Skeleton’s decade of patience paying off

Photo: MATTIAS TAMMET

Founder and CEO of Skeleton Technologies Taavi Madiberk admits that had he known ten years ago how long it would take to get a foot in the door in the car industry, they would probably never have started. The company recently signed €150 million worth of contracts that can be considered its first real achievement.

Skeleton gets quite a lot of press and praise in terms of their exciting technology and future potential. However, the company’s turnover remained stagnant for years and the breakthrough just didn’t happen. It wasn’t until last year the company’s sales took off.

Madiberk explains that the supercapacitors business is a long game. It takes years to develop and test products. Next, the client wants to test and qualify the product – a transmission network operator or a medical devices manufacturer. That could take even longer. “This is perhaps difficult to understand in Estonia, but the business requires a lot of patience and persistence,” the businessman admits.

For example, Skeleton sent a well-known carmaker its prototypes back in 2014. While the client was very pleased with the technology, the sides only signed a contract with financial merit for Skeleton last year. Add to that another contract with a leading European truck manufacturer (Madiberk takes care to keep the names to himself), and we can say 2019 was a breakthrough year for Skeleton Technologies. “We managed to break through the market barrier,” Madiberk says. The firm now has €150 million worth of contracts for the coming years.

New €100 million plant

Skeleton already has paying clients. For example, its supercapacitors are used by the tram networks of Warsaw and three German cities, U.S. industrial group General Electric, Canadian logistics firm Attabotics and several medical equipment manufacturers. “Our monthly turnover is in the seven figures,” Madiberk says.

But Skeleton’s ambitions go beyond that. The company signed a letter of intent with a major German car manufacturer this year for €1 billion worth of superconducts over six years starting in 2023. While such a cooperation memorandum is not a done deal by any means, it shows that the Estonians have made it to the big leagues and are trusted.

Because Skeleton’s business is picking up and sales volumes are growing, production capacity needs to be expanded. The company has a plant near Dresden, Germany in which it has invested around €40 million euros. It is likely one of the largest Estonian foreign investments in recent years. But Skeleton has its sights set on a new one that will cost over €100 million to build. It will likely be constructed next to the company’s existing production facility. Madiberk says that they have picked a suitable location and know what kind of technology and fittings are needed. “We have done our homework down to the level of details,” the CEO says. The final decision of whether to construct a new plant should be made by the year’s end.

The new facility should help Skeleton increase automatization, cut the number of employees required and boost quality. Its other goal is simply to ramp up production as demand is forecast to grow in the coming years. In addition to own funds, the company will also seek financing from the German Battery Alliance.

Even though competition is much closer on the lithium batteries market, Skeleton is by no means the only manufacturer of supercapacitors and has to compete with China’s national railroad company, U.S. electronics giant Eaton but also Elon Musk’s Tesla that acquired another former competitor Maxwell last year. Skeleton believes its technology is superior as its capacitors have four times the power/energy density.

Strong link to the climate turn

“And as concerns Tesla entering the market, it even had a positive effect for us,” Madiberk says. “While Tesla is seen as a strong company of the future, it does not have the reputation of a reliable supplier. That left several of Maxwell’s former clients uneasy and caused them to look to alternatives, including us.”

Skeleton has firmly tied its business to the climate turn. Madiberk is convinced that environmentally friendly high-tech companies that help pave the way to a carbon neutral economy constitute the greatest opportunity for Estonia since the internet revolution. “We have top level natural sciences and mathematics education, we are well-versed in IT and we have the startup mindset,” he says in terms of what Estonia has going for it.

Madiberk is convinced that sustainable economic solutions are the only way to save the planet from a climate disaster. “Simply putting life on hold and shutting down production won’t save anything in the long run,” he says. He gives as an example the fact that according to the International Energy Agency, the global coronavirus crisis only reduced global emissions by 8 percent that is clearly too little for such a massive economic sacrifice. “The things that can help us move forward are keeping calm, innovation and new and more effective technologies,” the CEO says.