TIDMDGI
RNS Number : 3905C
DG Innovate PLC
11 October 2022
11 October 2022
DG Innovate plc
("DG Innovate" or the "Company")
Strategic Update
Investor Webinar
DG Innovate (LSE: DGI), the advanced research and development
company pioneering sustainable and environmentally considerate
improvements to electric mobility and energy storage, is pleased to
provide an update on the Company's development and
commercialisation strategy for its suite of technologies.
Highlights
Enhanced Drive Technology (EDT)
-- Further significant progress made with the development of the
Company's Pareta (R) electric drive platform in conjunction with
its partners, the UK Ministry of Defence and Meritor
-- Successful development of the advanced prototype Pareta(R)
concluded and as planned the focus is now on testing to develop a
final design prototype
-- Clear staged roadmap set out for the Company to enter Pareta
(R) pilot production in 2024 and full scale commercial sales
targeted for Q1 2025
-- Ongoing commercial discussions with collaboration partners
and other potential end users in a variety of markets, with plans
to roll out the Pareta(R) product suite more widely
-- Significant revenue opportunity within aftermarket
integration services identified, with a targeted acquisition
strategy being adopted both to accelerate growth and complement the
existing product offering
Enhanced Battery Technology (EBT)
-- DG Innovate's hard carbon anode materials have demonstrated
commercially attractive performance characteristics, in line with
the best performing sodium-ion batteries currently available
-- DG Innovate is working with a number of battery manufacturers
to enable further cell manufacturing development to be carried out
in collaboration with them
-- The Company is planning to increase the scale of its in-house material production capability
-- The Company has recently won an Innovate UK grant of
GBP170,000 to carry out a feasibility study for the evaluation of
manufacturing its sodium-ion anode material at scale in the UK
-- The Company intends to primarily pursue a licensing model to
bring its battery technology to the market
Enhanced Drive Technology
The Company's electric drive technology platform, Pareta(R)
consists of a motor, high power inverter and control electronics,
with a novel 'multi motor/inverter' architecture and a number of
fundamental and patent pending innovations. This technology has
been developed over a number of years via the Company's ongoing
work to build ultra high performance and durable electric drives
for the UK Ministry of Defence, with the resulting product family
currently in its third iteration.
The Pareta(R) platform has most recently been extended to
deliver its associated performance and durability parameters at a
competitive cost point for volume manufacture for commercial
electric vehicles, initially for the Company's collaboration
partner Meritor, the US-headquartered global commercial vehicle
components company. The advanced prototypes produced in a scalable
250kW/400kW format, aimed at bus and HGV applications, have already
shown good performance versus electric motor systems from global
motor manufacturers.
To develop this new offering from its current advanced prototype
phase to final product release and volume manufacture, the Company
plans to take a staged approach. Having successfully produced an
advanced prototype design, work is now ongoing to progress to a
final design prototype.
As previously announced, testing of the 250kW Pareta(R)
prototype drive is ongoing. Performance results to date are
encouraging, and in line with concept expectations. The current
cycle testing programme is expected to continue to the end of Q4
2022. Further cycle testing, including in the 400kW configuration,
is then expected to be undertaken to establish and validate
endurance requirements.
Following the successful completion of the final design
prototype stage the Company intends to undertake a phase of pilot
manufacturing and industrial engineering. Whilst the current
version is already well developed, further prototypes will enable
the design to be optimised, particularly regarding performance and
costings, in order to progress to the pre-production stage.
As announced on 9 September 2022, the Company has been awarded
funding from the UK Government's Advanced Propulsion Centre ("APC")
through their Scale-up Readiness Validation competition, part of
the Automotive Transformation fund. The APC funding of
approximately GBP600,000 will cover circa 50% of the eligible costs
of the Company's 'Scale up Readiness Validation of Parallel Motor
for Automotive Applications' ("SUPAR") project. The SUPAR project,
which will involve the establishment of a pilot production
facility, is designed to optimise Pareta(R) to enable the most
appropriate cost of production using lean manufacturing techniques,
enabling substantial upscaling to commercial scale production and
demonstrating the attractiveness of Pareta(R) drives to commercial
partners.
