The Big Business Of Energy For The EV Industry

The Big Business Of Energy For The EV Industry

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I welcome everyone to basically the announcement of Tesla Energy. They are announcing that they are setting a target of being fully. Electric up and down the ladder. The Chinese government has said we want to be the world ev dominator, whatever it takes. Now you're seeing governments talking about batteries and lithium and other raw material components as important as oil.

We are producing energy in a constant basis during day and night time. It doesn't matter if it's raining or it's a cloudy day. They will produce energy. There is a sense that for us to move to the next big jump when it comes to cost reduction, lithium ion is not going to be the long term answer. We're going through a transformation of the industry as large as when oil came onto the marketplace for fueling.

This battery is one of the largest battery energy storage systems in the world. In Moss Land in California. Pge has been working with Tesla to install its Megapack utility scale battery storage system. Once complete, it will help store energy for redistribution during off hours when solar output decreases.

California needs generation for September August as our key areas and when we need storage to be able to capture it during the day and then release it in the afternoons evenings. As nations around the world set goals to transition to renewables, demand for these large scale storage systems is on the rise. The market size of grid scale battery storage is expected to become a $15 Billion market by 2027.

Now we're seeing in many parts of the world in California, Germany, now in China, mandates to have a certain amount of storage available per unit of renewable energy. If you look at resource forecast or resource plans, the expectation is there will be tens of thousands of megawatts of new energy storage in just California. Welcome, everyone, to basically the announcement of Tesla energy. Tesla got into the energy business in 2015 and it's betting it will become increasingly important for the company in 2020. It surpassed three gigawatt hours of energy storage deployments in a single year, largely due to the popularity of Megapack, like the one being built in Los Landing.

I think long term Tesla Energy will be roughly the same size as Tesla Automotive. I mean, the energy business collectively is bigger than the automotive business. They have really deep tactical knowledge of batteries, not just the cells themselves, but how to operate them, how to build a battery management system, how to package them well, make sure they're in the right kind of thermal window. The systems have smart technology built into them. The technology and the way the batteries are actually configured is one thing, but equally significant at the moment is how you control them.

Tesla have a system called auto bidder that actually chooses what the battery does and when it does it. The amount of data we get from each. Megapack is phenomenal. Jeremy The Tesla product has got a lot of technology. Built into it. It's really an answer to one of the big challenges we've got. We all know that we're transitioning our electricity systems to renewables.

It is the way of the future. We're going to see a lot of these. But energy storage is been around for a hugely long time, but for a very long time. The only real viable technology was actually the lead acid batteries in our cars. The one, of course, that was ramping up during those same decades were lithium ion batteries. First, lithium ion batteries were used in consumer electronics in the late 1990s.

We can thank Sony's Handycam for pioneering this innovation for us. Lithium ion batteries are now everywhere, from electric vehicles to our phones. Though there are many other types of batteries in the works.

Lithium ion is still the most cost effective for utility scale storage. In the past, prohibitively high costs have meant that lithium ion batteries couldn't be used at large scale grid storage levels. In the past decade alone, according to estimates from Bloomberg and F, costs fell about 90%. With the world transitioning to electric vehicles, demand for electricity could be greater than ever before. People are moving towards electric vehicles roughly twice as much electricity.

If all transport goes electric and then you need three times as much electricity, if all heating goes electric, this is a prosperous future, both for for Tesla and for the utilities. And with the recent failure of the power grid in Texas and brownouts in places like California, energy storage is becoming necessary to keep power up and running. There is a new impetus behind building out a stronger, more resilient grid. We've seen again and again our grid can't handle climate change, can't handle these climate disasters that are becoming increasingly frequent. Tesla built one of its storage systems on the Hawaiian island of Kauai in 2017. In addition to supporting the SolarCity solar farm, it's added more reliability for the utility.

We had our best reliability ever as a CO up last year. Part of running an electric utility grid is you have to always match every second of the day supply and demand. Batteries are amazing at that because batteries is instantaneous.

If you look at some of the events that the batteries responded to, it's gone effectively from zero to full output in a bit over a hundred milliseconds. And there's just there's no other technology that can do that. In the U.S. and around the world, more aggressive energy storage policies are being put in place. China has mandated energy storage as part of its effort to reach 16.5% solar and wind in its national power targets by 2025. And Biden's recently unveiled more than 2 trillion infrastructure package.

There is more than $600 billion earmarked for climate related policies, and that includes $100 billion for the power grid. President Biden has set 2035 as the 100% clean electricity date. Just meaning that one's going to be not only a big challenge, but also a market opportunity for all these technologies. Tesla is one of several companies working on energy storage. Tesla gets and they deserve to get a lot of attention for their effort to build the Gigafactory giga facilities. But there's lots of others.

There's a whole range of startup companies in the storage space. The majority of grid scale energy storage, lithium ion battery energy storage is being built out by utility companies such as Next Era Energy down in Florida. Duke Energy. These are a few of the names that are integrating battery storage into their models. Amy's corporation has been working on a number of projects, most notably with Hawai'i Island Utility Cooperative.

In 2019, it completed a 28 megawatt solar farm with a battery capable of storing 100 megawatt hours. And it just brought a microgrid online at the island's Pacific Missile Range facility. With the success of these projects, the Utility Cooperative is working with us on a new project to combine solar and hydro for even greater storage capacity. It's going to have 2 hours of battery that can handle the solar output. But what's really wild about this one is it's going to also have pumped storage, hydropower brought in.

