The Natron sodium-ion battery shutdown has sent shockwaves through the US energy storage industry, ending the company's 12-year pursuit to introduce its substitute battery technology to markets. The California company, once seen as the forefront developer of sodium-ion, suspended activities this week due to regulatory setbacks, investor withdrawal, and foreign market headwinds.

Natron had won customer orders valued at $25 million for its Michigan factory, but it could not ship them until it was UL certified, a mandatory safety certificate for electrical products. According to the News & Observer of Raleigh, the certification process has taken months, making Natron incapable of shipping out products or generating revenue. Investors were not keen on injecting more capital, so the company was struck with a cash shortage, Ultimately, leading to the Natron sodium-ion battery shutdown.

Sherwood Partners, Natron's controlling shareholder, attempted to sell its stake but found no buyers. The firm eventually was placed into liquidation, shedding all but a skeleton crew to oversee the shutdown. Instead of Chapter 7 bankruptcy, Natron used an "assignment for the benefit of creditors," which allows for a faster and less dramatic sale of assets.

Sodium-Ion Promise Meets Market Reality

Natron had been in the news last year when it said it would build a $1.4 billion factory for sodium-ion batteries in North Carolina, one that could employ up to 1,000 employees. The company focused on stationary storage and data center use, where the lower energy density of sodium-ion batteries, compared with lithium-ion, became less of an issue.

Sodium-ion batteries are generally regarded as a more affordable substitute for lithium-ion since sodium is much more plentiful. Their market appeal has been overshadowed, though, by the latest crash in lithium carbonate prices. Lithium prices have dropped by almost 90% in the last two and a half years, primarily on account of intense competition in China, says Benchmark Mineral Intelligence. That rendered it more difficult for startup sodium-ion firms like Natron to make their value proposition stand.

Industry-Wide Issues

Natron's closure is far from an isolated incident. Several Western battery makers have faced the same challenges. In June, Oregon's Powin filed Chapter 11 bankruptcy after it couldn't locate non-Chinese sources of lithium-iron-phosphate cells. Earlier this year, Swedish battery maker Northvolt also went bankrupt, although it had once been hailed as Europe's most promising hope to challenge Asian giants. Northvolt was reported to be incurring expenses of $100 million per month, and BMW canceled a $2 billion contract halfway through 2024 due to the company's failure to meet up to the mark.

These high-profile flops expose the sheer difficulty of building battery production capacity on a large scale outside Asia. China, Japan, and South Korea have dominated the industry with three decades of investment in supply chains, technology, and pro-business government support. U.S. and European startups face more precarious industrial policies and fleeting investor interest, however, so turning prototype into gigafactory is a treacherous journey.

Lessons for the U.S. and Europe

The Natron sodium-ion battery shutdown highlights the urgent necessity for long-term government support if the United States and Europe are to cut back on their reliance on Asian battery manufacturers. It takes a decade or more to construct gigafactories—a time frame longer than most venture capital horizons or political elections. Without secure policies and financing, Western startups will continue to fail to achieve commercial size.

Industry analysts suggest joint ventures with established Asian firms as a potentially more realistic path forward. Collaborations with Panasonic, LG Energy Solution, and SK Innovation have already proven effective in building local capacity for electric vehicle batteries. A similar model may be necessary for sodium-ion and other alternative chemistries.

For now, Natron sodium-ion battery shutdown is a warning sign about the risks of confronting an Asian-led market. While sodium-ion technology is not yet obsolete, its market attractiveness outside of Asia remains uncertain. Unless the policymakers and investors settle on long-term strategies, the West's dreams of becoming self-sufficient in battery manufacturing will remain elusive.