Morning, everyone. Jeff Elliott with Three Part Advisors. Thank you guys for coming. Next presenting company is Electrovaya. The ticker is ELVA. With us here today from the company, we have Raj Das Gupta. He is the CEO. Electrovaya is actually a Three Part Advisors client. If you guys would like a follow-up meeting or a call, just please reach out to me directly. Happy to set that up. With that, I'll just turn it over to Raj.
Thanks, Jeff. Good to be here this morning. I hope you're all having a good time here. I'm going to talk about Lithium-ion batteries and what Electrovaya is contributing in this sector, and we'll take questions afterwards. We're listed on NASDAQ under the ticker ELVA, and also on the Toronto Stock Exchange with the same ticker. I'll take this one as read. Electrovaya is a Lithium-ion battery company which has been innovating in the space for a long time, over two decades.
The present business is essentially built around a technology which we launched in 2018. That technology, we refer to it as the Infinity Battery Technology. What does it do differently than your typical batteries? Well, it really has three main differences. First of all, it is built around a ceramic separator technology.
All the batteries you guys have in your pockets right now, they have polymer-based separators, which obviously work well enough, otherwise you wouldn't have them in your pockets. However, if they get too hot, those separators will shrink, and the battery will catch fire. If it's got multiple cells in it, the neighboring battery will catch fire as well. Our technology has a ceramic membrane there. It's stable at high temperatures. We've made cells with this material. We've made millions of cells now, incorporated them in over 35,000 battery systems, and had a perfect safety record, right? They're a very safe technology.
That's differentiation number one, d ifferentiation number two is on the cycle life. That's the number of charge discharges you can do on the battery before it reaches its end of life. Going back to your phone, give or take, you have to get a new phone every two years, depending on how much you use it. The battery that goes in the phone does about 1,000 cycles before it reaches its end of life. An Electrovaya battery with this technology does 15,000 cycles. It is a very long-lasting battery. You're not going to use it in your phone, obviously, otherwise you'll never get a new phone.
You'll use it in a device which is doing multiple cycles a day, i.e. robots, i.e. forklifts, i.e. data center type applications. That's advantage two. Advantage three of this technology is it is able to handle a higher power density. It can charge a little bit faster, it can discharge a little bit faster than typical batteries. That's very valuable for certain types of applications where they need to operate very quickly. With those advantages, the disadvantages, we're smaller, and this technology's more expensive than conventional lithium-ion battery technology.
We've gone away from any application which is relatively commoditized. For example, electric cars. A typical electric car, when you buy an electric car, you don't know where the battery's coming from, nor do you really care. You care about its range t hat car is going to sit parked 23 hours a day anyway, so the cycle life doesn't matter. People are more worried about their pocketbook capital expense versus the probability of a safety event in their garage t hat's how people think, t hat market is not one we're going after.
However, if you're operating a warehouse, let's say you're a Fortune 100 company, you need to move goods in and out of that building 24 hours a day. You need that battery to operate the same way every day, the same way. It needs to charge quickly, it can't burn down your warehouse, y ou're going to look for a technology that can achieve that, and that's the type of application we've gone after. Material handling was the first market we went after. We now power, I don't know, 16 Fortune 100 companies' warehouses, including the world's largest retailers.
That's driven the financial, taken us from near bankruptcy in 2018 when we launched this technology, to now pretty steady cash-generating business. We've had over a year of net profits. We've had two years at least of EBITDA positive numbers. In the battery space, profitability and batteries is often an oxymoron. It's like oil and water w e've sort of proven that otherwise. Today, now we're expanding domestic production in a place called Jamestown, which is the far edge of the state. A beautiful part of the country and very low cost of electricity.
That plant will start operating towards the end of the year, and commercial output for that being used in 2027. I've sort of already done the presentation before the second slide. Safety, cycle life, that's the two most important things that we differentiate ourselves from. I've mentioned warehousing. Clearly, a typical Fortune 100 company's warehouse might have up to 200 electric forklifts inside those buildings. If they have robots, they have a much larger number. Any type of fire event is catastrophic, right? The safety element is highly important.
