By Jeff Brown, Editor, The Bleeding Edge 
Battery technology is long overdue for an upgrade… The promise of next-generation batteries for consumer electronics and electric vehicles has always been one of the most popular topics of my subscribers. I get it. It’s hard not to get excited about each press release or rumor that some company or academic laboratory has made a breakthrough in battery technology. It’s an absolutely massive market and we’ve been using the same lithium-ion battery technology for almost 35 years. While lithium-ion batteries were invented in the early ‘70s, it was Sony that first commercialized them, ushering in a transformation in consumer electronics. But the consumer electronics industry moved far faster than Sony ever could, and Sony quickly lost its competitive lead. Getting More Mileage From Our Batteries Lithium-ion batteries are an oddity in the world of high tech. Nearly every other technology has experienced rapid innovation and dramatic improvements in both cost and performance, along the lines of what we experience with exponential growth. But lithium-ion battery technology has proven to be a tough nut to crack. Improvements have been excruciatingly linear, improving a few percentage points every year over the last three decades. Progress has been slow. Most of us know the pains of using a smartphone for two or three years, or an electric vehicle (EV) for the same period, and experiencing a degradation in performance. The batteries simply don’t retain as much charge, requiring more frequent charging. This goes on until we replace the device… or replace the battery. It’s easy to understand something we experience every day. That’s why investors – and consumers – are so hungry for the next battery technology. For years, the great hope has been solid-state battery technology. The majority of the approaches to solid-state battery technology involve either a lithium metal or silicon anode. The anode is the negative electrode where the energy is stored in a battery. When the anode is discharged, electrons flow out, providing power to the electronic device or electric vehicle. The goal with solid-state batteries has been to develop higher-performance anodes capable of higher energy density. This results in longer-lasting batteries, and, in the case of electric vehicles, cars with much longer ranges on a single charge. I was reminded of how hard a task it is to commercialize this new kind of battery technology when one of the major players in the industry – Freyr Battery (FREY) -– completely gave up pursuing its goal to manufacture what it called “SemiSolid” batteries for the EV market. 
Freyr went public in 2021 via a reverse merger with a SPAC on the hope of its new battery technology. Since 2019, it has spent more than $900 million trying to commercialize its new battery technology, but it just couldn’t make it work. So, to stay in business, Freyr announced a few days ago that it has acquired the U.S. manufacturing operations of China-owned Trina Solar for $340 million. The 1.35-million-square-foot Trina manufacturing plant in Wilmer, Texas, can manufacture 5 gigawatts of solar panels a year and began production on November 1. Freyr went from a next-gen battery company to a solar panel manufacturing company overnight. Just a wave of a wand. But there’s more to the story… A Lab Experiment Is One Thing, Mass Production Is Another Freyr’s business was just commercializing the solid-state battery technology. Its job was to figure out how to manufacture someone else’s technology at a scale sufficient to support the EV industry. That “someone else” is 24M, a Cambridge, Massachusetts MIT spinout around since 2017. Freyr’s entire battery strategy was built on the promises made by 24M’s battery technology. Freyr licensed 24M’s technology for commercialization. 
24M’s Battery Technology | Source: 24M Shown above, at face value, 24M has the perfect battery technology. “zero cell fire risk” 20-year life 600-1000 miles on one charge Fast charging – 200 miles of charge in three minutes $80/kWh manufacturing cost “sustainable” – 98% material recovery potential when recycling If true, this would mean a single charge having a longer range than any internal combustion (ICE) vehicle. We could charge our EVs in the same amount of time that it takes to fill up our gas tank. And at $80/kWh battery costs, EVs would become priced on par with ICEs. Perfect! Except, Freyr was unable to manufacture the technology after spending nearly $1 billion trying. And 24M has raised more than half of billion dollars since 2017 developing its battery technology. This fall, it raised an additional $87 million at a $1.3 billion valuation. Please don’t get me wrong, I sincerely hope that 24M is successful and that its technology works. As investors, however, it’s important to understand that what is patented or what shows promise in a laboratory doesn’t always translate into success in real-world applications. And we don’t really know if the problem was Freyr’s manufacturing process or 24M’s technology. But what we do know, is that this isn’t a one-off problem… The Graveyard Earlier this fall, Swedish battery company Northvolt unceremoniously shut down its solid-state battery division, Cuberg. It failed to develop its lithium metal batteries. Northvolt acquired Cuberg, a California-based company, in March 2021. This was a spin-out of Stanford with some of the smartest battery technologists on Cuberg’s team. Cuberg received investments and grants from the National Science Foundation, the U.S. Department of Defense, the California Energy Commission, the United States Army, the U.S. Department of Energy, as well as some venture capital. It all looked so promising, and then it wasn’t. If that isn’t enough, Ambri – another extremely promising lithium metal startup out of MIT (again) – went bankrupt this summer. The company had burned through more than $200 million since 2012 trying to build the next great battery, and it absolutely collapsed. Like Freyr, it has repositioned itself, in this case as a provider of long-duration energy storage solutions. 
Source: Ambri Ambri has reemerged from bankruptcy and repurposed its “LithiumMetal” technology for grid-based energy storage commercialized in large shipping containers. Will Ambri be successful? I don’t know yet, but I do know that energy storage is a much easier problem to solve for than EV batteries. Ionic Materials was another great hope in the industry. It was also founded by another MIT expert in battery and semiconductor technology. It too had an impressive roster of investors like Kleiner Perkins, the U.S. Dept of Energy, Franklin Templeton, Hitachi, ARPA-E, and others. And yet, it collapsed, shut down, and sold off whatever assets were left. It appears to have reemerged as a materials licensing company. These are just a few recent developments this year. The reality is that the graveyard is full of examples like these. For anyone who would like more proof, just have a look at the five-year stock charts of SES AI (SES), Quantumscape (QS), and Solid Power (SLDP). The Solid-State Problem What lessons can be learned here? Despite our newfound powers of generative AI and seemingly unlimited computational power, commercializing solid-state batteries is an extremely difficult problem to solve. Even if we have the right materials and chemistries, the precision required in the manufacturing process can be insurmountable. Solid-state batteries using a silicon anode expand when they absorb lithium ions (i.e. when they are being charged). This expansion of the solid-state battery causes damage to the battery, which results in degradation of performance and also the growth of dendrites, which can result in battery fires. Lithium metal batteries have the problem of being highly reactive, which also leads to the growth of dendrites. Lithium metal also has a challenge with coulombic efficiency. These batteries lose a larger portion of their stored energy when being charged and discharged, making them less efficient. This is all to say that these are very tough problems to solve, particularly when we are considering this technology for electronics like smartphones or electric vehicles. After 35 years, we’re overdue for a breakthrough in battery technology. I’m just as anxious as you are, and I’m always on the lookout for what that might be. But for now, we’re going to have to settle for a few percent of improvements each year with our tried-and-true lithium-ion batteries. Regards, Jeff | 
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