Electric-vehicle battery maker Our Next Energy said Wednesday that it has raised $300 million in its latest fundraising round, bringing the Novi-based startup’s valuation to more than $1 billion.
The latest infusion of investment, combined with economic incentives from the state of Michigan, gives the company the capital needed to launch production at its first battery cell plant in Van Buren Township by the end of next year as planned, CEO and founder Mujeeb Ijaz said in an interview.
The Van Buren facility — where ONE will assemble its lithium iron phosphate, or LFP, battery pack products — itself is now complete and ONE is in the process of ordering equipment to outfit the plant. It will take its first delivery in July, Ijaz said, in preparation for the launch of production next year. The plant will be built out in phases as the market for electric-vehicle batteries evolves and ONE signs up additional customers.
Currently, ONE employs 205 people, the majority of whom are based in Michigan. By the end of this year, Ijaz expects to have just over 300 full-time salaried employees and roughly 100 hourly workers.
“As we look to raise the next phase of capital, it’ll be to further expand the factory into higher implementation so that we can get more aligned with the market pull that we have,” he said. “The Inflation Reduction Act has increased customer activity as well as projected output from the factory, so we’re already moving into thinking about phase two of the plan to put more equipment in. But this funding will take us to production of that cell factory, along with some pack products as well.”
This latest funding round brought on board some growth equity investors in addition to venture capital firms, which Ijaz described as a milestone for ONE.
“Growth equity investors require evidence of production, customer revenue and margin performance. So their expectations on return are not in the multiples as high as venture capital. Their risk tolerance is lower,” he said. “They want to invest in successful manufacturing-oriented businesses that are going to scale, and they need to see the evidence of that.”
The Series B investment was led by Fifth Wall, a Los Angeles-based venture capital firm, and Franklin Templeton, a San Mateo, California-based investment company. Other new investors include Temasek, a Singapore-based global investment company; Riverstone Holdings, a multinational private equity firm headquartered in New York City; and Coatue, a New York-based, tech-focused investment company.
The Series B also had two undisclosed strategic investors, including an EV technology solutions manufacturer and a renewable energy provider. AI Capital Partners and Sente Ventures also participated, according to ONE. Meanwhile, Richard Piliero, a managing director at Franklin Templeton, will join ONE’s board of directors.
ONE closed a $62.5 million convertible note, led by BMW i Ventures, in January as part of the funding round.
Along with $220 million in grants the state awarded to ONE last year, the $300 million in equity financing will help support the Van Buren plant, dubbed ONE Circle, and representing a roughly $1.6 billion investment.
Founded in 2020, ONE is developing battery packs for commercial and consumer EVs.
Currently, Piston Automotive Group is building ONE’s Aries battery packs. ONE Circle will begin production of Aries next year, and then start making ONE’s Gemini battery pack. ONE Circle is expected to create more than 2,100 jobs in the coming years as it scales up production.
To date, ONE has 10 customers whose agreements represent 36 gigawatt hours of battery cell capacity over the next five years, according to a news release.
Amid a slowing economy, Ijaz said ONE is prepared to weather an economic downturn and sees it as a good time to prepare for larger-scale production in a few years: “We’ll be ready to grow as the market comes out of this, because our factories will be tooled.”
jgrzelewski@detroitnews.com
Twitter: @JGrzelewski