Home storage has been around for decades. So it's a proven technology, but linking it into an intermittent resource such as solar is a new thing. Next to the PGE and Ian Tesla storage project and mass lending Vistra is also building one of the largest battery systems at its natural gas power plant.

Phase one of the project was completed in December of 2020, bringing 300 megawatts of storage capacity online. Phase two will add an additional 100 megawatts when it's completed later this summer. We need to do everything we possibly can to accelerate the transition to sustainable energy. You can't really talk about energy storage without talking about Tesla, which of course is the leader in EVs and also has a big footprint in the energy storage space.

Tesla launched its energy business in 2015 with the announcement of a new battery product. So this is the sort of product we call the Tesla Powerwall. It has all of the integrated safety systems, the thermal controls, the DC two DC converter. It's designed to work very well with solar systems right out of the box. People in a remote village or an island somewhere can take.

Solar panels, combine it with the Tesla, Powerwall, and never have to worry about having electricity lines. And for larger scale applications, Tesla developed the pack. What about something that scales much to much, much larger levels? So for that, we have something else. So we have the power pack. The Tesla Powerpack is designed to scale infinitely. So you literally make this into a gigawatt hour class solution.

In the summer of 2016, Tesla acquired SolarCity for $2.6 billion. The deal was controversial and is still the subject of some shareholder suits, but it drove Tesla to do more in energy storage. Tesla has unveiled several solar roof tiles and has hyped the product, but installations have not grown as quickly as expected.

They've had a numerous technical setbacks and kind of deploying that product and making it happen and a solution that works at the right price point, that's competitive with conventional rooftop solar. But by and large, they've built the right pieces. They've productized it in the right way for consumers. Just recently, Tesla updated the Powerwall to doubling the capacity of energy it can discharge.

All calls made since roughly November of last year have a lot more peak power capability than the specification on the website. The energy is the same, but the power is roughly double. According to the company. Demand has been so high, Tesla is now only selling power walls bundled with its solar products.

We will not sell a house solar without a Powerwall. A Tesla. Powerwall two has an energy capacity of 13.5 kilowatt hours. A Model S has up to 100 kilowatt hour battery power pack. Its smallest utility scale storage solution has a capacity of up to 232 kilowatt hours per unit. This can be scaled up to include several power packs to meet energy needs. Tesla's first major battery installation near Jamestown, South Australia, had a capacity of 129 megawatt hours at the time of its completion.

In December 2017, it was the largest lithium ion battery storage project in the world. The system charges using renewable energy from the Hornsdale wind farm and helped bring more stability to the grid following a significant blackout. Extreme weather event that happened in September 2016 in South Australia that resulted in the entire state blacking out the response that the South Australian Government took to develop and accelerate the energy plan that they were already working on was really triggered by that.

Based on studies observing its first and second year of use, Tesla's Australia battery system has proven to be reliable and has saved the utility company money. That first year performance we could see that the battery itself generated revenue of $24 million. It was. But the saving to the electricity system in terms of how much more cheaply the frequency control services were provided with 30 to $40 million. With the success of this project, Australia is looking to bring more lithium ion battery storage systems online.

There's quite a few underway now in other parts of Australia and also in South Australia. Another project Tesla took on was in Kauai, replacing diesel fuel generators that were supplying power when solar couldn't. In the Hawaiian Islands.

One thing was for certain we had to do something. We couldn't stay on oil. All these technologies, every single one we've done, even a higher price. Solar ones been cheaper than the alternative of oil.

So they've all saved us money. The project consisted of a 52 megawatt hour battery and a 13 megawatt solar city photovoltaic system Quiet Island Utility Cooperative contracted with Tesla to purchase electricity over a 20 year period for 13.9 cents per kilowatt hour. It's a great economic thing. We know we're going to have a fixed price for 20, 25 years on these.

Before we had the technology when we were heavily oil dependent, our pricing can go up 40 to 50% from 2 to 3 month period as we were riding oil. Since the Tesla and Amy's projects, Quiet Island Utility Cooperative has been able to operate nearly on all renewable energy. Almost every day. Now we will go 6 to 8 hours at a at 100% renewable working, and we call it inverter based technology here, where it's batteries running things. There's not really another grid out there that is doing that.

Similar to Hawaii, Tesla completed a project on the island of Tao in American Samoa, which was previously powered by diesel generators. Tesla installed 5328 solar panels and 60 power packs and said this would allow the island to stay powered for three days without sunlight. Tesla says it will offset the island's use of more than 109,000 gallons of diesel per year. And when Puerto Rico's utility infrastructure was devastated in 2017 during Hurricane Maria, Musk took to Twitter, suggesting Tesla could help in 2018. Ongoing outages left Puerto Rico without power. So Tesla brought in Powerpacks to several critical sites around the island.

Another one of Tesla's early projects went online in December 2016 to help reduce Southern California's dependency on peaker plants. In East Los Angeles, the Mira Loma substation has 210 megawatt systems, which can store 80 megawatt hours. The site is comprised of 396 power packs. With the success of these early projects, Tesla developed an even larger capacity solution Megapack, which has up to three megawatt hours of storage.

The equivalent of almost 13 POWERPACKS or. 30 model sedans. Tesla says if scaled to one gigawatt hour of energy storage, that would be enough to power every home in San Francisco for 6 hours. We're working with utilities large and small, not just utilities, but also just like microgrid and project developers of all type and building our own projects where it makes sense. And there's a lot of demand for the product and we're growing the production rates as fast as we can.

