Integrated Report 2025 artience group Strengths: Business Development with Proprietary Core Technologies

As environmental regulations in various countries become stronger to reduce CO2 emissions, there is a major trend toward EVs in the automotive industry. Since 2019, artience group has been full-fledged CNT dispersions business for LiB electrodes for EVs. CNTs are more conductive than carbon black, which has been widely used as a conductive additive for LiBs, and are attracting attention as a material that can contribute to higher capacity, higher output, and longer life of LiBs, which affect the cruising range and charging performance of EVs.

The current fiscal year 2024 has been a year of headwinds as the EV market as a whole has been sluggish against the backdrop of policy changes in various countries, inflation, and rising interest rates. In the U.S., shipments to existing key customers were sluggish. In China, sales of EVs and plug-in hybrid vehicles increased significantly compared to the previous year, but sales of Japanese and European brand vehicles were not good, and orders from LiB manufacturers, which mainly deal with European cars, were sluggish.

Sales Trends, Forecasts, and Targets (as of November 2024)

In response to this situation, we have decided to push back the sales and market share targets set in our medium-term management plan "artience 2027" by two years.

On the other hand, in addition to starting full-scale production in Zhuhai, China, progress has been made in expanding production capacity for mass production at bases in Kentucky and Hungary in the U.S. In addition, the number of customers who have made unofficial offers to adopt our products has increased from 7 in 2023 to 10 in 2024. Although there has been a temporary stagnation in the market, we have not changed our medium- to long-term growth trend, and we will continue to strengthen our initiatives as a strategic priority business.

Cumulative Investment Plans for this Business (FY2019~)

Our CNT dispersions for LiBs originally started with a dispersion technique that uniformly mixes printing inks pigments. Based on this core technology accumulated over more than 100 years, the conductive performance of CNTs is maximized by loosening bundled CNTs one by one without damaging them and dispersing them at the nano level. We have also developed our own dispersants and have made improvements. In addition, our strength lies in our production processes, which can be customized to meet the customer's requirements, such as the control of the length of CNT fibers.

In addition, CNT dispersions are used in automotive LiBs, so the quality requirements are strict. We design products that ensure safety based on thorough coordination with our customers, and carry out daily production activities under a strict quality control system. With regard to automotive LiBs, it has been more than 10 years since they were commercialized for hybrid applications, and we are proud to have gained the trust of the market.

In our major markets of Europe, the United States, China, and Japan, we have established a supply system to ensure stable local procurement and production, and we have a strong relationship of trust and network with customers based on our track record. In the current unstable political climate, it is a great advantage to be able to build a system that can provide local supplies at an early stage. In addition, in order to prevent new entrants from other companies, we are building a global patent network, which we believe is leading to securing a competitive advantage.

By FY2032, we have set a target of a 20% global share of CNT dispersions s for LiBs (as a percentage of total demand for automotive LiB capacity), and we will respond ahead of the diversification of EVs and the changes in LiBs in line with them. In addition to conventional conductive additives for ternary systems that pursue high capacity and high performance, we are also considering products that support low-cost lithium iron phosphate (LFP) batteries in order to meet cost-conscious needs. On the other hand, it is important to build a development system that can meet diverse needs while being aware of next-generation high-end products such as solid-state batteries.

Expanding the number of customers is the cornerstone of business growth. The more customers you have, the more information you have, the more accurate your understanding of market trends and how you can inform your business strategy. In addition, by accumulating achievements, it will be easier to expand horizontally to new customers.

We will continue to make aggressive investments to increase our supply capacity, but we are constantly reviewing the timing and amount of investment to optimize them. In this business, it takes 2~2 and a half years from investment decision to equipment introduction and start mass production, so a long-term perspective is essential. Based on close information sharing with customers and component manufacturers, we will incorporate market needs into our business plans and take necessary actions.

The major trend toward achieving carbon neutrality is intensifying, and we believe that the social demand for the spread of EVs will continue to unwavering. Although it is necessary to carefully monitor the method of generating charging power and the life cycle CO2 of LiBs, the shift to EVs remains an essential element for the automotive industry to move toward decarbonization. Our focus is to contribute to improving the price, cruising range, and charging time of EVs by providing CNTs for LiBs dispersions. If we can encourage consumers to choose EVs and contribute to the realization of carbon neutrality, we believe that this will lead to the provision of value that resonates with the senses through products and services, which is artience group 's materiality.