Silicon Anodes: Big Promises Not Yet Delivered

Silicon-based battery chemistry offers impressive energy density compared to conventional lithium ion batteries that use graphite for anodes.  For example, privately-held NanoGraf Corporation based in Chicago recently claimed its 18650 cylindrical cell is the most energy dense battery available, giving the devices it powers 28% higher run time.   For manufacturers of electronics products from small, handheld devices to large cars and trucks, energy density is a beguiling promise.  It makes possible a smaller, weight saving form factor or longer device life.  That translates into higher profits for battery producers as well as the manufacturer.

Graphite has been the go-to material for anodes, the negative electrode of a lithium ion battery.  Graphite is an allotrope of carbon, which has atoms featuring three electrons ready to bind with the lithium ion electrolyte.    Silicon gets attention as an anode material because one silicon atom can bind with four lithium ions.  Theoretically, then silicon could be superior to graphite.  Unfortunately, silicon is not as reliable as graphite for anode applications.

A battery anode absorbs a large number of lithium ions during charging.  Graphite can accommodate the lithium ions well enough because graphite can reversibly place the lithium ions between its many layers.  Thus, graphite anodes maintain excellent cycling stability.  This means the battery can be charged and recharged over and over again, with the device it powers delivering the same reliable performance day in and day out. 

However, silicon does not have graphite’s layered structure and its chemistries are a bit problematic in a lithium ion battery.  As the lithium electrolyte comes around during the charge cycle, silicon anodes swell by three times.  This often leads to a cracked surface that reduces the silicon anode performance or puts the battery out of commission entirely.

In a conventional design, the anode represents about 15% of the total cost of a lithium ion battery.  If the anode can be made more efficient, it could have a meaningful impact on the total battery cost.  For example, just substituting a little bit of silicon metal or oxide for some of the graphite material could improve the battery’s energy density without running the risk of too much swelling action.   Thus far this hybrid graphite-silicon has been the approach that battery developers have taken, which mixtures topping out at about 10% silicon and 90% graphite.

NanoGraf is ready to commercialize its hybrid silicon-graphite technology.  The company has announced plans to build a manufacturing plant near Chicago in 2022, where is proposes to produce 35 tons of its proprietary silicon anode material each year.  Management claims a partner in the endeavor but will not name the company’s battery manufacturer.  It also hints that its materials will show up in military electronic equipment. 

The military is highly sensitive to battery size and performance.  If a lithium ion battery can deliver improved results with a smaller, lighter form factor, it is a big win for weight conscious troops that are already hard pressed to carry all the equipment each soldier needs in the field.

If NanoGraf is able to deliver silicon anode materials for military orders, it may be able to reach the scale needed to produce at a cost on parity with graphite anodes aimed at the electric car market.  NanoGraf management suggests the tipping point in production is about 1,000 tons of its material per year.  At that point, NanoGraf sales personnel could approach any one of the world’s car producers with a competitive price quotation.  

The car and truck industry are hungry for cost-effective battery solutions.  Indeed, it appears quite likely that combustion engines will be phased out of the transportation network.  In early January 2022, General Motors (GM:  NYSE) introduced the 2024 Chevrolet Silverado electric pickup truck with a 400-mile driving range.  GM’s Silverado is the answer to Ford Motor’s (F:  NYSE) electric version of its flagship F10 pickup truck.  GM has promised at least thirty all-electric vehicles by 2025 and has pledged to stop selling vehicles with internal combustion engines by the year 2035.

NanoGraf is out of reach for most investors.  As a private company it has raised most of its capital through private placements.  Government grants have also been pivotal.  So far, the company has raised about $23 million in a series of small rounds and grants.   NanoGraf has received help from its joint venture partner, Japan-based JNC Corporation, a supplier of liquid crystal used for LCDs and other silicon products.  JNC has provided technology as well as low-volume production capacity for test and sample materials. 

It seems likely that JNC might want to monetize its investment in the NanoGraf joint venture.  As NanoGraf moves toward large volume production, a larger capital raise is more likely than not.  NanoGraf is worth watching for an initial public offering.  It will be the first-time investors would have a look at NanoGraf’s financial profile

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.