Apple is working with Tesla to build a 240 megawatt hour megapack at its California flat solar farm that powers its Cupertino headquarters outside of Houston and Angleton, Texas. Tesla has quietly been working on its first site in the state. Once complete, the 100 megawatt system will be capable of powering about 20,000 homes. Cnbc visited PGE and its Megapack site in Moss Landing, California, which is expected to be completed by the end of the summer. We're standing at the PGA and Elkhorn Energy Storage Project.

It's 182.5 megawatts of Tesla Megapack that are next to another very large project, which is the Vista, a 300 megawatt energy storage project combined. You're looking at 930 megawatt hours between the two projects, which really makes most landing. Some would say the energy storage capital of the world right now. California is the top producer of renewable energy in the U.S.. In 2014, the state realized that the renewables were great, but we needed to do something to deal with the excess.

So the state started launching its energy storage programs as part of energy storage. One of our first assignments was to procure 580 megawatts to be online by 2024. It is the glue that holds it all back together is the energy storage. If you consider how much energy we do use, we're going to need more facilities like this.

When PGA looked to integrate an energy storage solution, it said it received several proposals but ultimately chose Tesla for this site. Tesla definitely had the most mature product. The understanding of energy storage was better than the rest they've already done.

Ul 9548 burned tests on their power pack product for these mega packs. If there is a fire, it itself extinguishes. It's one of the few projects I've ever worked on with. This is going to save customers money. While Tesla has been aggressive in its rollout, it is unclear how profitable this business is for them.

It does not break out energy storage sales from its solar business. In the first quarter of 2021, Tesla energy revenues were $494 million, while costs were 595 million. But energy storage deployments grew 83% from 2019 to 2020, which the company said was driven mainly by the popularity of the Megapack.

They've deployed a lot of systems, they've deployed them on time at a profitable price point where the project operators also use the project successfully and made money from them. They've built a lot of the right pieces and have a promising play in the energy space because of the battery expertize they've had. And the future looks promising for Tesla and others in the space.

As energy storage and as lithium ion and as renewables become a greater makeup of our grid, it's going to fundamentally shift how our grid currently works. This is a big opportunity for a wide spectrum of companies who are involved in what's known as the energy transition. There are still a bunch of hurdles to making lithium ion batteries. First of all, while the costs have come down a lot, they are still high. Batteries are the most expensive part of electric vehicles. And similarly, the large quantity of cells and utility scale batteries make them costly.

The average price per kilowatt hour for a lithium ion battery pack is around $137, down from 157 in 2019. The increase in energy density really isn't about how do we make longer range electric vehicles today. It's about how can we make them cheaper by using less materials and getting the same amount of energy from them.

And there is the issue of resources. With electric vehicle production ramping up, there are concerns demand will outpace supply for materials to make batteries. Tesla is reportedly looking into changing to a cobalt free lithium ion phosphate battery for its megapack. The change in chemistry could help cut costs and ease demand for supply constrained, nickel based battery production. There are definitely issues going forward with whether or not there will be enough supply to meet that demand because demand is not just growing in the United States but growing around the world.

I've been working on lithium ion cells for 20 years and I've seen factories evolve. And then Panasonic built the Gigafactory, which is just on another scale. But even this factory really only supplies one car model. So if we're really going to change to an electrified industry, we need something like 20 of these factories. The Biden administration has emphasized it wants to bring mining and cell production back to the US.

China started to ramp up their mining of rare earths in the eighties and nineties and because of that supply the United States actually ramped down. Actually, now we're seeing in the United States and Canada and Australia a ramping up again of supply. To meet the growing demand. New types of battery technology are also being explored. There are sodium batteries, there are salt based batteries.

One of my favorites is called flow batteries. One of the huge benefits of low batteries is that instead of thousands of cycles before degradation, they give you potentially millions of cycles. And for certain projects, energy storage is being done through alternative means. Long duration storage can be anything from things we're really familiar with, like storing energy in hydro systems or pumping water uphill. As the world transitions to renewable energy, storage will continue to play an increasingly important role.

And Tesla could become as important of a player in the energy industry as they have in the electric vehicle space. So while we don't really have an idea of who is going to win the day and who's going to be the most successful company in this space, I do think one thing is for certain, and that's that we're going to see a lot more solar and wind build out, both here in the United States and abroad. Getting bulk wind and solar into the network is what will bring prices down for consumers. And I think that's important rather than people thinking it's all about do these technologies need subsidy? Are they getting a free ride? It's actually no, they're going to enable much cheaper energy while we're decarbonizing the grid, which is hopefully what we all want.

Think about where our energy comes from. Drilling rigs and smokestacks, windmills and solar panels, maybe even lithium ion battery packs might come to mind. What we probably don't think about are the farms that make up over one third of Earth's total land area, but it turns out that they can be an energy source as well.

Barcelona based battery company bio is generating electricity from soil and creating biological batteries that can power agricultural sensors, eliminating the need for single use chemical batteries. So soil is actually very rich in fuels and you're just harvesting that fuel. In this case. Bio is hoping that its biological batteries can help to power the $1.36 Billion Global Sensor Market Stick, one of bioreactors reactors in the ground.

And so long as the soil is irrigated regularly, the battery will provide an always available source of power to the attached sensor. In turn, these sensors give farmers the information they need to irrigate and fertilize their crops most efficiently. Farmers around the world are buying and buying more sensors every single year. They're used to measure humidity, temperature.