The pilot manufacturing will be carried out in parallel with
continued Pareta (R) development. The pilot facility, when fully
developed, is expected to have a capacity of approximately 2,500
Pareta (R) units per annum and be revenue generating for the
Company. The planning phase for the pilot facility is underway and
the Company expects to start ordering longer lead time items and
site preparations later in Q4 2022 and into Q1 2023. The target is
for the facility to be completed early in 2024.
Once the pilot plant has been established, the Company intends
to carry out a period of industrial engineering on the pilot
production line during 2024. Following industrial engineering and
with the achievement of a final commercial scale ready Pareta(R)
design, the Company is currently targeting full scale commercial
sales by Q1 2025. As noted, the latest Pareta(R) drives have been
designed from the outset to be compatible with volume
manufacture.
The Company is exploring multiple potential routes to market and
continues to progress commercial discussions with its existing
collaboration partners and other potential launch customers. The
Company is encouraged by the progress of discussions to date and is
confident that this will translate into commercial supply
agreements in due course.
The Company believes that Pareta(R) can address requirements
within multiple electric vehicle segments and potentially
additional stationary applications. Pareta(R) has been designed to
be scalable to a range of vehicle sizes, from e-bike size to large
marine drives. To date the Company's focus has been on the
military, heavy goods vehicle and bus segments and these are
expected to remain a priority given the Pareta(R) units inherent
suitability for these applications and the shorter expected
timescales for these sectors to adopt new technology.
Following completion of the pilot scale production programme and
in order to accelerate the Company's ability to secure commercial
scale sales, the current intention is for the Company to commence
development of a volume manufacturing facility with a capacity to
produce approximately 10,000 Pareta(R) units per annum.
Commissioning of such a facility is targeted for 2025, at a capital
cost currently estimated to be approximately GBP5 million, with the
potential for this to be funded through loans, further grant
funding and/or investment from a commercial partner. Additionally,
the Company sees the potential for commercial agreements in the
form of licenced manufacture, joint ventures or further direct
supply agreements in order to increase the volume of units produced
and sold.
In addition to demand from OEMs, the Company views the
aftermarket as a substantial opportunity for sales. With an
increasing number of emissions regulations being introduced and the
long useful life of heavy vehicles and buses, the Company expects
there to be an increasing demand for aftermarket electric vehicle
conversions. The Company would expect to service this demand from
in-house manufactured units, with the Company also providing
integration expertise and services.
In order to develop a full-service capability within the
electric vehicle drive market, particularly to enable aftermarket
integration, the Company is considering appropriate acquisitions
and intends to take advantage of any compelling opportunities
presented. The Company intends to fund these acquisitions through a
combination of equity and debt depending on the nature of the
acquisition.
Enhanced Battery Technology
The Company's proprietary energy storage technology encompasses
a family of hard carbon anode materials produced from a sustainable
bio waste product, specifically developed for use in sodium-ion
batteries, with potential applications in existing lithium-ion
battery production. Sodium-ion batteries offer an attractive
alternative to lithium-ion batteries, using materials that are more
abundant, with lower carbon footprints, and which circumvent
natural resource constraints involved in the production of
lithium-ion batteries.
DG Innovate believes that its battery partners consider the
Company's technology to be a disruptive alternative in their
aspiration to reduce dependency on hydrocarbon-derived anodes for
both sodium and lithium-ion battery technologies. The Company's
hard carbon anode materials have already demonstrated commercially
attractive performance characteristics, particularly enabling
significant energy densities, in line with the best performing
sodium-ion batteries currently available, in battery cells
manufactured at a small scale in the Company's own facility.
Further scale up of material production will involve an
iteration of process engineering to maintain the desired
performance and material characteristics in high volume.
Additionally, integrating the material into commercial scale
battery cell production will require a parallel process of
optimising cell design and large scale production engineering.
