“When there is a market pull, the likelihood of a new technology succeeding goes way up.” Q&A with Volta Energy Technologies

Volta Energy Technologies is a venture capital investment fund that invests in new battery technologies and clean energy technologies, using its deep understanding and experience of the battery industry.

Launched in 2016, the firm has invested in around 20 companies, involved in everything from lithium extraction, to power electronics that enable fast charge and prolonged battery life, silicon anodes, niobium anodes, non-rare earth permanent magnets, and wireless charging.

It manages around $250 million in investments.

The fund is led by Jeff Chamberlain, who previously led the battery and energy storage research and licensing at the US DOE Argonne National Laboratory for ten years.

Benchmark Source sat down with Chamberlain and James Frith, principal at Volta, to learn more.

Below is an edited transcript of the conversation.

There has been a lot of innovation in battery cathodes over the last decade or longer, is now the time for innovation in anodes?

James: When we look at the kind of innovation that happened in that 2010 period, the 2010 to 2020 period, we really see the automakers pushing for an increase in energy density and a reduction in cost. And I think the first base that they turned to to achieve that was really through slight tweaks to the cathode material.

… but now we’re at a point where there are still some improvements that can come from the cathode side, but they’re not quite so easily won if you’d like.

Whereas on the other side, you really haven’t had any changes to the anode material since the commercial introduction of lithium ion cells in the early 1990s by Sony, it’s really just graphite that’s been used.

We’re getting to the point now where there’s been a lot of R&D that’s happened on silicon and a lot of the kind of initial problems with silicon are fairly well understood now, and companies have come up with methods to mitigate those performance issues.

We’ve got these R&D approaches that have borne fruit and now there’s a lot of focus on really scaling up that technology and commercialising it and getting it into vehicles. So a lot of the science risk is gone now and it’s really around that kind of commercial scale up. And that’s where I think you can get more of a step change in performance improvement, if you can engineer silicon into the cells.

I think you won’t see a huge step change because I think it’s going to be similar to the development of NMC where it’s going to be slight changes. So you’ll see cell makers going to 2% silicon, then 5%, and 7%, and getting those kinds of gradual improvements. Once you can see how it performs in the real world, that helps you have a kind of longer product life and recoup some of that kind of R&D investment as well.

Jeff: The industry has been focused on replacing graphite with silicon for well over a decade. And unlike solid state batteries silicon is bound to happen. It’s already happening. It’s unclear whether solid state batteries will happen in a universal sense, but it is certain silicon will.

We believe at Volta, in part due to our experience with the semiconductor industry, that the automotive OEMs – and even their suppliers the battery makers – what they want is improved performance and cost with no change.

And so in the case of blending some form of silicon with graphite, the battery makers and automakers can feel almost no change in their supply chain … And that’s that’s really important because not only is the risk lower for the end user, but the cost is lower.

There’s billions of dollars of sunk capital in these gigafactories that no one’s going to want to replace those with new manufacturing processes with new equipment anytime soon. Some of the silicon startups that are out there are aiming for a very simple change in the processes that is not really felt. And what do you get out of that? A significant increase in performance – range and charging rates in particular.

You recently invested in a UK company, Echion Technologies, that produces niobium-based battery anodes, can you describe the applications of that technology?

James: I think the kind of niche applications are sitting in a similar kind of area to where LTO (lithium titanate) is used today. So really, anything where there’s kind of high cycle life requirements, high power requirements. Although the LTO cells that we have today on the market are more expensive than LFP and NMC cells because of the higher lifetime requirements, you’re selling into applications where you’re thinking about the total cost of ownership rather than the upfront costs.

So it’s really commercial applications – that could be some stationary storage applications, or uses in electric buses and commercial vehicles.

But what’s interesting about Echion is that because of that higher energy density, you’re opening up the size of that market, so suddenly your addressable market increases quite dramatically. And you could see this [technology] being used in things like mining trucks, where previously LTO packs were just kind of too heavy and bulky to be used in mining truck applications. So you’ve seen companies exploring the use of NMC or LFP cells but they have to replace those packs several times a year in some instances.

Jeff: There’s also a reflexive action by the automakers that’s happening right now – getting back to plug-in hybrids. While the world is aiming to build a ubiquitous, fast charging network, in the meantime it might make sense to have these plug-in hybrids – and this kind of battery that we’ve described would serve that market very well.

There’s been a lot of work done in niobium in the last decade or so. And the question might be, why is that emerging now? Because if there’s anything I learned from half of my career working in industry it’s that when there is a market pull, the likelihood of a new technology succeeding goes way, way up.

How do you see the potential for sodium ion batteries?

James: I think from where I sit, I think sodium ion is a fantastic technology. Particularly if you look at where lithium prices were last year, if we had had commercial sodium ion systems out there it would have been able to reduce a lot of the pressure that was on the market at the time. And that’s why we saw so much interest last year in developing new kinds of approaches to the sodium ion industry.

But we’re seeing more lithium supply coming online and lithium prices are low today. And actually, if you look at the bill of materials for LFP – if you have very low lithium prices, there’s not that much of a cost advantage of moving from LFP to a sodium ion system, particularly if you’re trying to match the energy density on a volumetric or gravimetric basis.

And so the driver for me for sodium ion adoption, is not necessarily as a replacement for lithium ion. It’s more of a pressure release valve. So if you find that lithium prices are getting too high and it’s in short supply you can switch to the sodium ion product.

How do you view the current difficulties many startups have faced, with higher interest rates and cost of capital, are you concerned about their ability to survive?

Jeff: There are cycles, especially during a period of adoption of new technology like electric vehicles. And what’s very tough, is the capital markets are very tight right now … capital markets are generally very tight and they’re made even tighter and more complicated by an increase in interest rates over the last year or two. On top of that, a few big automakers announced late last year that we’re gonna slow down their plans. And so that creates a perception of risk.

The good news is this: the need by the automotive OEMs and the power producers for increasingly lower cost battery and storage technologies and all the associated supply chains and all the innovations in the supply chain. The need for those technologies that will lower costs and improve performance is going up.

The European automakers and the North American automakers view the wave of low cost electric vehicles coming out of China as an existential threat.

And so what that means is, while they’re slowing down their spending capex and building big manufacturing plants, they’re actually accelerating their desire to adopt technologies like we’ve been talking about today. So the need for the technology is going up while the valuations are going down, so there’s a dislocation from the investors’ perspective.

The market need is increasing, while the prices for those investors are going down – there’s an ongoing capitulation in valuations in the private markets. So that is actually the time, the moment, to invest.

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