That, after all, how do you charge those sensors? Literally an army of workers having to go to the fields and replacing the batteries themselves, which is not really just very expensive, but quite polluting as well. Bio is working with large companies like Bayer Crop Science to change this. Piloting their sensor tech on farms while also experimenting with using bio batteries to power lighting installations. Eventually, bio envisions a future where biology could even help to power our largest cities.

Standard batteries rely upon chemical reactions, for example, in a lithium ion battery. Lithium ions move from the negatively charged side of the battery, the anode to the positively charged side, the cathode. This creates free electrons which move through a separate wire, carrying an electric current from the anode through the device being powered into the cathode.

But instead of using an element like lithium, Bowe uses organic matter as fuel. Within the soil, microorganisms feed on organic matter. Breaking it down in a process that releases hydrogen ions as well as electrons inside the B0 device, there's a wire that transports the free electrons from the anode to the cathode powering the sensor. In the process. We are producing energy in a constant basis during day and night time. It doesn't matter if it's raining or it's a cloudy day.

They will produce energy. Bio is not the first to make batteries from organic compounds. Bio battery is using enzymes that break down carbohydrates. Fatty acids and alcohol have been developed in labs for years.

Many are introduced to the infamous potato battery demonstration in grade school, which shows how the acids in a potato can be harnessed to power small lights or clocks. There have also been a number of trials focused on producing electricity from the organic matter found in wastewater and using that to treat the wastewater itself. But the tech has not yet been able to scale.

At the University of Utah, Professor Shelley Minter's research group is working on incorporating DNA into bio batteries to increase energy density. She believes that for biosensor tech to gain mass adoption, it all comes down to price and operational efficiency. At this point, it becomes an issue of thinking about the cost of what those materials are that you're going to make electrodes with, how you're going to wire everything together, and just how efficient that you can make those systems.

Much of the US tech is made from graphite, which is abundant and cheap, less expensive even than the materials used to build solar panels, which can also be used to power sensors but take up more space and can only produce energy when the sun is shining. Well, single use chemical batteries may need to be changed multiple times a year. Vidyut says that biosensors can last up to ten years and cost less than €1, as compared with 4 to €10 for sensors powered by chemical batteries. Many say that's what will truly make the difference. We have a growing audience that is very, very interested in saying, what can I do? What can my family do, my organization do to not only be sustainable environmentally, but first and foremost economically? Everybody says that they want to be helpful to the environment, but I think the biggest driver right now is economics.

Can you group is an agricultural organization that brings together different stakeholders interested in regenerative land management and farming practices, and it plans to test biosensors in its fields later this year. Collectively, we're in touch with probably about 20 million acres of private. Lands, and. All of them are focused on regenerative.

Agriculture. Bayer Crop Science also plans to test biosensors this year, and if it ends up adopting them widely, it could lead to major savings. Right now they have like 50 million hectares of land using sensors specifically. So they've calculated that by applying this biological reactors for their sensors, they would be saving €1.5 billion per year.

Yeah, we'll be running pilots throughout 2021 and next year it hopes to officially go commercial with its sensors. In the meantime, it has a number of other projects in the works, including bio panels, which are basically just larger biological batteries that are placed fully beneath the soil and can power single lights or full lighting installations day and night. They work using pretty much the same principles as the bio sensor. The constant breakdown of organic matter in the soil means that the panels are constantly providing power but cannot store energy on their own for later use. A lot of us now have lighting outside that is using solar. And so rather than having sort of that solar light that is lighting your flower bed, actually using the flower bed to light that light I think is a perfect example. Bio is also working on a number of experimental art installations that showcase the ways in which plants can be used as so-called biological switches, detecting frequency changes that can be transformed into voltage in order to turn on lights or emit sound.

As in this piano installation at the Absa Biotechnology Botanical Garden. What we do with them is to actually detect the exact frequency between a human touch and a plant. So actually, if you touch the plant with a metallic bar or with a phone or whatever, it won't get activated. It just gets activated with a human touch. It hopes that these installations will help to inspire designers of cities and public spaces to incorporate the natural world into their blueprints. What we do with biological switches right now is literally a transformation in architecture, in actually creating a city that it's able to literally combine with nature itself.

And the panels he hopes will one day help to power these biotech cities of the future. Even imagine farmers using their own fields, not just to create foods, for example, but actually to nourish not only human beings, but all. Societies themselves, the energy needs of cities. But Bill does expect that it will be able to exponentially increase the energy density of its batteries in the years to come. In the next ten years, we're really going to see a great leap.

I mean, since we began with the energy, productions of our batteries have been multiplied 1000 times. And actually in the last 5 to 6 months, we've increased our energy output by by four times. Peter says that in the lab, the panels are able to produce about 3.7 watts of power per square foot, about one fourth that of a solar panel operating at average efficiency.

This is impressive given the constraints of using soil as a conductor of electrical current. But there's still no replacement for energy dense chemical battery tech like lithium ion. Unlike a piece of metal, a microorganism is not conductive. And so looking at how you can develop strategies to improve the overall conductivity of the cell, how you can.

Improve communication. Between the microorganism and the electrode, how you can decrease resistance in soil. All of those are sort of engineering feats. That need to be handled because of this. Minter says that sensor tech is a good place to start.

