Nov 28, 2010
This winter, the weekly visit to the gas station will become a distant memory to some drivers when one of the first all-electric vehicles, the Nissan Leaf, rolls off the production line and into driveways. Promising a 100-mile range, the Leaf boasts a lithium-manganese oxide battery with an unprecedented low cost of roughly $400/kWh (the current price for commercially-available cells is approximately $1000/kWh). To achieve this competitive price, Nissan is shooting for scale: the battery pack and cells will be produced and assembled on U.S. soil in Smyrna, Tennessee, at a planned production capacity of 200,000 packs per year – no small feat given the exacting manufacturing required for lithium-ion technology. Clearly, Nissan is betting that the electrical vehicle (EV) market is on the rise, and they’re not alone; Lux Research, a research and advisory consultancy for emerging technologies, estimates the U.S. demand for EV energy storage devices will grow from $7.7 billion in 2010 to roughly $15 billion by 2015. To help put this in context, we looked at who is or will be making lithium-ion batteries in the U.S., as well as the raw materials and cell components that comprise them, to sketch out the existing and future entrepreneurial landscape that will result from such growing demand.
The concept of a competitive “battery startup” in the U.S. has only become commonly discussed within the last ten years, as Japan, Korea and more recently China have significant head starts on industrial-scale production of lithium-ion technology. With the widening diversification of available cell chemistries, however, the opportunity space is growing. Already, a number of startups are focusing on making better, longer-lasting and safer lithium-ion batteries at a scale and quality that are competitive with more established international manufacturers. These include MIT startup A123 Systems, another local superstar Boston Power, Michigan’s ultra-secretive and highly buzz-generating Sakti3 Inc., and a host of other startups including Contour Energy, Farasis Energy, Seeo, Planar Energy, and Prieto Battery, all of which operate within the lithium-ion space.
However exciting, these companies represent only one part of what could ultimately become the lithium-ion battery entrepreneurial landscape. As the demand for cell hardware and raw materials for making cells increases, new opportunities open up throughout the supply chain. Indeed, some companies are already moving into this space. We identified three exciting areas to watch:
Raw materials mining. State-of-the-art lithium-ion battery electrodes require a range of raw materials such as lithium and manganese metals for making anodes and cathodes, and lithium salts for synthesis of the battery electrolytes. Pleasanton, CA-based Simbol Mining is one of the newest startups attempting to meet the looming demand for raw materials for electric vehicle batteries. Simbol’s process for extracting lithium carbonate from waste brine at geothermal power plants can already produce 1 ton of lithium carbonate per month in a pilot demonstration, enough raw material to support 1200 electrical vehicles per year.
Separators. While not the most technologically glamorous part of the cell, the separator – a porous, electrically insulating material located between the anode and cathode – is a critical cell component. Separators can improve safety by preventing spikes of metallic lithium “dendrites” from shorting the cell during aggressive charging, and serving as a shutoff mechanism in the event of cell thermal runaway. Lafayette, CO-based Porous Power has developed a laminable, porous separator that can be applied directly onto the electrode surface rather than simply placed on top of it, enabling a more fully integrated cell with improved safety and lower weight. The company recently entered a $1.41 million partnership with Oak Ridge National Labs to help commercialize its technology and has also announced a partnership with Japan-based Chisso Corporation to help break into the huge Japanese market for lithium-ion technology.
Pack integration and electronics. Currently, EV makers perform the integration of commercial cells into modules and packs that are optimized on a case-by-case basis to fit the specific design, safety, and space constraints of vehicles. However, in-house pack design is costly and time-consuming, especially since EV makers need to adapt quickly to an evolving battery supply market as chemistries change, safety improves, and cells become increasingly energy-dense. One company, Electrovaya, has identified a growing need for customized modules that can accommodate a variety of cell chemistries and various end uses. They specialize in prismatic, laminated pouch cells that allow more volume-efficient packing into battery modules than cylindrical canisters and can accommodate a range of cell chemistries using their SuperPolymer technology platform. Electrovaya also provides proprietary intelligent circuitry to monitor cell performance and ensure safety and long cell lifetime. Another company, Flux Power, is developing modular systems based on lithium-ion technology that can be customized for a range of applications from electric vehicles to backup power. Flux Power is also developing a proprietary battery management unit (the circuitry that lets the vehicle computer talk to individual cells and monitor cell health) as well as high-performance chargers.
This list represents just a sample of the newest companies playing a role in the growing lithium-ion technology space. Creating a thriving battery market in the U.S. will require lots of players with varied expertise. Ultimately, the cost and viability of next-generation batteries will depend on innovation at the component level and on bold entrepreneurs who can carve out a niche in a highly competitive market where specialization will be critical.
In addition to the present technologies that we have highlighted, there are still several key areas that are full of potential, yet presently underexplored. One area is liquid electrolytes, where the best-quality products are still found in Japan, a market that can be difficult for U.S. customers to access. Innovation could come in the form of new electrolyte chemistries or more robust processing techniques that can ensure the highest quality at competitive costs. Another largely unexplored area is the stress-testing of cells, modules, and packs to identify long-term safety risks and failure modes. Determining whether a battery pack can last 15 years by using accelerated testing over shorter timescales is non‑trivial and presents an opportunity for battery scientists. EV makers currently do this in-house, but a smartly focused startup with unique expertise could find a primed market here. Finally, be on the lookout for companies specializing in recycling of batteries, either for raw materials or for second-life applications such as load leveling of the electric grid. All of the raw materials and components comprising a cell must wind up somewhere, and the prospect of profitable cell recycling could lead to some interesting business models.
The entrepreneurial landscape for batteries in the U.S. is already shaping up to be bold, complex, and highly dynamic. As you hear more and more about new electric vehicles over the next few years, or perhaps even buy one yourself, keep an eye out for the specialized battery startups that are the key enablers of our electrified transportation future.