The same type of evaluations will also go into expensive infrastructure like data centers, right? Data centers are installing large amounts of energy storage outside of them in many cases, in combination with gensets. They need batteries which can handle high power, many cycles, and obviously handle the safety element better than what grid-scale storage solutions have typically been able to operate with. That's another segment we're going after d efense as well.
We're already powering some defense vehicles where the safety element is what they're really focused on. Right? If you have, let's say, a vehicle, and you've got troops inside that vehicle, and you need to hybridize it, you're not going to hybridize it with a conventional lithium-ion battery. You want to use our technology because it really lowers the risk to the troops inside the vehicle.
This slide just shows you how some of the safety testing has gone with our batteries. The most interesting result is actually the bottom left-hand corner there for you, where you just see a blue box. Right? That blue box, we've actually set a cell on fire on purpose in that battery. Right? If you did that for an automotive battery pack, the whole vehicle most likely would be up in flames. Here, that fire stayed in one cell in that large battery system, really a testament to how this ceramic separator technology prevents neighboring cells from catching on fire.
That really comes down to the heat stability of that material h ere you've got our ceramic separator i t looks the same as the regular separator. They're both white, but ours is over 90% ceramic. The one we're comparing ourselves to is better than the separator that's in your pocket. Right? The one in your pocket is just polymer. Here we're comparing it to a polymer which has been coated with ceramic. Even then, at about 130 degrees Celsius, one shriveled up. If it's shriveled up, that means your cell's already caught fire, and ours is stable.
There's a nice video on our website where we've taken a blowtorch to our material, and it, again, remains intact. Right. That provides a significant advantage. Application-wise, we're just going after these mission-critical applications where these parameters are key to them, and that is proving to be fairly successful. Where we lie in the overall ecosystem of battery manufacturers is somewhat interesting.
Traditional large-scale lithium-ion battery manufacturing, that is heavily weighted towards Chinese manufacturers, the largest being CATL, and there's a bunch of others out there in China, BYD, et cetera. Below them, there's some large Korean players LG, Samsung are the two largest t hese battery companies essentially are looking to serve the automotive industry primarily and secondary grid-scale energy storage. The main objective is to lower the price per kilowatt hour. They've brought down the price of batteries so your electric cars can be relatively affordable.
We're not trying to compete with these players at all. The only exception to that would be on energy storage. Right? On energy storage, these companies have typically made large batteries, which are designed to handle two to four hours of storage, which is what you need if you're implementing renewables onto the grid, or you're looking to potentially even replace a peaker plant or something like that. If you're an industrial site, i.e. data center, you don't need two to four hours of energy storage in most cases.
You need five minutes, 10 minutes, 30 minutes of energy storage. That's where our solution will come in. I'll come into that in more detail. That's the traditional side. You've got a whole host of companies who are also listed on NASDAQ with us, who are mostly looking at other cutting-edge battery technologies. Think silicon anode, solid-state, lithium metal. These companies, I'll list a few of them Amprius would be a good example, Enovix, QuantumScape, et cetera.
There's a long list of them. These companies are all focused to some degree on increasing energy density of the batteries. Most definitely, they have some exciting technologies that achieve that. That's what they're doing. The applicable markets that they're looking at are applications where you want more energy in a smaller space, right? You don't necessarily need it for your cars. In fact, cars are going the opposite way. They're going to cheaper, lower energy-dense batteries.
You might definitely need that for anything that flies in the air. Think drones. They're doing good stuff there. That's the market they're going after. We're a bit different. We're going after heavy power-requiring industries, high cycling required industries, and industries which are very sensitive on the safety front. I believe that TAM is significantly larger than the one on the right there. We'll see.
We're relatively unique in that sense as well. I would say the high energy dense field is a relatively crowded space. In terms of the battery companies looking at very high power, high cycling technologies, that's a much shorter list. Material handling is our most mature space because it's the product we launched first. Today we have solutions which cover pretty much most of that market. It's been driving our growth, which has been pretty good over the last few years. We're able to sell battery systems into that market. Last quarter was about 32% margins, right? We've been pretty steady at that level. That's a good business and a growing business. Robotics, we've launched some products there. The TAM there still has a ways to go.
