Electrovaya, a small Canadian battery maker, is looking to compete with the top companies in storage after buying an electrode manufacturing plant previously owned by Evonik and Daimler.

The company announced a supply agreement with lithium-ion battery producer Leclanché less than a week after completing its acquisition of Evonik Litarion, which has a 500-megawatt-hour-capacity factory in Germany.

“We have a huge pipeline, and we were throttled on production,” said Electrovaya’s chairman and CEO, Sankar Das Gupta, on a conference call. “Previously, we did not have the capacity to bid on large systems.”

He refused to give guidance on 2016 sales figures, but said: “Things are looking good. You will not believe the amount of requests for quotation we’re receiving. They are pouring in.”

Electrovaya completed the "transformational" purchase of Evonik Litarion, a much bigger business than its own, at the end of last month.

The deal included licensing of the intellectual property for Separion, a ceramic composite separator used for lithium-ion battery electrode production.

“We intend to make the ceramic composite separator available to all producers of lithium-ion batteries and make it an industry standard,” Gupta announced.

Electrovaya intends to upgrade the Litarion plant by incorporating its own non-toxic production processes, which it believes could greatly reduce costs.

"Conventional manufacturing of lithium-ion employs a toxic n-methyl-pyrrolidone process, which is prohibitively expensive and energy-intensive,” said Gupta in a press statement.

He continued: “Electrovaya’s unique non-toxic manufacturing technology will enable this best-in-class plant to become one of the lowest-cost producers, as well as the greenest and one of the largest manufacturers globally.”

Evonik Litarion was formerly part of Li-Tec, a joint venture between Evonik and the carmaker Daimler. Some have speculated that Electrovaya was able to pick up the Litarion business on very favorable terms after Daimler decided to withdraw from the battery market.

As well as having a narrow focus on the auto industry, Litarion may have been at risk from growing concerns over toxic manufacturing in Germany, Gupta hinted. “There is a large amount of interest from Germany to go to a non-toxic process,” he said.

“If we had not taken it over, the plant could not function in the regulatory environment in Germany.”

Retooled for non-toxic manufacturing with Electrovaya’s clean assembly process, the Litarion plant represents a real bargain, according to Gupta. “This is the largest plant in Europe,” he said. “It’s a completely debt-free operation.”

He estimated Litarion’s previous owners had spent €500 million ($571 million) on the business, adding: “It’s a profitable business, and they left quite a lot of cash. We are not looking for any investment cash.”  

GTM understands the remaining Li-Tec activities, such as cell assembly, will now likely be closed down.

Electrovaya’s Litarion acquisition underscores the importance of safety, as well as cost, in battery technology commercialization. Tesla’s Elon Musk played up the safety aspects of his Powerwall products when his company entered the energy storage market this month.

And Doug Staker, vice president of global sales at Demand Energy, a commercial-scale energy storage system developer, said safety concerns were a limiting factor for lithium-ion battery deployment in certain markets.

"In New York, the fire department won't let us install lithium-ion on commercial customer premises, which is why our systems use lead-acid," said Staker.

Gupta clearly sees this area as the ace up Electrovaya’s sleeve following the Litarion acquisition.

“All lithium-ion applications where safety is important, such as energy storage, electric vehicles, aerospace and utilities, should, in our opinion, utilize this separator, which gives vastly improved safety performance [compared] to lithium-ion batteries and cells,” he said.

Comments from Litarion executives in the press convey a sense of relief at having been rescued.

“The last six months has been a period of constant change at Litarion,” said André Mecklenburg, Litarion’s chief operational officer.

“Shifting from a 100 percent supplier to the automotive industry, we are now focusing on the emerging market of energy storage systems and industrial applications. We are extremely happy having this supply contract with Leclanché, fitting excellently in our new core field.”