“You’ve got to keep developing.” Q&A with Epsilon Advanced Materials

Epsilon Carbon was founded in India in 2010 as a supplier of carbon-based materials for the aluminium and tyre industries. In 2018, the company founded the subsidiary Epsilon Advanced Materials and began developing anode products, a natural foray for a carbon company into the battery industry.

They acquired some of Johnson Matthey’s facilities after the company folded its battery chemicals division, thus adding LFP cathode active material development to their remit.

In 2025, China still produces 99% of LFP CAM and this year outlined export controls to restrict companies from exporting the technology required to make the latest generation of LFP to other countries.

Epsilon’s managing director and founder Vikram Handa explains why he thinks the company can make a mark on the cathode industry despite the hegemony of China in this Q&A with Benchmark Source’s senior editor Matthew Bird.

Matthew Bird: Talk me through the rationale behind transitioning from a carbon materials based company to one looking at cathode materials.

Vikram Handa: When we looked at cathode, we have very good relationships with customers globally. We understand the requirements, we understand electrochemical performance, and that was one reason to get into cathode. We thought we had an advantage there.

The reasons to get into LFP are two: One is we didn’t see much value of a company like us in NMC chemistry. We see the Koreans who are really backward integrated from mining to processing. Very well established, very good relationship with Korean cell companies. I felt that really LFP is the dark horse in the room where it’s doing really well in China, I think it will do really well in India as a market as well. And we wanted to bet on LFP.

The other thing is, which is not very commonly known, but at Epsilon Carbon, we only have one raw material, and that is coal tar, which comes from steel plants. And one of the reasons was that we actually saw synergy there of access to a raw material out of the steel plant, namely iron. So we see that lithium is something that’s available, whether lithium carbonate or hydroxide, and that’s a pure commodity play. We’re not into mining, but we feel we have an edge when it comes to the source of iron.

MB: You are targeting 100,000 tonnes per annum at your LFP CAM facility. What are the key challenges to get there?

Image credit: Epsilon

VH: The real focus is towards material development, and that’s what we get unique with our acquisition [of Johnson Matthey assets] in Germany, because the team has more than 100 years experience in just LFP. And not many people outside China have developed this know how of where LFP started and where it is today that is really helping us move ahead in generations. Today, we have a Gen III product, and we think in the next six to eight months, we’ll be at a Gen IV product as well. And the goal is not to stop there. The goal is to continue. And that facility gives us the advantage of doing things at kg scale, hundreds of kg scale, tonnes scale. In the last year, the team has done a really good job, today we have a couple of contracts with customers in Korea, in Japan and Europe, where our product is in physical cells for the last one year, getting used in niche applications, on defence, on mobility and consumer. So having worked with customers and having a product actually in cells and performing like that gives us the confidence, both on the quality and the performance of the product. Our strength lies in industrialisation as a company, so that is the benefit we’re getting: how to scale up this technology and get to market first.

MB: Gen IV LFP has been the target of China’s technology export controls. What are your thoughts on these?

VH: As a country and as an institute, they’ve worked really hard to develop this technology. They’ve obviously invested a lot in it, scaled it up, commercialised it, and done a great job. And they want to kind of build that moat and enjoy it for the next few years, just like any other, say, chemical company would if they could, and put patents behind it. I think that’s a real challenge in developing technology.

I think one of the mistakes companies have been doing in battery materials and specifically cathode is they think that this is something that is licensable from China, and you just build it. But in the time it takes to build plants, you kind of become irrelevant in your product development. So there is a push and a pull between companies that are really good in innovating and doing R&D, and then there are companies that are good in industrialisation, and they’re not many of them that do both. So this restriction is going to force companies to spend more on R&D if they want to catch up with them. So I think that puts them [Chinese companies] three-to-four years ahead of anyone trying to build LFP outside China.

The restrictions on equipment, which for now have been kind of laxed after President Trump’s visit to China, is a really big challenge, because you’re literally getting everything off the shelf over there. It’s not about paying 10% more in sourcing it from Europe or Japan. The industry and equipment supplies are so well established that it’s tough to build plants at cost. If China builds a plant at, say, $100 just because you have to source equipment from other places, it might cost you $150/$160 to build the same plant. And then, if you’re making a substandard, say, gen II product, your cell performance won’t be so high, so you’re not competitive at a cell level either. So it’s tough to catch up with them. But you know, you’ve got to keep developing and working closely with customers.

