Britain’s hopes to grab a slice of the fast-growing market for electric vehicle batteries have been dealt a blow after one of the UK’s biggest chemicals companies said it would give up on developing the technology. Johnson Matthey, a member of the FTSE 100, announced plans on Thursday to exit the battery materials business because it is too far behind rivals who are already making batteries at gigantic scale. The shares plunged 17% on Thursday to their lowest level since December, wiping more than £900m off the company’s market value as it also announced that the chief executive would step aside. To add to its difficulties, supply chain shortages hitting the automotive industry mean that profits will be at the lower end of expectations. Johnson Matthey makes most of its money from producing catalytic converters to clean exhaust emissions from petrol and diesel cars. However, impending bans on internal combustion engines in the UK and around the world have forced the company and many other suppliers to find new ways of making money. Developing lithium-ion batteries with carefully fine-tuned chemistries seemed an obvious choice, and the company had been on track to start building a new factory in Finland to build as many as 300,000 automotive batteries a year. It could now be forced to write down £340m in assets in that business, which employs 430 people. It will attempt to sell all or parts of the unit, although it noted it had found the required investments too expensive to compete with rivals. Johnson Matthey’s decision will also alarm the broader UK industry. Establishing a supply of batteries from the UK or EU is seen as vital to replacing 90,000 British car industry jobs reliant on internal combustion. “From a UK perspective it’s not good news,” said one senior industry source. “We would like to have some champions here who know what they’re doing.” The battery industry is dominated by Asian companies such as China’s Contemporary Amperex Technology (CATL) and BYD, South Korea’s LG Chem and Samsung, and Japan’s Panasonic. Just eight Asian companies control 58% of global battery supply, according to Benchmark Minerals, a data company. Electric car projects involving Johnson Matthey have received at least £14.4m in British government funding, ranging from lithium air battery chemistry that could have increased energy density dramatically to working out how to power air conditioning without using waste heat from internal combustion engines. Johnson Matthey will instead focus its investment on projects involving hydrogen and decarbonising chemical production. That includes work on cathodes used in the electrolysers that break down water into “green” hydrogen, as well as other technology for producing “blue” hydrogen made from fossil fuel gas paired with mostly untested carbon capture and storage. The company’s hydrogen and decarbonisation were also at an early stage, wrote Charlie Bentley, an analyst at Jefferies, a US investment bank, in a note to clients. Johnson Matthey had an “EU diesel car catalyst franchise that is going to zero”, Bentley said. “Its ability to be a supplier to the automotive chain over the longer term remains a key long-term question for the business.” Robert MacLeod, Johnson Matthey’s chief executive, said: “While the testing of our eLNO battery materials with customers is going well, the marketplace is rapidly evolving with increasing commoditisation and lower returns. We have concluded that we will not achieve the returns necessary to justify further investment.” MacLeod’s retirement on Thursday means a strategic review of the whole business is likely. He will be replaced in March by Liam Condon, an executive at the German chemicals company Bayer.