The Company intends to primarily pursue a licensing model to
bring its battery technology to the market , through licensing to
sodium-ion battery manufacturers, with the potential for in-house
material production should that prove commercially attractive.
Whilst there is currently limited volume sodium-ion battery
manufacture worldwide, a number of large global battery
manufacturers have recently announced plans to establish
substantial sodium-ion battery manufacturing capabilities. As
global sodium-ion battery production increases in the coming years,
the Company believes there will be a substantial addressable market
for its technology.
DG Innovate is already working with a number of battery
manufacturers and arrangements are being made to supply them with
small sample batches of material for further testing and to enable
further cell manufacturing development to be carried out in
collaboration with them. In parallel, the Company is planning to
increase the scale of its in-house material production
capability.
The Company has recently won an Innovate UK grant of GBP170,000
to carry out a feasibility study for the evaluation of
manufacturing its sodium-ion anode material at scale in the UK, in
particular to enable the Company to refine its economic and
technology model out to 10,000 tonnes-per-annum production of the
Company's hard anode material.
Due to the stage of development of the sodium-ion battery
industry and the complexities of cell manufacturing scale-up, the
Company currently expects that moving from the current pilot
manufacturing phase to 'giga-scale' manufacturing will take around
42 months from now, although there is the potential for earlier
deployment both in existing lithium-ion battery manufacture, and
sodium-ion battery manufacturing should commercial scale be
developed sooner.
Commenting, Peter Tierney, Chief Executive Officer of DG
Innovate, said: "Since I joined DG Innovate at the beginning of
July, we have been reviewing the Company's strategy in order to
ensure that our world class technology is appropriately exploited
and brought to commercial scale production as quickly as possible.
As set out today, we have a clear roadmap to commercialisation for
both our electric mobility and energy storage technologies to take
advantage of the numerous market opportunities we are seeing.
"This is a very exciting stage of development for the Company as
we progress the significant potential of our proven suite of new
and disruptive technologies. I believe that with this clear
strategy and route to market for its technology, DG Innovate has a
very bright future. I look forward to providing further updates as
we progress."
Investor Webinar
DG Innovate's management will be hosting an online presentation
and Q&A session at 5.30 p.m. BST on Tuesday 18 October 2022.
This session is open to all existing and prospective shareholders.
Those who wish to attend should register via the following link
where they will be provided with access details:
https://us02web.zoom.us/webinar/register/WN_nPBNMLtIQqe7cXNWAUcV3w
Participants will have the opportunity to submit questions
during the session, but questions are welcomed in advance and may
be submitted to: dginnovate@investor-focus.co.uk .
For further information please contact:
DG Innovate plc C/O IFC
Peter Tierney, CEO
Jack Allardyce, CFO
IFC Advisory (Financial PR & IR) 020 3934 6630
Tim Metcalfe
Zach Cohen
Grant Thornton UK LLP (Financial Adviser)
Samantha Harrison
Jamie Barklem
Daphne Zhang
Ciara Donnelly 020 7383 5100
OvalX (Joint Broker) 020 7392 1400
Tom Curran
Thomas Smith
WH Ireland (Joint Broker) 020 7220 1666
Chris Hardie
Megan Liddell
About DG Innovate
DG Innovate is an advanced research and development company
pioneering sustainable and environmentally considerate improvements
to electric mobility and storage, using abundant materials and the
best engineering and scientific practices. DG Innovate is currently
developing its products alongside a number of major manufacturers
across the transportation and energy sectors, research institutions
and the UK Government, and has filed 18 patents worldwide. DG
Innovate's current research and development activities are broadly
split into two areas, focusing on novel electric motor technologies
and energy storage solutions. Its two main products are:
- Enhanced Drive Technology (EDT) - High efficiency,
cost-effective electric motors + power electronics; and
- Enhanced Battery Technology (EBT) - Sodium-ion batteries
offering a sustainable energy storage solution at similar/greater
energy density to incumbent technologies at a lower cost, increased
safety with lower environmental footprint.
Further information may be found at: https://www.dgiplc.com
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