The Strategic Case for Nano One Materials (TSX:NANO) in a Shifting Energy Landscape

The global energy transition is accelerating, and North America is doubling down on its ambition to dominate the battery materials sector. For investors, this creates a unique opportunity to identify companies that align with both technological innovation and government-driven supply chain resilience. Nano One Materials (TSX:NANO) stands at the intersection of these forces, leveraging cutting-edge chemistry and strategic partnerships to position itself as a critical player in the lithium iron phosphate (LFP) battery revolution.

Government-Backed Momentum: A Tailwind for Nano One

From 2023 to 2025, the U.S. government has allocated $7 billion across three rounds of the Battery Materials Processing Grants Program, alongside a separate $1 billion initiative under the Trump administration's energy strategy. These programs are not just about funding—they're about reshaping supply chains to reduce reliance on foreign imports, particularly for critical minerals like lithium, cobalt, and rare earth elements.

Nano One has secured $30.9 million in direct government support since 2024, including a C$18 million grant from Québec and a US$12.9 million Defense Production Act (DPA) grant from the U.S. . These funds are earmarked for scaling its Candiac, Québec facility and expanding production capacity in British Columbia. The Québec grant, in particular, is a vote of confidence in Nano One's ability to create high-quality jobs while advancing sustainable manufacturing.

The One-Pot™ Process: A Game-Changer in Battery Chemistry

Nano One's core innovation—the One-Pot™ process—offers a 50% reduction in greenhouse gas emissions compared to traditional LFP production methods, according to a 2023 lifecycle assessment by Minviro. By eliminating complex chemical conversion steps and wastewater treatment, the process cuts costs, energy use, and regulatory hurdles. This is not just a technical advantage; it's a strategic one.

As automakers and energy storage companies prioritize cost-effective, sustainable battery solutions, LFP chemistry is gaining traction. , , and have all increased LFP adoption in recent years, and Nano One's partnerships with industry giants like Our Next Energy (ONE), , and signal growing demand for its materials.

Supply Chain Resilience: A North American Priority

The U.S. and Canadian governments are no longer passive observers in the battery race—they're active participants. The DPA grant Nano One received in 2024 explicitly ties to strengthening the LFP supply chain for defense applications, a sector with long-term growth potential. Meanwhile, Nano One's collaboration with Our Next Energy to co-develop LFP cathode materials for the Aries and Gemini batteries underscores its role in building a North American battery ecosystem.

This alignment with national priorities is critical. With the Inflation Reduction Act (IRA) and Canada's Clean Energy Investment Strategy incentivizing local production, companies that can demonstrate domestic scalability and environmental compliance will capture disproportionate market share. Nano One's Québec facility, now operating at 200 tonnes per annum (tpa) of LFP cathode material, is a blueprint for this model.

Risks and Rewards: Navigating Volatility

Nano One remains pre-revenue, and its stock has historically traded with high volatility. However, the company's recent funding milestones and production progress suggest a path to commercialization. The C$15 million loan from Québec, repayable over a decade, provides financial flexibility without diluting equity—a rare advantage in the pre-revenue space.

For investors, the key question is whether Nano One can scale its One-Pot™ process to gigafactory-level production while maintaining its cost and sustainability edge. The company's partnerships with , , and indicate strong industry validation, but execution risks remain.

Investment Thesis: A Long-Term Play on Energy Independence

Nano One's strategic alignment with government-backed supply chain initiatives, combined with its proprietary technology and growing industry partnerships, positions it as a high-conviction long-term investment. While short-term volatility is inevitable, the company's role in North America's energy transition—backed by $30.9 million in grants and a $1 billion U.S. critical minerals program—creates a compelling risk-reward profile.

For those willing to tolerate near-term uncertainty, Nano One represents a unique opportunity to participate in the democratization of battery materials. As the U.S. and Canada continue to prioritize energy security, companies like Nano One will be at the forefront of a $1.2 trillion global battery market by 2030.

Final Take: Buy for the long term, with a focus on strategic milestones (e.g., production scaling, new partnerships) and macro trends in clean energy policy. Hold for volatility, but stay invested for the ride.