October 23rd, 2025 | 07:20 CEST
Next DRONE BOOST ahead: NEO Battery Materials, Kratos Defense, AeroVironment
Drones have become indispensable in modern warfare. That much is now clear. NATO and EU countries are therefore pooling considerable resources for unmanned systems: this year, NATO allies decided to increase defense spending to a total of 5% of economic output. Germany alone announced that it would invest EUR 10 billion in drones of all kinds in the coming years. These massive investments underscore that there is no way around drones. To ensure the supply of high-performance drones, battery technology is increasingly coming into focus. China dominates this field and has recently restricted military exports. The up-and-coming Canadian company NEO Battery Materials is closing the gap.
time to read: 3 minutes
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Author:
Nico Popp
ISIN:
NEO BATTERY MATERIALS LTD | CA62908A1003 , KRATOS DEF.+SEC.NEW DL001 | US50077B2079 , AEROVIRONMENT DL -_0001 | US0080731088
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"[...] Boron is one of the most versatile elements in the whole world! Everyone reading this text regularly uses hundreds of products that depend on boron. [...]" Tim Daniels, CEO, Erin Ventures
Author
Nico Popp
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
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Batteries are the heart of modern drones
The drone market is rapidly evolving. In addition to manufacturers such as AeroVironment and Kratos Defense, there are countless drone manufacturers in Ukraine that are constantly innovating. This situation is challenging for investors. However, investors do not need to choose which manufacturer will deliver the drone of the future. Since batteries are crucial for the performance of small drones and range and agility often determine success or failure in the field, it makes sense to focus on drone suppliers, such as NEO Battery Materials.
NEO Battery Materials makes drones better – a breakthrough in South Korea
At the heart of NEO's business model is the development of silicon anodes under the brand name NBMSiDE®, which enable significantly higher energy density in lithium-ion batteries. According to the Company, NEO anodes increase specific capacity by 40 to over 70% compared to conventional graphite anodes. For drones, this translates into additional flight time or greater payload capacity. NEO's technology thus delivers direct benefits to all drone manufacturers.
Operationally, the young company recently announced two significant developments. First, it secured a factory in South Korea to manufacture its products, positioning itself in a country that is both a leader in battery technology and a close ally of the US. Then, at the beginning of the week, came the next announcement: NEO Battery Materials has received an order worth CAD 2.5 million from a South Korean industrial robotics supplier. The fact that NEO Battery Materials has been able to impress Samsung & Co. with its technology in their home market can be considered a major accolade and highlights the Canadian company's lofty ambitions.
AeroVironment and Kratos: Full order books, strong drive for innovation
NEO Battery Materials is likely well-positioned to connect with drone manufacturers. One example is the Nasdaq-listed company AeroVironment. The drone manufacturer is considered a leading supplier of small tactical drones and loitering munitions for Western armed forces. Well-known systems include the "Switchblade" drone and the land-based reconnaissance UAV "Puma," which AeroVironment is developing in partnership with Lockheed Martin. Its customers are predominantly the US armed forces and its allies. In the fourth fiscal quarter of 2025, AeroVironment achieved record revenue of USD 275.1 million. At the same time, its order books are full, with orders totaling more than USD 1 billion.
When it comes to drones for NATO forces, Kratos Defense always comes into play. The US company is considered an innovation leader in unmanned combat systems and high-performance weapons. Kratos' strengths include the rapid development of prototypes that strike a chord with potential customers. Although the Company is currently focusing on drones that support existing weapon systems, Kratos also has what it takes to take off with battery-powered drones. Cooperation with large corporations such as Airbus also shows that Kratos is well-connected.
Drone market supported by various factors – NEO Battery Materials as a strategic supplier
The current situation offers opportunities for investors: AeroVironment and Kratos are well-positioned to benefit from rising defense spending – their full order books speak for themselves. While the shares of the two drone pioneers are already on the radar of many investors, NEO Battery Materials is still largely under the radar. Yet secure and stable supply chains in the West are of crucial importance. Without batteries, small drones simply cannot operate. NEO Battery Materials could therefore become a strategically important supplier for the next drone boom.
The first steps have already been taken with the production facility in South Korea and the recent CAD 2.5 million order from an industrial robot supplier. The fact that South Korean customers, in particular, could be won over is impressive. Driven by current security policy, rising budgets, and technological trends, investors can expect further growth among drone companies and also among specialized supplier NEO Battery Materials. Added to this is takeover speculation – batteries are a central component of the value chain. NEO Battery Materials shares have recently fallen back a little and are still valued at only around EUR 50 million. Investors should take a closer look at the Company before the next market upswing.
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