Obviously, powering sensors is something that's a relatively sort of low power application. Transportation and airplanes would be sort of high power needs, and you're not going to make it to that area. Sort of where you are in between is going to kind of depend on how inexpensive they can make the materials associated with the battery. While Bill hopes that 2021 will be the year that its batteries are proven at scale, it has been able to generate lots of buzz in the meantime, raising a total of €3.5 million in funding, approximately $4.3 million.

The European Union overall has been its biggest supporter. The European Union has actually invested €2.5 million in the company, way more than double that. What we got from from the private funding. Supporters are banking on sustainable and regenerative agricultural practices continuing to gain traction so far. Bennett says he's found a willing audience of farmers to test Beau's tech. Those that are already in the realm of taking on regenerative agriculture, those are the ones that we're focused on. And that's in the millions we don't have a problem with with finding an audience.

As bio grows, it doesn't plan to manufacture sensors and panels itself. Instead, it wants to license its bio battery tech to agricultural companies that already make sensors and have the manufacturing and logistics know how to drive mass market adoption. We're going to go straight forward to companies that want to actually use this technology and that already have a network of clients, and they already have products that are applicable with this technology, with. The public at large, starting to take a deeper interest in where their food comes from.

Bennett sees the market opportunity for a product like biosensors continuing to expand. The audience is going to say, So tell me, how are you powering your your agriculture? How are you powering these these food sources? You know what's in the soil. We didn't ask that even ten years ago. We didn't ask that really even five years ago.

We're starting to ask it now. Since 2010, the price of lithium ion batteries has decreased by a factor of ten, leading to a boom in EV production in the U.S. and globally. But as most recent car buyers know, electric vehicles are still prohibitively expensive for most Americans, costing on average at least $15,000 more than a new gasoline powered car. When you look at the need for electrification of the transportation sector, one of the greatest contributors to emissions around the world, it really is the limitations of battery technology that are holding back that movement of electrification. Within the EV industry. Lithium ion is the only type of battery being manufactured at scale, but there's a number of companies that are developing new battery technologies that they hope will be able to compete on price and efficiency in the next decade or so. As analysts estimate that the size of the EV battery industry will grow to around $70 Billion by

2025. There is a sense that for us to move to the next big jump when it comes to cost reduction and energy density increase, lithium ion is not going to be the long term answer. Coburg, a Silicon Valley startup which spun out of Stanford in 2015, is pursuing a lithium metal battery, which Wang says could be twice as energy dense as standard lithium ion. While lithium metal has been on researchers radar since the late 1960s, it's only recently started to show real promise for commercial applications. Kubrick's first customers are in the aviation industry, but EV battery giant Northvolt, which has contracts with Volkswagen and BMW, just acquired the company with plans to eventually put Kubrick's batteries in cars, too.

We've been obviously looking at what is beyond the next generation of of high nickel lithium ion batteries, how to get beyond 1000 watt hours per liter. But Richard and the team at Kjellberg really, really seem to have a viable way. We're going through a transformation of the industry as large as when oil came onto the marketplace for fueling vehicles in the first place.

It's as big as displacing the entire oil industry for transportation. A battery has three basic components one end the anode is negatively charged, the other the cathode is positively charged. The substance in between, which conducts electric current is the electrolyte. In a lithium ion battery. The electrolyte is made up of lithium salt and organic solvents and carries positively charged lithium ions from the anode, which is usually made of graphite to the cathode, often made of cobalt, nickel and manganese. This movement creates free electrons which travel through a separate wire and carry an electric current through the device being powered.

The more lithium in the battery, the more energy dense that it is. And in a lithium metal battery, the anode is made of pure lithium. The pure lithium is the holy grail of nanotechnologies. There is literally no excess weight or volume contained with storing that lithium, just a pure metallic electrode. And that allows us to really take the battery to the next step in terms of how much energy we can store in their battery.

Experts have known for decades that if they could get it to work, lithium metal would be a superior battery technology. But there's been persistent challenges like dendrites forming on the anode. When you charge lithium metal batteries, you have these needle shaped formations that form on the surface. These needles can penetrate through and shot the cell, and shorting a battery is never a good thing. So what happened maybe in the early 1990s was people sort of dropped the research into lithium metal batteries.

Lithium is also a very reactive element, meaning that if it comes into contact with water or oxygen, it can overheat and catch fire. Kubrick, though, thinks that it solved these problems with its proprietary electrolyte technology. So we have developed a new chemically stable electrolyte that creates a wonderful protective layer on the lithium metal and that protects it from being decomposed or reacted with other materials. It's not the only company in this space, but what sets Kubrick apart from other lithium metal startups is that like lithium ion batteries, it has a liquid electrolyte. Well, its competitors like Quantumscape and solid power use a solid, oftentimes ceramic based electrolyte. Solid state batteries have generated lots of interest and commercial investment since they also promise to prevent reactivity and dendrite formation.

Quantumscape, backed by Volkswagen and Bill Gates, went public in 2020 and solid power, backed by Ford and BMW, is set to go public this year both through special purpose acquisition companies, but those solid state tech shows Promise. Wang says Kubrick's liquid electrolyte makes its batteries far more compatible with existing lithium ion production methods. So with just some very, very minor retooling and retrofitting, we're able to utilize more than 95% of all of the existing lithium ion manufacturing processes for making our new battery technology.

