Johnson Matthey's shares plunged as much as 20% on Thursday after the British chemicals company said it would exit its battery materials business due to crushing competition and that CEO Robert MacLeod would step down next year.

The London-listed company said potential returns from the battery materials unit could not justify investments anymore as it struggles to compete with more established large scale and low cost producers. It was looking at a sale of all or part of the unit, with the "ultimate intention of exiting".

"This decision will allow us to accelerate our investment and focus on more attractive growth areas, especially where we have leadership positions such as in hydrogen technologies, circularity and the decarbonisation of the chemicals value chain," CEO MacLeod said.

In May, the company had laid out plans to spend up to 600-million pounds ($812.04-million) this financial year to tap into Europe's growing electric vehicle market.

But heavy investments amid a push from electric vehicle (EV) manufacturers which have also sought to scale up in the battery supplying business and a shortage of skilled workers are hurting traditional suppliers.

"A decision to offload its capital-intensive battery operation dealt a blow to hopes (Johnson Matthey) could be a major player in the EV growth space in the coming years," said Markets.com analyst Neil Wilson.

Shares in the blue-chip company were down 17.4% at 2 281 pence at 0931 GMT, after plunging 20% at one point after it also warned that annual results would be towards the lower end of market expectations.

Analysts have previously warned that Johnson Matthey would find it tough to gain market share in battery materials given Belgian materials technology and recycling group Umicore's lead in the sector.

Johnson Matthey's announcement had a knock-on effect on Umicore shares too.

Johnson Matthey is now preparing for new leadership as it announced MacLeod would step down in February and be replaced by Liam Condon, the head of Germany's Bayer crop science unit that includes Monsanto.

"After nearly eight years as Chief Executive, the time is right for me to move on .. I am confident in our future growth prospects," MacLeod said in a statement.

Earlier this week, Bayer said Condon would quit at the end of the year following disappointing results.

Other players in the battery materials market include China's Beijing Easpring Material Technology and South Korean companies LG Chem Ltd and Posco Chemical.