Natron Liquidation: US Battery Manufacturing Challenges

Natron Energy Ceases Operations: A Cautionary Tale for Battery Startups

Natron, a sodium-ion battery startup, has halted its operations this week, bringing an end to its 12-year effort to bring its technology to market within the United States.

Order Backlog and Certification Delays

Despite securing $25 million in orders for its Michigan-based production facility, the company was unable to fulfill these commitments. This was due to a pending UL certification, as reported by Raleigh’s The News & Observer. Natron’s planned expansion into North Carolina, with the creation of new jobs, was contingent upon this certification.

Obtaining UL certification is often a protracted process, frequently extending over several months. Investors subsequently hesitated to release additional funding, resulting in a significant cash flow problem for the startup.

Liquidation and Asset Distribution

Sherwood Partners, Natron’s principal shareholder, attempted to divest its ownership stake but was unsuccessful in finding potential purchasers. Consequently, the company is undergoing liquidation, and a majority of its workforce is being laid off, with a small team remaining to manage the operational shutdown.

Challenges in Battery Manufacturing

Natron’s closure exemplifies the obstacles inherent in establishing battery manufacturing capabilities without consistent and long-term industrial policies. The progression from a startup to a large-scale gigafactory typically requires a decade or more – a timeframe exceeding most business cycles and investor interest.

The company is being dissolved through an “assignment for the benefit of creditors,” a method that offers a faster and more discreet asset sale compared to traditional Chapter 7 bankruptcy proceedings.

Ambitious Plans and Market Focus

Just a year ago, Natron announced plans for a $1.4 billion sodium-ion battery factory in North Carolina. This facility was projected to produce gigawatt-hours of cells annually and generate up to 1,000 jobs. Natron specifically targeted the stationary storage and data center sectors, where the lower energy density of sodium-ion technology is less critical.

Lithium Price Fluctuations and Competitive Pressures

While sodium-ion batteries possess the potential for significant cost advantages over lithium-ion alternatives due to the abundance of sodium, this advantage has been diminished by a recent decline in lithium prices. Over the past two and a half years, the price of lithium carbonate has fallen by 90%, according to Benchmark Mineral Intelligence.

A Pattern of Failures

Natron is not an isolated case; it represents the latest in a series of recent attempts to establish large-scale battery production outside of Asia.

Recent Battery Company Bankruptcies

• In June, Powin, based in Oregon, filed for Chapter 11 bankruptcy after failing to secure a non-Chinese source for lithium-iron-phosphate cells, essential for its grid-scale battery assemblies.
• Earlier in the year, Northvolt, a Swedish battery manufacturer, also declared bankruptcy in its home country, effectively ending Europe’s most promising effort to create a domestic competitor. The company was reportedly losing $100 million monthly while grappling with the complexities of large-scale manufacturing. BMW cancelled a $2 billion contract with Northvolt in June 2024 due to delivery issues.

The Asian Advantage

These failures underscore the difficulties of building battery companies outside of Asia, which has cultivated both robust supply chains and companies with extensive manufacturing expertise over many years.

The Path Forward

For the U.S. or Europe to successfully challenge the dominance of Asian battery manufacturers, sustained governmental support spanning a decade or more is crucial, rather than the inconsistent policies of the past 15 years. Joint ventures with established Asian companies like Panasonic, LG Energy Solution, and SK Innovation appear to be a more viable strategy.

In the near term, the West’s most realistic path to domestic battery manufacturing remains reliant on partnerships with Asian companies.