It's a new segment overall, but one which we believe is going to be very significant over the next few years, and we're getting in there early, right? We're already shipping batteries into the robotics. Still relatively low numbers, but we expect that to go up. Airport ground equipment, we do have batteries at two U.S. airports right now, although airlines lately have been affected by higher fuel prices. Potentially some of these orders we had anticipated in that segment will be pushed out a bit. It will come. Defense, we're already in a few defense applications.
There's a picture there of one vehicle that is using our batteries. That's an autonomous, I guess it's like a drone carrier, right? There seems to be some interest for that. The one that's probably the largest opportunity for us is energy storage. I used to speak with investors over the years, and I would say, "Oh, energy storage, I launched products there a decade ago. That's a commoditized space. We don't want anything to do with it." That has most definitely changed as of late, right? Data centers not being the only contributor for that change in strategy.
Generally speaking, you can see it from your electricity prices, the demand for electricity is going up. Industrial sites that we already serve are seeing higher and higher costs. You want to be able to, A, energy storage is a very effective means to peak shave. You don't need many hours of energy storage to achieve that. Again, our solution is aptly designed for that. Data centers, we all know, are extremely power hungry.
One caveat there is they may be very power hungry, but they have huge volatility in power demand, right? That power swing can be up to 40%. Let's say it's 100 MW one minute, it might be 150 MW the next minute. Generators, the grid, they hate that. They want to be flat. If you look at your diesel gen set, they want to generate power at the same level all the time. If it has significant swings in demand, the efficiency of those devices goes down. The utilities themselves reflect that in peak.
They'll charge you on a kilowatt hour standpoint, but they'll also charge you for your peak usage because they have to design their whole infrastructure for that peak period. What we see here is an opportunity where we can have an Electrovaya battery which is sized significantly smaller than the commoditized energy storage solutions, but have the same impact. This is a product which we're launching, and it'll coincide with our Jamestown manufacturing output. In terms of partnerships, we already serve the world's largest companies, and we have a very good list of OEM partners already.
In terms of technology development, we have proven ceramic separators well already. We made millions of cells with them. We're also working on another ceramic separator which would be ionically conducting. Helps us with a solid-state battery. We have cells there. Again, as I mentioned earlier, this is a relatively crowded field, but not one we have given up on either. We are also working on an ultra-high power battery, right?
This would be one which can charge in less than five minutes, discharge in less than five minutes. Why is that interesting? We had been looking at robotics a year ago, and one of the companies we were talking to would say, "Ultimately, we want these robots to charge in less than five minutes." We said, "Okay, our current battery technology can't do that. It can do 20 minutes. Let's see what we can do." We looked at a change in anode material. That's one of the electrodes in the battery. We had a pretty rapid development of this program.
We already have cells working where they're doing five-minute charge, five-minute discharge, and demonstrating the long life and all the good stuff we've already have with our technology. Robotics certainly is a segment where this can be applied, but we find it can also be applied inside next generation data centers, where they are moving towards 800 V DC architectures right now. A typical data center looks the same as an industrial building, where power is AC 480 V, and the racks are plugged in the same way your dishwasher is, right? The next generation sites are going to be more like an electric vehicle, which the new ones are about 800 V DC design, so they can handle higher power.
For those, you'll need to have energy storage instead of outside the building, you'll probably need it inside the building. You won't need it for more than five minutes. You'll need a type of technology like this one. That's another exciting thing that we have in development. I'll skip that one. We'll add some more slides on this over the coming months about our energy storage product, which is still in development, but we are very bullish on that one. The first solution will be a containerized unit, which is designed to do the same thing as the commoditized versions, just less of them required to do the same amount of work.
That's why we think we're going to be successful there. On top of that, you get production tax credits for I'll go over here for a second. Production tax credits for anything we make out of the Jamestown plant. That's going to be helping our margins. On top of that, customers of our energy storage products, because they're made in the U.S., will be eligible up to 40% investment tax credits. That makes these products very, very attractive.
