Automotive and electronics giants are flooding the battery ecosystem with strategic investments.

Solid-state battery startup Solid Power, based in Louisville, Colorado, just won $20 million in a Series A investment round from Hyundai, Samsung Venture Investment, Sanoh Industrial, Solvay Ventures and A123 Systems. Late last year, Solid Power announced a partnership with BMW to jointly work on automotive batteries.

The company claims that its battery technology provides “substantially higher energy than conventional lithium-ion” while also reducing system-level costs of safety precautions.

With the level of investment and excitement in automotive and consumer battery markets, one might forgive a battery startup for using such aspirational language as “a multi-MWh roll-to-roll facility, which will be fully constructed and installed by the end of 2018,” or writing, “The company’s ultimate objective is to displace lithium-ion as the battery of choice.”

But the company’s claim that its technology provides “2 to 3X higher energy vs. current lithium-ion” really raises a red flag in the world of battery improvements. We spoke with Solid Power’s CEO to learn more.

2x to 3x greater energy?  

In an industry that is thankful for 10 percent performance gains, Solid Power co-founder and CEO Doug Campbell said that the “2x to 3x” greater energy claim encompasses its near-term and longer-term targets.

Campbell told GTM that state-of-the-art NCM (nickel, manganese, cobalt) cathodes with metallic lithium in a rechargeable chemistry can result in a 50 percent to 100 percent improvement in watt-hours per kilo compared to conventional graphite-based anodes and liquid electrolytes.

The CEO also noted that the startup is working on a more advanced chemistry, a conversion reaction cathode instead of the NCM formulation. This was the technology the startup initially licensed from the University of Colorado and according to Campbell, when combined with metallic lithium, can “credibly reach 2x to 3x” improvements.

The CEO added that his firm’s chemistry requires less safety precautions and less cooling requirements.

According to a Cornell University paper on conversion reaction materials for batteries, “Current battery technologies are mostly based on the use of a transition metal oxide cathode (e.g., LiCoO2, LiFePO4, or LiNiMnCoO2) and a graphite anode, both of which depend on intercalation/insertion of lithium ions for operation,” while “Conversion reaction materials have been identified/proposed as potentially high-energy-density alternatives to intercalation-based materials. Transition metal compounds such as transition metal oxides, sulfides, fluorides, phosphides, and nitrides can undergo conversion reactions yielding materials with high theoretical capacity. ”

One of Solid Power’s patents mentions sulfide solid electrolytes. An industry expert told GTM, “Certain sulfide materials can transport lithium as quickly as a traditional liquid electrolyte even while offering the structural support of a solid material. Faster transport of lithium means faster charging relative to some other solid electrolyte materials such as oxides.”

The major challenges confronting any solid-state battery that employs sulfide electrolyte cells are electrochemical stability of the sulfide electrolyte and mechanical stability of the electrolyte-electrode interfaces.

Solid-state and advanced battery competition

As Josh Garrett, CTO of Solid Power, noted in an earlier interview, “One of the main challenges with lithium-ion type technologies is, you can increase the energy and power, or you can improve or maintain your safety, but you can’t do both,” he said. “Solid-state is really the one known viable path toward increasing both at the same time.”

Solid Power is by no means the only well-funded startup going after these markets with new battery technologies. Here’s a partial list of competitors.

In June, Volkswagen Group raised its stake in Stanford University spinoff QuantumScape, which landed a $100 million funding round for its solid-state battery.

A few Silicon Valley publications have labeled QuantumScape a “unicorn” since it garnered a valuation of more than a billion dollars in its most recent funding round. That’s a heady valuation for a company still deep in its development phase and without significant revenue.

Other investors in QuantumScape include Kleiner Perkins, Prelude Ventures, Lightspeed Venture Partners, Capricorn Investment Group and Khosla Ventures. QuantumScape CEO Jagdeep Singh is the very successful founder of Lightera and Infinera. Dipender Saluja, managing director at Capricorn Investment Group, is on QuantumScape’s board, as is VW’s Axel Heinrich.

Sila Nanotechnologies recently won another $70 million of venture funding to develop advanced battery materials that improve power performance of EVs and consumer electronics. The Alameda, California-based company, founded in 2011, is looking to commercialize a new set of high-performance silicon anode materials that could replace the commonly used graphite in lithium-ion battery anodes.

This latest funding round was led by Sutter Hill Ventures and joined by earlier investors Bessemer, Samsung, In-Q-Tel, Matrix Partners and Changwei Capital, along with Next47 (Siemens’ VC arm), and Chinese battery builder Amperex. This round brings the firm’s total funding to $125 million, along with a $350 million valuation, according to PitchBook.

Ionic Materials’ plastic-like polymer serves as an electrolyte, and can work with active battery materials like lithium, zinc and aluminum. Last year, Ionic Materials claimed its technology can be used to build a low-cost solid-state rechargeable alkaline battery.

Sion Power of Tucson, Arizona has been working on advanced batteries for decades and received $50 million in funding for rechargeable lithium sulfur battery technology back in 2011. Board members include investors from Topspin Partners and Renaissance Technologies. Sion has also received grants from DOE and ARPA-E, and has collaborated on battery materials with BASF. Sion claims that its lithium-sulfur materials system has the highest theoretical gravimetric and volumetric energy densities of any battery system, as well as superior low-temperature operation.

Prieto Battery is another Colorado battery startup. Prieto is developing a three-dimensional lithium-ion structure to increase energy density and cycle life. It has raised an undisclosed investment from Stanley Ventures, the venture arm of the tool-making giant. The startup has also raised money from investors including Intel.

Sakti3, acquired by vacuum builder Dyson, was developing solid-state batteries, as was the Bosch-acquired Seeo with its polymer electrolyte. Toyota has made significant investments in sulfide solid electrolytes.

More than $1.3B invested in energy storage this year

Despite the challenges of battery science and manufacturing, venture capital and private equity firms have invested more than $1.3 billion in energy storage technologies in 2018, according to Wood Mackenzie.

The rapid growth of a viable EV industry is driving the advanced battery industry to new heights in revenue and technological progress. This is why corporate investors and venture capitalists are eager to invest in batteries, relative to say, solar hardware. Assorted forecasters peg the 2025 market for electric car batteries as ranging from $36 billion to $125 billion a year. That’s big enough to get any investor’s attention.

And so, despite the less-than-stellar record for VC-funded battery firms such as A123, Envia, Aquion, Imergy, Alevo, etc., there is still a movement of talent and capital into the battery business.

As Ben Kellison, GTM’s Director of grid research, recently noted, “Strategic investors have really taken over grid VC investment over the last 18 months or so, leading to lower total investment totals, but more meaningful investments.” The bulk of “grid” investment still goes to energy storage technologies.

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