Analysis
STORAGE

Is industrial electrification entering its Goldilocks era?

As it pursues $50 million in Series B funding, battery manufacturer Acculon is betting on a convergence of market preference and regulatory support.

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November 1, 2023
A factory worker drives a forklift through stacks of timber

Photo credit: Chip Somodevilla / Getty Images

It may not be as readily visible as the transportation or electricity sectors, but industrial equipment is also ripe for decarbonization. Construction accounts for around 11% of global carbon emissions, and parts of the estimated $191 billion market for construction equipment are already electrifying.

Acculon Energy, an energy services-provider-turned-manufacturer, is pursuing up to $50 million in Series B funding to open a domestic lithium-ion battery systems factory. Those batteries are not destined for electric vehicles, but rather for forklifts and other industrial machinery.

Getting the timing right for market entry like this one is crucial, said Acculon co-founder and president Andrew Thomas. And in the company’s view, the market for industrial machinery batteries is about to take off.

What we’re seeing today, Thomas said, is a convergence of factors that “move the needle”: market preference for electric and hybrid equipment, “notable commitments” from large industrial equipment operators, and a regulatory environment that encourages electrification (like California’s upcoming ban on gas-powered small engines, and incentives in the Inflation Reduction Act).

It’s this convergence that gives Acculon confidence in their timing: the company’s two gigawatt hour battery pack factory is expected to reach full production capacity next fall. The factory will assemble battery cells for use in industrial vehicles like forklifts, tractors, and even equipment for aerospace and military uses.

“I don’t think we’re early,” Thomas said. “We’re not the earliest, but I don't think we’re too late. We’re trying to be right on time.”

This Goldilocks moment is a decade in the making. 

“Over the last 10 years, you've seen people do the research and development, do the advanced engineering, and proof of concept,” Thomas said. Those companies that have been using off-the-shelf solutions or purchasing batteries from contract manufacturers abroad are now looking for a “sustainable, defensible” way to go to market.

Thomas pointed to the trajectory of machinery giant John Deere as a clear example of how the market has progressed. The company debuted an electric tractor prototype in 2016. In 2021 it acquired a majority stake in battery developer Kreisel Electric, and last summer it announced plans for a module manufacturing facility in North Carolina.

As an earlier entrant, Acculon’s addressable industrial market is two-sided. On one side, Thomas said, is equipment powered by internal combustion engines, which is slowly but surely starting to be converted to hybrid or electric. That side of the market is pushed along by low- or zero-emissions regulations, both in the United States and abroad.

On the other side of Acculon’s market are industrial vehicles that are already electric, but that are powered by lead acid batteries. 

“That bifurcation, where there [are] new applications and existing applications, tells you that there’s an existing base of business that you can go after with the right product today,” Thomas said. “That was really important for us, because you’re trying to build a business that’s resilient: not just as economies are expanding, but as they vacillate.”

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