In the bull case, the Jamestown production will be allocated more for energy storage, defense applications. These are applications where they're sensitive to, obviously, where they're manufactured. In the bear case, the Jamestown production can be accommodated from our existing demands and material handling, robotics, et cetera. I'll go back to the sites. The site's well on their way under construction. We have a direct loan from the EXIM Bank, which is funding the build-out and the equipment that's going into this facility. In terms of leadership, we've already hired the managers for the site, coming from mostly Korean battery companies.
The lead for the cell plant came from LG Chem. We have another second guy from LG Chem, and then another one from Tesla BYD. This plant is well on their way under construction. The cell equipment will be completed this summer, then we'll start a factory acceptance and site acceptance plan. Outputting from this facility will start in 2027. In terms of other operations, we have two sites in Canada, one where we're making battery systems already, and one where we are doing R&D work on this next-gen separators and cells.
The Jamestown site is about three hours' drive from our other two sites. We also set up an office in Tokyo. We already sell battery systems into the Japanese market, and we're looking to grow that. Japan is also a key point for our supply chain on ceramics and input materials. That's why we're setting up a presence there. Then, of course, we sell to Toyota and a few other Japanese names.
We have a partnership with Sumitomo Corporation as well, which is looking at the overall Asian market, but especially in Japan. In terms of financial performance, we definitely hit an inflection point a few quarters ago. We have been pretty steady in terms of margins, which have been growing. EBITDA numbers have been very consistent and growing as well. In the battery space, these kind of numbers are very unusual. In terms of the cap table, that's obviously also been improving. With that, I'll take some questions.
You said right now, you're obviously, Jamestown is a U.S. manufacturing. Are there any other competitors of yours in the heavy power side of things that are manufacturing in the U.S. as well?
Batteries which are optimized for heavy power, no. It's very slim pickings there.
The timing of the ramp of the Jamestown facility, you mentioned it's 2027, and also the interest obligation on the first tranche of debt on that facility also seems to be ending in 2027. Are those things matched in time? When in 2027 are we talking about for those things?
Making a new factory, of course, entails lots of risks, right? Especially in terms of making sure everything works properly. For that, we have taken a very conservative approach. The entire battery plant is essentially being set up in Korea first. We will run it for eight, nine weeks. Our team from Jamestown and Canada will be parked and creating lots of kimchi for a long period of time. We'll run that, make sure it all works well, then it will be disassembled, shipped to Jamestown. It's scheduled to arrive in November and re-set up, and then there's a start-up period.
In terms of the materials that are going into the cells, they're identical to the ones we're already using. The cell that gets produced in Jamestown is identical to the cell that currently gets produced. Nothing on the supply chain is really changing other than some additional localization. For instance, electrolyte manufacturing will come out of the U.S. instead of the Japanese site where it's currently coming out of. That's the plan there, and then commercial output from Jamestown will start, we anticipate early 2027 after we're satisfied with the product quality. In terms of EXIM's interest in this, they're actually pretty flexible.
We just recently adjusted some of the dates with them, pushing them back a little bit. Overall, we're in a good position to satisfy any debt payments. With EXIM, if this site looks like it's going to sell out very quickly, which we're bullish on, we will look to expand it further. We own 52 acres there, and to expand it's an 18-month process, give or take. We believe that there's appetite there to support that.
Sorry, sir. Have you used a prototype wide-scale unit that someone could actually look at?
Yeah. Great question. We used to produce these energy storage. You're talking about energy storage?
Yeah.
Yeah. We've produced a bunch of them about over a decade ago, and then we stopped because of, for the reasons I already outlined. We have a project with the Department of Energy already, portions of which will be installed this year. We're also going to build a system for our own plant, in Jamestown, which will be installed in December. We're already also having conversations with potential customers for offtake later in 2027.
It's hard to sell something that physically doesn't exist or exists on a PowerPoint presentation, right? We will most definitely be using it ourselves, as well for our own purposes.
Your own unit will be ready when?
It'll be ready in November, but installed in December. By the end of this year. By the end of this year, yeah.
Thank you.
Perfect. Thanks, everyone.