Carbon Revolution’s ‘Mega-Line’ Capital Raising a Success

Cluster member Carbon Revolution successfully raised $73.5 million from institutional investors this month, putting it on track to begin construction of Phase 1 of its first “mega-line” production system which will vastly increase production of its carbon fibre wheels.

A retail component of the entitlement offer opens on April 30 and is expected to raise a further $21.5million. “As demand continues to increase it is expected that the Geelong facility will ultimately house four mega-lines,” Carbon Revolution says.

A full mega-line is expected to have 150,000 wheels a year of capacity, deploying state of the art technologies to supply to the global automotive market.

“As demand continues to increase it is expected that the Geelong facility will ultimately house four mega-lines.”

– Carbon Revolution

Chief Executive Officer Jake Dingle said construction of Phase 1 of the first Mega-line, which is expected to provide capacity for around 75,000 more wheels annually, could now proceed and ensure the Geelong-based firm could meet growing demand from global customers, including Ferrari.

Carbon fibre wheels make cars lighter, faster, quieter, and more fuel efficient, providing a compelling business proposition to global car manufacturers.

Carbon Revolution has secured formal agreements to initiate detailed design and engineering relating to four new Original Equipment Manufacturer (OEM) programs. Following “extensive collaboration” with these customers, the team estimates

it will require additional capacity of circa 75,000 wheels per annum in order to deliver these programs, which include a significant proportion of electric vehicle and large wheel formats.

“The volumes from these programs underpin the development of Phase 1 of the mega-line,” it says. “Securing larger programs is consistent with its industrialisation strategy.”

These multiple programs are expected to enter production in 2023 and 2024, and engineering and development of the new programs is now underway with styling activities progressing

“The management team is now focused on executing the Mega-line strategy which in the first instance includes collaborating with our OEM customers on detailed engineering and design work, and successfully delivering on the key milestones of the vehicle programs that relate to these formal agreements,” Mr Dingle said.

The expansion is “underpinned by the expected volume from the four new OEM formal agreements to initiate detailed design and engineering,” he said, adding that the “expected step change in production scale and economics from the mega-line will support the company’s pathway towards profitability.”

Carbon Revolution has been finessing its processes and as it scales up production of its unique wheel products. It has sold around 40,000 wheels so far and a further ten unannounced programs are currently under formal agreements, it told the Australian Stock Exchange.

Large wheel sizes are becoming more popular and are well suited for carbon fibre, which is also uniquely suited to electric vehicle requirements which present a significant growth opportunity for the business.

Carbon revolution says its product technology is globally unique and its leading market position and targeted R&D program are enabling it to extend its lead. The company holds 44 granted patents and 29 pending patents.

“Our industrialisation pathway is clear and progressing well. The decision to invest in Mega-line is supported by market demand, particularly from EV and larger wheel segments.”

– Carbon Revolution

Carbon Revolution’s revenue and volumes rebounded in the third quarter and the team cut labour hours per wheel to 31 hours. It is targeting around 17 hours per wheel.

The company says OEM relationships have been enhanced through the recent appointment of Ron Collins to Carbon Revolution’s US business development team as Vice President, North America. Mr Collins brings over 30 years of experience within the car industry, including as Ford’s global head of chassis engineering.

The Institutional Entitlement Offer had a take-up rate by eligible institutional shareholders of 90.3%.

Apr 2021