This, Wang says, will allow Kubrick to scale up and commercialize much quicker than its solid state competitors, though many companies, Northvolt included, are interested in investing in a whole range of next generation battery technologies. You see different types of technologies which all have the ambition of really increasing energy densities. So I think there is so much going on that just to stand on one and bet on one leg is a very dangerous proposition going forward. While Quantumscape and Solid Power are partnering with big name automakers, Kubrick's first customers are in the aviation industry as the market for short haul electric aircrafts is heating up. So far, Kubrick has partnerships with Boeing as well as aviation startups, beta technologies, AMP, Air and Volt Arrow.

Current lithium ion batteries are not good enough for aviation simply because they're too heavy. And that weight ultimately means that you can't carry as many passengers, you can't fly as far. And so we are targeting the aviation industry because they have a much higher value proposition for high performance technologies and are willing to pay a premium to really get the best performance for their vehicles. Kubrick acknowledges that it will take a number of years for its tech to scale to the point where it's cost competitive with lithium ion.

Wang predicts that will happen around 2027 or 2028. But in the meantime, when it comes to electric planes, the increased energy efficiency of lithium metal batteries could be well worth the higher cost. The idea here is to start to move away from the two dimensional travel and all the traffic we have on the roads to try to take off from, say, a building go across town where there could be a lot of traffic and sort of get away from the traffic and drop somebody off here.

There are very short runs. You might be only flying for half an hour or 45 minutes. You might have a few passengers and electrifying them has a lot of advantages. Ultimately, though, Northvolt plans to get Kubrick's batteries into EVs as soon as possible. Any path to automotive requires huge scale up, but five years is the internal timeline that we put upon ourselves. If all goes according to Carlson's plan and Kubrick's batteries are in cars by 2026, weighing predicts that by 2030, EVs with lithium metal batteries will actually be cheaper than EVs.

Using lithium ion as increasing the energy density will ideally drive down production costs across the. Ward by increasing the energy density, you're making the entire vehicle design simpler. You have fewer production steps per kilowatt hour, you have less material inputs, less labor inputs, less energy inputs. And even then, when you integrate it into a vehicle because you have a lighter weight battery, you can get away with a simpler vehicle design, more elegant vehicle structure, and a more efficient vehicle. And so ultimately, all of these apply for cost savings across the board. Srinivasan says that today's lithium ion battery packs for EVs cost about 170 to $180 per kilowatt hour to reach cost parity with an average gasoline powered car.

Packs would need to be more than twice as cheap. Now the target for electric car is somewhere around $80 a kilowatt hour. And that number comes from taking a small vehicle, say a Toyota Corolla or equivalent, and converting that from a gasoline car to a electric car. Hedberg says that it expects its battery packs will be 10 to 20% cheaper than lithium ion once they're manufactured at scale. Well, Srinivasan agrees that lithium metal could lower costs and increase the range of electric vehicles. He warns that charging time has historically been a problem with these batteries because of dendrite formation.

Turns out that fast charging has actually been the big challenge with lithium metal batteries. So today it is not clear if you're going to be able to enable fast charging. But the hope is that once we start getting these batteries to the market, we can start to sort of push on the boundaries of things like fast charging. Hybrid believes that fast charging will be possible, though, for aviation.

Wang says that now its battery cells currently take 40 minutes for a full charge, a number that he expects will drop significantly in the coming years. Quantumscape says that its batteries can charge to 80% of full capacity in 15 minutes, and solid power says that it can get to 50% capacity in the same amount of time. The key is to combine all these parameters with high energy density, with cost, with long durations and also very fast charging times. I mean, everybody wants everything at the same time. And this is where we need to continue working with the technology in order to get it to all these requirements.

Manufacturing scale up is also going to be critical in the years to come, especially in the US, which lags far behind China and Europe when it comes to building out all elements of the EV battery supply chain. Today in the United States, we make approximately 40 gigawatt hour of batteries. The number that we need in the next 10 to 15 years could be in the range of terawatt hour a year. Now, that's a big change we are talking about creating in the order of 20 gigafactories or 30 gigafactories, so for us to get there.

But battery experts are heartened that the Biden administration is taking this scale up seriously. The Department of Energy recently released a 100 day battery supply chain review. In it, the administration says that it will take immediate action to ensure that battery companies receiving federal funding make their products in the U.S.

and promises to make loans to EV battery manufacturers to help them to expand or establish US manufacturing facilities. By offering grants and other types of funding to make it easier for companies to set up shop in the US. This ultimately allows us to really develop that advanced supply chain in the US and support domestic automakers. Cuba itself has received funding from the Department of Energy, the National Science Foundation and the California Energy Commission and hopes to expand its domestic presence even though Northvolt is headquartered in Stockholm.

I wouldn't be surprised if you would see Factory in the US from us in a not to long business future. But building out the battery industry, which is projected to grow by tens of billions of dollars in the years to come, will not happen overnight. So there will be more than enough room for multiple technologies in the marketplace. We believe the future of the battery industry will be highly supply constrained for the foreseeable future, and this means that there won't be enough good batteries to go around for all the different use cases that you wanted for. And so this naturally means that more advanced technologies like lithium metal will co-exist along with lithium ion technologies. Experts say that now is the time to act when it comes to investing in these new technologies.

And a number of innovative battery companies like Cuba have raised big rounds, been acquired or gone public in recent years. There is a worldwide race to capture the battery market simply because it is becoming clear that we are probably going to transition towards an electric future. What this means is that this is the time to take the ideas that we have, the innovation that we have, and bring them to the market. The Electric Vehicle Revolution is coming to America.

Gm's Ultium battery is. Made for all types of vehicles. So soon everyone can drive it even. So this F-150 prototype is all electric.

