Long-term owners of Fortescue Ltd (ASX: FMG) shares may have initially invested in the company for its mining operations, but this week, the Australian miner announced it's now selling software to Jaguar Land Rover (JLR).
The tech addition began in January 2022 when Fortescue's efforts to decarbonise its operations and diversify its earnings from iron ore mining led it to acquire high-performance battery business Williams Advanced Engineering (WAE). Today, the miner is now commercialising work and software that WAE has developed.
With this new software deal in the bag, perhaps we should now add 'ASX tech stock' to Fortescue's operating credentials.
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Fortescue signs deal with Jaguar Land Rover
JLR has signed a multi-year deal to use Fortescue's advanced battery intelligence software, Elysia, in its next generation of electric vehicles. It will start with the new Range Rover Electric, which will launch later this year.
The Elysia software will monitor all future JLR electric vehicles, giving clients a "better ownership experience with faster charging, improved reliability, and increased range".
Fortescue explained that its software used "physics-informed digital twins and probabilistic artificial intelligence to identify and solve battery issues".
Monitoring battery health throughout its life could also support sustainability by "making it easier to transition batteries from electric vehicles to second-life applications", the company noted.
Fortescue described the contract with JLR as a "multi-year deal worth tens of millions of pounds", according to the Australian Financial Review. That may not be hugely material to the Fortescue share price, but it adds further earnings to the miner's green energy division.
Management comments
Fortescue Energy CEO Mark Hutchinson had this to say about the deal:
This collaboration showcases the very best of cutting-edge innovation and engineering. Through Fortescue's breakthrough battery intelligence software, JLR will benefit from a new level of access to battery data and a revolutionary way to monitor its products in the real world, ensuring that every product lives up to the brand's exceptionally high standards.
The lessons and innovations we have both learned from motorsport are now being applied to the management of battery systems on our roads, unlocking a leading future of EV performance for JLR's customers.
Hutchinson also told the AFR the deal was important because it would "release the true potential" of WAE. He said the WAE business had grown its staff "fourfold" since March 2022 after being starved of capital under former owners.
Fortescue share price snapshot
Fortescue shares are up 7% over the last six months, as shown in the chart above. That compares to an 11% rise for the S&P/ASX 200 Index (ASX: XJO) in the past half-year period.
