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Battery 101: Battery Summit Takeaways

Battery 101: Battery Summit Takeaways

In November, we attended the Piper Sandler Battery Summit. The event hosted 20 panelists in the battery world, from raw materials providers to cell manufacturers and downstream customers. Money managers are beginning to identify battery tech as a growth wave to ride. How to ride that wave will be the topic of our next Battery 101 note. 

Here are the four key topics we gathered from the summit, along with our takeaways:

  • The Inflation Reduction Act means business. As a recap, the bill allocates $369B in loans and tax credits toward clean energy efforts including support for US-based EV production, assembly of wind and solar components and the processing of critical minerals. The IRA is quickly leaving a positive effect on demand for products that require big batteries. This is a positive for solar integrators that are seeing increased attach rates for batteries which receive the 30% federal tax credit. On the EV side, continued demand for vehicles is driven by the increased tax credits.

Our takeaway: This is particularly a positive for Tesla given the company’s product lineup checks all three boxes — EV, solar, and battery.

  • It’s going to take 5-10 years for the sourcing of metals to shift away from China toward the West. Locating and exploiting new sources of raw material in the ground, such as graphite, lithium, and nickel can take 5-10 years. The most significant pain point is graphite given the US has virtually no graphite output.

Our takeaway: It’s going to take a decade plus for the West to begin to diversify from China’s battery metals. This is a positive for companies who are working today to achieve that goal including Redwood Materials and Ascend Elements.

  • New battery chemistries and architectures will take a decade plus to come to market, and that’s okay. Most of the next-generation battery conversation today revolves around the chemistry of the cathode and anodes.

Our takeaway: For greater energy density and fast charging, we believe the most promising technology is related to the silicon anode. We see these technologies making it into consumer electronics by the middle of the decade and supporting EV batteries by the end of the decade. For solid-state and dry electrode batteries to go mainstream, the timeline appears to be a decade or more away. It’s okay because supply for current battery chemistries should be enough to meet most of the demand for electrification over the next decade.

  • Smaller manufactures are in a difficult spot. The one group that could be left in the cold are smaller manufacturers that don’t have enough volume to win battery contracts from the likes of CATL, LG and Panasonic. All of their supply will go to the bigger manufactures.

Our takeaway: Based on our conversations with people in the battery industry, auto OEMs are already working to secure battery supply for the next five years. Some of those OEMs are having difficulty making it happen. We see the days of EV startups as a thing of the past, and the smaller EV makers today may have trouble surviving because they can’t source essential parts to scale their business.

The EU is challenging the Inflation Reduction Act

Not discussed at the Piper Sandler Battery Summit—yet top of mind for Loup—is the pushback that the IRA is getting from EU member states. All 27 countries agreed in early November that the IRA could damage European companies and economies, along with similar concerns of South Korea. We believe that Germany is leading the charge to dilute the IRA. German cars account for about 10% of light vehicles sales in the US each year, and demand for those cars will face a headwind given the IRA incentives. Our view is that most of the support from other EU members is more about extending support to Germany and less about concerns of the true impact of the IRA.

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Tesla
3 min. read Show less
2022 Loup Holiday Gift Guide

2022 Loup Holiday Gift Guide

Last year, we predicted a few items for this year’s gift guide:

  • Nintendo 64 Classic Edition | $50 | We missed the mark – it did not ship.
  • Quest Pro | $1,499 | We got the product right and the name wrong.
  • Peloton Strength Machine | $3,500 | We didn’t see the Tonal competitor this year but, eventually, it’s coming.

Here’s what else is on our list:

 And, here’s a look ahead to 2023 and some of the products we’re hoping for:

  • Nintendo 64 Classic Edition | $50 | Second time’s a charm.
  • Apple’s MR Headset | We’re still with Mark Gurman on this one and expect to see it by WWDC.
  • Tesla Model 2 | $30,000 | We’re expecting an announcement. Availability more like early 2025.

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Battery 101: What’s Next in Batteries?

Battery 101: What’s Next in Batteries?

The bottom line: While tech followers await in anticipation of the next battery tech breakthrough, it’s likely that the rate of improvement will prove to be incremental and continuous. We will still refer to the batteries in EVs as lithium-ion given that lithium will likely remain the key metal in cathodes for the foreseeable future.

For this fifth report in our “Battery 101” series, our goal is to outline the potential opportunities in battery innovation over the next two decades. A programing note: Elon Musk has been vocal on the topic. While he doesn’t know everything when it comes to batteries, he does influence which technologies make it to market. And, there are still many unknowns when it comes to what’s next in batteries, as evidenced by Musk’s response on a December 2019 earnings call Q&A:

Q: Wouldn’t it make sense to raise capital to pursue acquisitions, especially bolt-ons that could help you accelerate capabilities in battery technology?

A: I mean, if you know of any acquisitions, we’d love to hear about them. Yes, sure. It sounds great. Who should we acquire?