China sold roughly 1 million more EVs than the U.S. last year, but domestic automakers are finally getting serious about going electric. While Tesla has dominated the U.S.

industry for years. Ford and General Motors recently announced major investments in the space. They are announcing that they are setting a target of being fully electric.

That's the goal by 2035. If we're looking over the next 10 to 15 years, you're probably going to see more change in the automotive industry than we've seen in the previous 100 years. Volkswagen, Jaguar, Land Rover, Toyota and Volvo have also made big commitments, planning to rapidly ramp up production of EVs in the coming five years. Problem is, electric cars run on lithium ion batteries, and the U.S. is in short supply.

And so it doesn't take much looking ahead to realize we don't have enough. We simply don't have enough electric batteries. The fact that the US is building one Gigafactory or the equivalent of one Gigafactory every four months and China's building one every week.

China's in tune with the pace of what's happening here in the US at the moment isn't. China has nearly 100 large scale battery manufacturing plants while the US has just four. If current trends continue, projections for the next decade show the U.S. continuing to lag far behind, and relying on China for battery imports is neither cost effective nor good for national security. Should the US become overreliant on Chinese batteries? Well, it'd be so simple.

Just the Chinese would say, sorry, we don't have enough supply for you. Biden's messaging around the need for more EVs could incentivize battery manufacturers to invest more heavily in the US market. But even if they all started planning facilities today, we'd probably still face a temporary shortage, inevitably delaying the transition to an electric future.

By the time you acquire the land, by the time you get all the environmental permits, by the time you construct it, by the time you operate, it could be two, three, four years. And those years are going to be critical as we fight to avoid the worst effects of climate change. Even before China's big EV push, lithium ion batteries were an Asian centric industry. The tech was first commercialized by Japanese company Sony for use in their video cameras and Walkman media player the Japanese giant Panasonic and South Korean heavyweights LG Chem, Samsung and SK Innovation then took the lead throughout the 1990s and 2000s producing lithium ion batteries for portable tech, from power tools to iPhones and laptops. While the U.S. may have been okay relying on imported batteries for their phones now that vehicle electrification is an issue of energy independence. The gaps in the US supply chain have been laid bare.

If the US wants to buy lithium for batteries today, 0% produce in the US say nickel sulfate for batteries 0% is produced in the USA. Cathode material 0% is produced in the USA. So at the moment the supply chain up to the battery cells does not exist. That's not a healthy national security strategy for what is going to be one of the biggest growth industries of the 21st century.

As of 2021, benchmark mineral intelligence values, the lithium ion battery market at $50 Billion and expects it to reach $200 billion by 2030. But the US still lags behind in mining and manufacturing. Australia is the largest producer of raw lithium by a long shot followed by Chile, China and Argentina. Other key battery elements include graphite, nickel, manganese and cobalt, which are mined in large quantities in China, Indonesia, South Africa and the Democratic Republic of Congo.

Most of these materials are then shipped to China, which handles 80% of the world's raw mineral refining, 77% of the world's battery cell manufacturing, and 60% of the world's battery component manufacturing. Japan and South Korea are still manufacturing leaders, too, but China has quickly surpassed them in recent years. The problem for America is not a lack of resources. For example, the U.S. Geological Survey reports that the U.S. actually has more lithium reserves than China.

The mines just haven't been built here. That's because until recently, domestic automakers just hadn't really committed to EVs and the policies weren't there to support them. China, on the other hand, decided over a decade ago that it wanted to be the world leader in electric cars and went on to heavily subsidized EVs and EV infrastructure for the automakers, consumers and battery companies themselves. You can get up to $10,000 back on the purchase of a vehicle. The government is encouraging its state banks to lend very liberally to EV startups hundreds of millions of dollars of easy loans, incentives for investment up and down the ladder. The Chinese government has said, we want to be the world ev dominator, whatever it takes.

And while some of China's subsidies have phased out recently, quotas are now driving the country's EV sales. So essentially what they tell automakers, whether the global or Chinese, is that if you want access to this massive Chinese market, you must produce a certain percentage of electric vehicles every year. These policies guarantee a robust battery market, giving Chinese companies up and down the supply chain the assurance they need to mine for raw materials and manufacture on a massive scale. Until 2019, China also effectively required EV makers who wanted subsidies to use Chinese batteries, giving rise to domestic giants like Catl, which now powers some of Tesla's Chinese made model threes.

Specific states, most notably California, do have strong policies promoting EV adoption, yet others have almost no support and federal policy has been unreliable from administration to administration. There's been a lack of concerted, directed efforts from the federal government to push the energy transition along in the transport industry. And what happens when there's sort of mixed messaging from that level is that there's doubts raised about is the EV market really going to grow in the US? Should we set up shop? Is it worth long term returns if we if we make this move? Due to this historical uncertainty and the established dominance of the East Asian battery giants, there are currently only a handful of companies producing lithium ion batteries at scale in the U.S., none of which are American owned.

When we look across the landscape, there's really the work that Tesla does with Panasonic. Some of the US manufacturers work with LG, and then there's the facility that's being built in Georgia, the SK facility, which would electrify 330,000 vehicles a year. Korean owned SK Innovation is building out the plant in Georgia, and many industry experts believe that it could play an especially important role in the domestic battery landscape in the US. Panasonic only provides batteries to Tesla and LG works primarily with General Motors, but the SK factory represents nearly half of the country's non captive EV battery capacity, meaning that its batteries are not tied up in long term contracts with specific automakers. The great thing about this facility is that they will be producing for multiple companies, which really is needed in the US because we don't have enough batteries. But those plants hit a snag in February when the International Trade Commission imposed a ten year ban on SK following an intellectual property dispute with Korean rival LG Chem.