Image credit: Epsilon

MB: Does the sourcing of equipment for CAM production concern you?

VH: Because of our background in the anode business – we’ve been working on a project in the US for anode business for the last two years in North Carolina – we realised that lot of the government funding we were applying in the US required non-China sourcing, so whether it was shaping, milling equipment, coating equipment, furnaces. So we started developing vendors in India, in adjacent industries, so they don’t make stuff for battery materials, but they make stuff for other, say, pharma industry or powder handling, or, you know, other other industries. And we started working with them, and we can install some of them in our anode plant, and they’ve been running for the last two years. So can we build it? Can we build the plant totally external? We can for both anode and cathode. We have comfort in buying things from Japan, Germany and a lot in India. Would it be easier to source from China? I think definitely. But if the restrictions kick in, I think we are okay buying it outside for building that plant.

MB: Where are your anode and cathode technologies on the automotive qualification timeline?

VH: So I would say our anode business is much more mature just from the time that we’ve been in it. We are at Sample B with some customers, and sample C with some customers, and in contracts with some customers to supply volumes out of our India plant as well.

On the LFP side, you know, if you look ex-China, they’re not many customers that are making LFP cells. In India, there’s a lot of customers coming up. So I would say a lot of customers we are in the qualification stage with right now, somewhere between A and B. Like I said, we have a couple of contracts where there’s steady supply out of Germany. We are in discussions with two large customers, OEMs, that are clear that they’re going to go down the LFP path, and we are working with them to qualify and get into contracts. I’m pretty confident that in the next six-to-eight months, we should get into these contracts for our LFP facility as well.

MB: What role could India play in the global battery supply chain?

VH: India is unique in that there are a lot of companies in the whole value chain, whether you look at foils, electrolytes and salts, anode, cathode. So it’s very encouraging to see. I think Indian investors aren’t as mature as European or US investors, because they’ve kind of seen this play out in five or six years. In India, you’re just seeing adoption of cars and bikes and upstream. The challenge in India is also cell technology. Some are trying to do it on their own. Some are partnering. So you really need your customer to mature. So what I look at is that in India, battery materials will first be made for the export market for the next three-to-four years. So we’re going to build capacity in India, focus on Korea, Japan, the US market – come up with a whole ex-China solution. India is coming along, and India is going to be really big, I would say, in four to five years. But I think the next two years, there are no really big consumers.

MB: What is Epsilon’s position in the sodium ion supply chain?

VH: The last two years, we’ve been working on hard carbon because, again, we’re a pitch company originally, and a lot of hard carbon is made out of coal tar pitch in Japan, at the same time using, you know, coconut shell or other ingredients as well. So we’ve been working on it. We think early next year we’re going to go to market with our product. But again, not many large customers, but I really see that sodium mine is going to be big in two-to-three years.

The anode we’ve already worked on. We’re going to start working on the cathode as well, out in Germany maybe in the latter half of next year, after Gen IV. We want to come up with an anode and cathode solution for sodium ion as well. And one of the things we’re doing is we’re actually marrying anode and cathode together. So we’re unique in that we have maybe 20 products on each side, and we’re doing a lot of coin cell power cell development, and we go to the customer saying, if you want this performance by product A and by product B, and you get this and let them scale it up. But the ability to marry an anode and cathode is actually really unique when, you know, the customer’s looking for a power application or a storage application.

MB: Any final comments?

VH: We think LFP is going to kind of hit a ceiling after maybe Gen V or VI. There’s only so much you can do with that kind of material, from a capacity and a density perspective. So we’re really starting to think what’s next? Could it be mixing different chemistries? Could it be optimising some other parameters, how you’re going to differentiate your customers in the market.

I think compared to anode, the cathode companies in China are losing a lot more money, because the capacity is just huge. Due to the losses that they’re seeing, it’s becoming difficult for other people to enter the market from a customer point of view, because they’re just used to these really nice prices which are not realistic, in my opinion.

But capacity needs to come up globally, and people need to develop technology. So we’re taking a two prong approach. One is obviously what the customer understands, and the other is how to kind of leapfrog and come up with the next gen materials as well. It’s interesting, because while customers might say, “hey, I want Gen IV,” or “I want this”, it’s only CATL that knows how to use Gen IV. So it’s not just us making material, but it’s the customer being ready to develop it, make the cell and commercialise it. There are a lot of challenges in using Gen IV in a cell, which is easy to ask for, but you need to know how to do it.

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