In August, when Swedish battery darling Northvolt shut down Cuberg, the Bay Area startup it had acquired in 2021, many in the industry saw it as a warning sign. Those worries were realized last week when the company filed for Chapter 11 bankruptcy protection in Texas.
The news produced a stream of lessons for the rest of the battery industry in the U.S. and Europe — cautioning other startups not to do too much too soon, and of the dangers of a rapid vertical integration strategy.
But for Lyten, a California-based lithium-sulfur battery startup, the series of Northvolt setbacks came with a different takeaway. They validated Lyten’s own, scavenger-like approach to scaling, which involves swooping in to snap up battery factories when they hit hard times, and rapidly converting them to lithium-sulfur cell production.
Lyten started testing its conversion strategy last year, building a small lithium-ion factory in San Jose, and then converting it to lithium-sulfur. But when Northvolt’s expansion plans began to unravel, lithium metal startup Cuberg became Lyten’s first real-world test case.
In late August, when Northvolt announced it was shuttering Cuberg’s California operations, the company set about putting equipment from its San Leandro production facility up for auction and getting out of the facility lease. Lyten, located 30 miles south in San Jose, stepped in, offering to take over the lease and buy out all remaining equipment in a single deal. Less than two months later, the deal was signed, and Lyten was poised to apply its factory flip approach to its first acquisition.
The salvage strategy
Lyten’s batteries use sulfur instead of the more expensive metals found in traditional batteries, and pair it with lithium metal.
The outcome, Lyten believes, is a higher energy density battery that requires fewer ingredients, making it significantly lighter and less dependent on a Chinese supply chain. (A key part of Northvolt’s promise was to build up a European supply chain that wasn’t reliant on China.) And because sulfur and natural gas, two of the key components, are extremely low-cost, chief sustainability officer Keith Norman said Lyten’s batteries are cost-competitive with Chinese competition.
Like Cuberg, Lyten’s ultimate goal is to sell its batteries into the EV market. In the meantime, they’re focused on military customers seeking batteries for drones, and also on satellites. Next year, a Lyten battery will head to the International Space Station to test out orbital and zero-gravity performance. Starting in 2026, the company is looking to enter the stationary storage market.
But at present, Lyten has just a few megawatt-hours of manufacturing capacity, at its San Jose test facility. And building its own factories, even several at one time, is risky, slow, and expensive.
The Cuberg asset acquisition is one step in an expansion strategy that Lyten hopes will allow it to scale fast while avoiding the same fate as Northvolt, Norman said.
It’s a strategy the company identified as it watched the battery sector shakeup play out. “What we are really looking for, and seeing, is factories at different stages of completion that are building [nickel manganese cobalt and lithium iron phosphate batteries and] are struggling to make the finances work,” Norman said. Those factories are “really good candidates” to be purchased by Lyten and converted over to lithium sulfur production, he added.
The opportunity for flipping battery assets is potentially huge. According to data that Lyten is monitoring, there are around 70 gigafactories between the U.S. and Europe that have been announced in the last five years and are either in planning for construction or currently being built. High interest rates, among other things, mean the economics of those factories “are becoming much more difficult,” Norman said.
What we are really looking for, and seeing, is factories at different stages of completion that are building [nickel manganese cobalt and lithium iron phosphate batteries and] are struggling to make the finances work.
And on top of it being hard to compete on costs with China while building up manufacturing for the first time, Lyten thinks that, like Northvolt, the batteries those companies are making don’t have enough of a performance benefit over Chinese batteries.
Lyten knew going in deals like Cuberg would need to move quickly, he added. So the company had already been raising additional (as yet unannounced) capital in anticipation.
“That left us in a really good position to be able to execute quickly [when Cuberg’s assets went up for auction],” said Norman. “We didn’t have to raise additional capital.”
Flipping Cuberg
When the auction came up, it included more than 650 individual items: from lab stations and tool chests to ventilation chambers, acid storage cabinets, spectrometers, and “various PPE.”
Lyten really didn’t need every single piece of equipment listed, Norman said. Much more important to the expansion strategy was the facility itself. Cuberg had made significant investments over the course of the last year in “the dry rooms and the infrastructure and the power infrastructure and the facilities that are ready for battery making,” he said. “We really wanted access to that.”
Norman said Lyten wasn’t alone in discussing terms and agreements with Cuberg about its assets. But as far as Lyten is aware, they were the only ones making an offer for both the equipment and the facility combined, which appealed to Cuberg.
Lyten set up an internal team of around eight people to spend several weeks inside Cuberg’s factory, assessing it for safety, equipment, and power. That gave the company “a really clear road map of what we’re acquiring, and what future investments are going to be required,” Norman said.
Lyten plans to expand Cuberg’s old facility to about 200 megawatts of capacity, with commercial production starting in the second half of next year. They’re aiming to reach full capacity by early 2026.
“This really meets two needs for us,” Norman explained. “Need one is proving on a larger scale that we can acquire assets, we can convert them to run lithium sulfur, and we can scale that as a really cost-effective way to scale buildout of the battery.”
The second, more direct need, he added, is getting batteries into the hands of waiting customers more quickly, therefore driving revenue earlier.
In Northvolt’s wake
Lyten’s expansion strategy doesn’t rely solely on brownfield sites, though.
In mid-October the company announced plans to build its own 10-gigawatt-hour facility from scratch in Nevada. That factory, Norman said, will be the Lyten “home factory.” It won’t be big enough to deliver to commercial automotive customers (that will take closer to 20 GWh of capacity) but is a good size to hit the company’s initial target markets.
However, the first batteries won’t come out of that factory until 2027. The Cuberg facility, meanwhile, will start churning out batteries next year. And while Lyten is still navigating how to fund the full buildout of the Reno factory — the current plan is to rely on a Series C raise early next year, in combination with grants and debt — Cuberg’s old factory came almost ready-made, in a single, steeply discounted purchase.
And Northvolt’s decision to file for bankruptcy last week hasn’t deterred Lyten from its expansion plans — despite the overall battery market softening that complicated things for the Swedish startup. Ultimately, Norman said, the Swedish company’s undoing was its pursuit of a strategy that involved scaling across multiple continents simultaneously, before having its first factory up and running.
Lyten’s strategy to scale is very different. Bringing on incrementally larger facilities over time, Norman said, creates “a rapid learning curve” that Northvolt just didn’t have.
Lyten expects to see other battery companies follow in Northvolt’s wake in the coming months. And as they do, Lyten is prepared, cash in hand, to execute more deals like its Cuberg buy.
“We see the Northvolt bankruptcy being much more a reality check on what is required to build a successful battery solution and less about the fluctuations in the EV market,” Norman said. “When a market is on a big positive wave, a lot of the challenges can be hidden. In the current EV market, those challenges got exposed.”