President Biden could choose to overturn this ruling, and a number of industry experts say that he should. Given the dearth of battery manufacturing in the U.S., which basically ensures that automakers will struggle to deliver on their bold targets in the coming years.

Every week there's another announcement, another OEM talks about their long term plans for moving to electric mobility. Currently, there is not enough battery production going on to support even half of what we're talking about at this point. Some say that the battery problem is already holding them back.

And even Elon Musk went on record and said we would be producing the Tesla semi if it wasn't for the fact we don't have enough batteries. But the battery manufacturers need to see more says is more specific plans from the automakers about exactly what they need and when they need it. If the entire automotive industry came out and gave a detailed plan of, we want to build this amount of electric vehicles and we will need this amount of volume of batteries, then there will be a battery gold rush in North America. In this environment, the uncertainty over the future of Sk's Georgia factory has become a lightning rod of concern for some electric vehicle proponents, as well as for Georgia state officials like Wilson, who say that the factory would help transform the state's economy. And so the size and the scope of this project at 2000 plus jobs and $1.67

billion of investment, that is going to change really the fabric of that part of the state. It is the largest investment ever in the state's history and really the largest number of jobs that we've announced in any one project. Though the International Trade Commission did find SK Innovation guilty of misappropriating trade secrets from its Korean competitor, LG Chem, some say this dispute ought to have been settled through the courts, which could have awarded monetary damages. Instead, LG took the case to the ITC, which could not arrange settlements but can place a ban on imports as it's done for SK Innovation's battery components.

The Korean prime minister went on record to say he was personally embarrassed by this dispute. I think it is embarrassing because I think it could be sorted quite quickly between the two companies that we wanted. But the only companies, the only people that will be hurt the most from this is actually the US automotive industry. Right now the SK facility is nearly complete and is on track to be up and running by the fourth quarter of 2021.

It has a contract with Ford to produce batteries for the company's electric F150 truck and a contract with Volkswagen for its new line of EVs. The ITC ruled that it will allow SK to continue making batteries for Ford over the next four years and for Volkswagen over the next two years, giving the companies time to transition to alternative domestic suppliers. But many say the decision, if it stands, would still cause delays, as well as stifle competition. A number of manufacturers have had to sort of dial back their EV goals just because they're not able to get their hands on battery packs.

And now add on top of that, you have one of the major suppliers not being able to manufacture in the US. Europe is surging ahead. China is surging ahead with lots of different battery companies, lots of different technologies and huge capacities at the same time. Does the US want a similar environment or does it want to stifle its battery industry? If so, it needs healthy competition. So where do we go from here? First, experts say that we need to build out a domestic supply chain that starts with mining for raw materials here in the US and ends with getting the battery giants to set up shop here in the US. Already Tesla has secured the right to mine lithium on 10,000 acres of land in Nevada.

Large graphite deposits in Alaska are being explored and in 2019, the USGS released a critical minerals strategy calling for faster permitting and. Better mapping to locate deposits of key minerals and metals. Many environmentalists worry about the impact of these mines on natural resources, but also acknowledge the importance of these materials for an electric future. It's a tension that the Biden administration will have to navigate as EV proponents push for aggressive government action. The federal government almost needs to approach this like the creation of the interstate system that they need to step in to lower barriers for investment.

You're getting into processing and you're getting into mining. Margins are so low, really is tough for companies to make that initial investment. Many, like Wilson, are heartened by what they've seen and heard so far from President Biden, including the executive order that he issued in February, which directs the Secretary of Energy to evaluate the supply chain risks for EV batteries and submit policy recommendations for addressing such risks. Now you're seeing governments talking about batteries and lithium and other raw material components as important as oil. So lithium ion batteries are now very geopolitical. The executive order from President Biden shows that batteries are at the top of the agenda for governments around the world. And that means. Watch this space, because it's just about to get real.

There's a wave of new startups developing techniques to recycle lithium ion batteries in the U.S. and hopefully recover the grand majority of materials for use in new batteries. But for now, this tech remains too expensive. It is cheaper to mine for lithium rather than recycle it from existing battery packs. So that is projected to go on for the next at least ten years or so.

So in the immediate future, there will probably continue to be a battery shortage in the U.S. as automakers ramp up production of EVs to comply with fuel economy standards. For the next 5 to 10 years.

We are still looking at EVs being in a push adoption rather than a pool adoption, right? It's being driven by emissions regulations and policy that are forcing the hand of automakers to electrify more and more of their fleet just to meet the emissions regulations or the fuel economy regulations. Chandrasekaran predicts that as battery costs continue to decline, 2025 will be a tipping point for the industry by then. He says that we can expect to see more organic consumer demand ending the need for subsidies like tax breaks for EV customers. The regulations, like strict vehicle emission standards, will likely continue to drive the industry forward. And as the domestic and global EV market grows, the battery manufacturing industry is projected to diversify alongside it.

One McKinsey projects that the Asia-Pacific share of battery manufacturing over the next 20 years is going to decline from 90% to 60%. Still a majority, but at least a healthy piece of the pie for the rest of the world. So look for this to become a matter of national security for the Biden administration.

Throw some weight behind getting more battery manufacturing capability right here in North America.

2022-03-23 22:43

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