Not made clear by Musk’s response is Tesla’s progress with its next-gen 4680 battery pack along with the reality that they’re currently experimenting with more than 30 battery chemistries. Despite the uncertainty of the future of batteries, Musk believes even that even without significant battery tech breakthrough, “the opportunity to transition Earth to sustainable energy is still very possible.”

Lithium-ion batteries are the EV workhorse

Today, lithium-ion batteries account for almost all of the batteries used in EVs. Some pros: energy density for a 300-mile range, portability and reliability.

Cons:

  • Battery degradation. A typical lithium battery loses about 3-5% of its storage capacity each year, which means a 300-mile range battery will degrade to a 190-225 range (a decline of 25-37%) after 10 years.
  • Fire risk. The National Transportation Safety Board reports that there are about 170k car fires in the US annually. While almost all of those are from gas-powered vehicles, EV batteries can catch fire and pose challenges for first responders. After an accident or battery malfunction, the battery has stranded energy and once extinguished can reignite hours and or days later. Just like a gas vehicle, it’s unlikely that a EV battery would explode.
  • Affordability. The battery in an EV is expensive, accounting for between 15-20% of the overall cost of a vehicle. For example, in a $55K Model Y, the battery accounts for about $10-$12K in costs.

Current rate of battery improvements

A typical lithium battery sees an annual energy density improvement of 5-8%. This rate of progress pales in comparison to the 41% annual improvement outlined in Moore’s Law for semiconductors. While there is a debate as to whether Moore’s Law still holds, there is no debate that battery tech advancements lag chip advancements.

The DOE’s Vehicle Technologies Office outlined the following goals for battery development by 2025:

  1. Reduce the cost of EV packs to less than $100/kWh, ideally $80/kWh. Current battery cost: $130/kWh.
  2. Increase the base range to 300 miles. Current average range: 235 miles.
  3. Decrease charge time to 15 minutes or less. Current charge times range between 5-10 hours, or less at a supercharger.

The goals are aspirational yet lack any incentives to move the industry forward. That said, the freehand of the market is at work, leading to the development of an array of next-gen battery chemistries.

What does the next-generation of battery tech look like?

At its most basic level, current and future battery architects will include a cathode and an anode. The topic around next-generation batteries is centered on changes to the chemistry, architecture and battery cell alignment that make up the cathode and anode. As mentioned, an important takeaway is that lithium will likely remain the essential metal used in cathodes for the foreseeable future. Despite the dangers of predicting anything in tech will be around in 20+ years, we believe lithium will still be essential beyond that period. In other words, we expect consumers will refer to “lithium batteries” in their EVs for decades to come.

The Silicon anode

While still in a proof of concept phase, the most promising research in battery tech is related to the silicon anode. In theory, a silicon anode can increase the range of a vehicle by 2X, provide additional energy to power features like autonomy and reduce charge time in half. Another benefit to silicon is that it reduces geopolitical risks around metals supply. We estimate that almost 90% of total graphite supply is directly or indirectly controlled by China given China’s influence over African suppliers. We’re likely 3-5 years away from the chemistry making its way into consumer electronic batteries and 10+ years away from making it into electric vehicles.

One challenge to the silicon anode is swelling. When the battery charges, the silicon expands which can result in prototypes breaking and catching fire. Today, manufacturers are slowly building to a full silicon anode by adding small amounts of silicon into a graphite anode in a process known as anode doping.

Solid-state dry electrode

This architecture is totally different than a lithium battery and considered to be a science project today. It uses solid electrodes and does not use lithium. The selling point for solid-state batteries is that the provide improved performance and greater safety. We don’t expect them to go mainstream given the high cost (varying from $400-800/kWh) and poor performance in low temperatures.

Some companies working to develop solid-state batteries include QuantumScape (QS), SES (SES), SolidPower (SLDP) and Toyota (TM). Additional startups exploring the development of solid-state batteries include SVOLT, Automative Cells Company (ACC), Northvolt and Britishvolt.

Hydrogen

Hydrogen powered cars likely won’t gain traction. In the US, there are about 20k hydrogen powered cars on the road (compared to about 2.7m EVs)—all of which are in California, where there are retail points to fuel up. Most hydrogen-powered vehicles are made by Honda and Toyota. The battery is safe in a crash (despite word association with the Hindenburg disaster) because a hydrogen car battery does not pool gases like a 1937 German airship. There won’t be uptake of the hydrogen battery because it doesn’t produce enough power for the way most people drive. That said, if you prefer to drive like a grandparent, a hydrogen car may be for you.

Why all of the excitement around Tesla’s 4680 battery?

Tesla’s 4680 battery goal is to power a vehicle for more than 1m miles. It uses a slightly different cell architecture and is expected to be in volume production next year for Model Y’s with a partnership with LG Energy. The chemistry of the battery is similar to conventional lithium batteries. The benefit of the 4680 is a 16% increase in range with little additional costs.  This 16% step up is a step ahead of the typical 5-8% annual energy density improvements.

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Tesla
4 min. read Show less