What Does Axion’s Supply Agreement Mean for Investors?
Axion Power International Inc. [[AXPW.OB]] announced that it signed a worldwide supply agreement with Exide Technologies [[XIDE]] for its PbC batteries and other technologies. Exide Technologies, one of the largest battery manufacturers and recyclers in the world, agreed to three consecutive phased purchase and test periods that will commence immediately and last for several years. But, what does this agreement mean for investors?
There was little doubt among investors that Axion’s PbC battery technology is a gem. The PbC battery uses carbon electrode assemblies to replace the lead-based negative electrodes found in conventional lead-acid batteries. The results is a low-cost battery/supercapacitor hybrid that offers faster recharge rates, higher power output and longer cycle-life. Additionally, these batteries can be manufactured in thousands of existing plants around the world.
The technology also won several awards, including the 2006 Technology Innovation Award for North America, in which the PbC battery was praised as a breath of new life into the lead-acid battery industry:
“Frost & Sullivan monitors innovation in the lead acid battery industry and presents this Award to companies like Axion that introduce new technologies that have made or are expected to make major contributions to the industry in terms of adoption, change and competitive posture. The award recognizes the quality and depth of Axion’s research and development program as well as the vision and risk-taking that enabled it to undertake such an endeavor.
[Axion’s technology] has the potential to revitalize the lead-acid battery industry by breathing new life into an established technology that was not well-suited to the requirements of important new applications like hybrid electric vehicles and renewable power.”
The supply agreement with Exide Technologies goes a long way in validating this new technology on a commercial scale. After all, it’s the jump from science to commercialization that causes problems for most development-stage companies. Many investors are hoping that this agreement will pave the way for many more with other lead-acid battery manufacturers looking for ways to enter the so-called “cleantech” market by leveraging Axion’s technology with their existing production lines.
Also, while details of this supple agreement were not furnished, there was some key vocabulary present in the company’s press release that appears promising. Axion stated that it “expects its capacity to be exceeded”, in its press release. And according to the company’s latest 10-K filing with the SEC, its battery plant has a permitted manufacturing capacity of 3,000 PbC batteries per day with its production, limited by their inability to make carbon electrodes in large numbers.
In the end, Axion Technology’s PbC battery is finally entering the commercialization stage, which is good news for investors in the company. Once the technology is validated, it is possible that many other manufacturers may want to get on board, particularly if the government begins to subsidize the use of hybrid vehicles and other technologies that require batteries. Prudent investors may want to wait until feedback from these first sales, but speculators looking for a good entry point may want to consider getting in at these levels.
CONTACT: Daniel Minton, Managing Director, 406-862-5400, daniel@accelerize.com