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The fast-growing market for electric vehicle batteries faces a stream of enthusiasts who’d like to grab a piece of cake after one of the UK’s biggest chemicals companies announced about stepping back on developing batteries. 

The Guardian mentioned that Johnson Matthey the company, which is a member of the FTSE 100, revealed it plans to leave behind the battery materials business thereby providing stronger rivals a free way to develope. 

The shares plunged 17% on Thursday to their lowest level since December, wiping more than £900m off the company’s market value as it also announced that the chief executive would step aside.

Besides, the automotive industry deals with supply chain shortages nowadays and that means the profit will be even lower than expected. 

Johnson Matthey makes most of its money from producing catalytic converters to clean exhaust emissions from petrol and diesel cars. But the UK and other countries are rapidly implementing restrictions against petrol and diesel cars. These game changing moves make the company and many other suppliers adapt to new rules and find new ways to make money.

Developing lithium-ion batteries with carefully fine-tuned chemistries seemed an obvious choice, and the company had been on track to start building a new factory in Finland to build as many as 300,000 automotive batteries a year.

The UK batteries producing industry should consider Johnson Matthey’s decision as a warning. Establishing a supply of batteries from the UK or EU is seen as vital to replacing 90,000 British car industry jobs reliant on internal combustion.

“From a UK perspective it’s not good news,” said one senior industry source. “We would like to have some champions here who know what they’re doing.”

According to Benchmark Minerals, a data company, 58% of the global share of battery supply ows Asian companies such as China’s Contemporary Amperex Technology (CATL) and BYD, South Korea’s LG Chem and Samsung, and Japan’s Panasonic.

Electric car projects involving Johnson Matthey have received at least £14.4m in British government funding, ranging from lithium air battery chemistry that could have increased energy density dramatically to working out how to power air conditioning without using waste heat from internal combustion engines.

Johnson Matthey will rearrange its investments focusing them on projects involving hydrogen and decarbonising chemical production. The company’s hydrogen and decarbonisation were also at an early stage, wrote Charlie Bentley, an analyst at Jefferies, a US investment bank, in a note to clients.

Johnson Matthey had an “EU diesel car catalyst franchise that is going to zero”, Bentley said. “Its ability to be a supplier to the automotive chain over the longer term remains a key long-term question for the business.”

Robert MacLeod, Johnson Matthey’s chief executive, said: “While the testing of our eLNO battery materials with customers is going well, the marketplace is rapidly evolving with increasing commoditisation and lower returns. We have concluded that we will not achieve the returns necessary to justify further investment.”

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