently contributes about 55% of global lithium-ion battery production – and by 2021 China will produce 65% of all production.
In fact, the Chinese are building battery factories bigger than Tesla’s.
On November 14, 2017 Nano One Materials announced that it hosted a business delegation from Rushan City located in Shandong Province, China.
“We are developing a manufacturing process for the production of lithium ion battery cathode materials and our pilot plant has made it possible to explore business opportunities in Chinese provinces like Shandong,” stated Dr. Stephen Campbell, Principle Scientist at Nano One.
According to the press release:
Collaborative initiatives were presented and discussed with the aim of identifying possible strategic partnerships, joint ventures and co-development opportunities to expand Nano One’s activities in the Chinese nanomaterials sector with the support of Chinese funders.
Electric vehicle sales are expected to increase from 650,000 in 2017 to about 7,000,000 a year in the next 10 years – an increase of 1,100%. The Chevy Bolt’s replacement battery is listed at $15,700.
There are about a dozen new technologies being developed to displace lithium ion batteries. But none of them have a toe hold in commercial markets.
Nano One’s stock price is up about 280% since we first started writing about it.
That’s more than an incremental change.
We believe there are bigger things coming.
Full Disclosure: Nano One is an Equity Guru marketing client, we also own stock.