LION is on the brink of becoming a fully automated producer of lithium-ion battery packs for a wide range of applications such as buses, commercial vehicles, marine, industrial vehicles but also stationary energy storage with an annual production capacity of 2 GWh or roughly 45k battery packs (the serial production should start withing the next weeks).

LION’s vast battery know-how (one of the first battery technology consultancy businesses in Germany; founded in 2008) coupled with the experience as supplier of engineering services for the BMW i3 battery pack, forms the ideal foundation of successfully running an own battery pack production.

What makes it even better, LION was able to acquire the license and all necessary equipment to manufacture the SE09 (former BMW i3 pack) from BMW. Despite being “the new kid around the block”, LION is able to offer customers a product with an established reputation for safety, quality and reliability as well as an automotive qualification. Thanks to its history as battery technology consultancy business, LION is able to engage potential customers as full service one-stop-shop with services from design over prototyping of new pack formats, development, testing and series production.

Stellar growth ahead. Over the next eight years, the demand for Li-ion batteries in Europe and the US is expected to 7-8x compared to 2022. This opens massive growth opportunities for the industry. The market for battery pack manufacturing looks set to grow to $ 33bn (vs. $ 4.5bn in 2022), carried by the electrification of mobility solutions and the broader energy transition.

LION is seen to be able to reap the industry’s growth opportunities. Until 2026e, the company is seen to grow sales by 35% p.a. to € 176m. Thanks to a high degree of production automation and scale effects, EBIT should increase at a 145% CAGR, with the margin reaching 6.7% by 2026e.

Newsflow looks set to remain positive as dynamic sales growth on the back of customer wins and a strong order momentum (€ 45m during the first six weeks of the year) should become a recurring theme. Also, LION is in an advanced development stage for a new, immersion cooled battery pack which would be suitable for applications where performance is more important than price.

Initiate with BUY and € 11 PT based on SOTP (DCF for the pack production and multiples for the JV).