Crain’s Detroit Business
May 24, 2023
The concrete has not even been poured for Our Next Energy’s new 659,589-square-foot electric vehicle battery plant in Van Buren Township, but CEO Mujeeb Ijaz is already considering an up to 1 million-square-foot expansion.
ONE has the right of first refusal with developer Ashley Capital on a potential development neighboring the $1.6 billion factory under construction, Ijaz said on a recent tour of the site. The new building would span between 600,000 square feet and 1 million square feet and come with a ONE investment of $800 million to $900 million.
Mulling a mammoth expansion when the Novi-based LFP (lithium iron phosphate) battery startup has yet to make regular revenue is more strategic than aspirational, as Ijaz describes it. The battery industry is moving at breakneck pace as automotive companies and utilities race toward a clean energy future. The competition is forcing ONE to build out capacity for business that doesn’t technically exist yet.
“Our company’s footprint in terms of customer activity is growing outside of what we can do in just this building,” Ijaz said.
While the expansion is not set in stone, booking business is not a problem if the company can deliver on its ambitious production goals and bank the contracts, according to the CEO.
“We need to make sure that the capitalization of the company is forward-looking, that we’re confident,” he said. “We need to make sure that our revenue and our customer forecast is there.”
The projected demand for batteries is much higher than the supply, not to mention the demand for domestically-sourced batteries, said Glenn Stevens, executive director of MICHauto and vice president of mobility initiatives for the Detroit Regional Chamber.
“The OEMs have an almost unquenchable thirst for battery supply and new technology,” Stevens said. “They’re somewhat of a homegrown team, and Michigan and the U.S. needs that when it comes to battery technology.”
Ijaz previously told Crain’s that Our Next Energy has, conservatively, about $4 billion in business in the pipeline over the next five years. The company was valued at $1.2 billion after raising $300 million in its Series B funding round earlier this year.
The bulk of its revenue is expected to come initially from the utility storage vertical. The company announced in March a $500 million contract to supply energy storage products to a Berkshire Hathaway Energy solar-powered manufacturing hub in West Virginia.
Its commercial vehicle vertical, seen as an avenue into passenger cars, is also poised to generate revenue. ONE announced in March a $200 million supply deal with Charlotte-based Shyft Group Inc.
ONE’s other publicly announced customers include Motiv and Oak Park-based Bollinger Motors, as well as a partnership with BMW. What’s missing is a major supply contract with an automotive OEM, but Ijaz said he never expected that to materialize quickly. He said it would likely be another year before it happens.
“Personally, I always thought the automotive teams would need to see this thing running before they would source business to us,” he said.
Stevens said he believes ONE is well-positioned to land that business because of strong leadership, an understanding of the market and a deep list of sharp investors. Planting its flag in Michigan hasn’t hurt either, he added.
“They’ve chosen to build the company in probably the densest cluster of research and technology innovation in the world when it comes to mobility,” he said.