Friday, August 10, 2018
It seems like everything runs on a battery. Cell phones, tablets, cameras, watches, even cars bring convenience to our lives and nearly all run on the ubiquitous lithium ion battery. Critical to even the most basic human needs (a new mobile phone app was recently published to help with birth control and fertility management) these devices run out of ‘juice’ when it is least expected - and potentially most disastrous. Wouldn’t it be wonderful to get your electronic devices charged in just a few minutes and ready to work for days or even weeks?
There has been progress on improving the power output and energy life of lithium ion batteries. A good share of the work by scientists and product developers is on reducing faulty chemical reactions that erode capacity. Others are exploring better materials to replace or complement the usual cathode, anode and electrolyte materials.
In April 2018, Germany’s BMW agreed to put Sila Nanotechnologies’ silicon-based anodes in batteries, foregoing the usual graphite anode. The first all-electric BMWs with the new battery are expected to reach showrooms in 2023.
Sila finds silicon is a better partner for lithium than graphite because silicon-based anodes can hold as much as twenty times the amount of lithium than graphite. With increased energy storage capacity, battery costs could be reduced significantly. Using silicon-based anodes would reduce the size and weight of lithium ion batteries, which could be particularly advantageous for electric cars. Smaller, more energy intensive batteries could bring down electric car prices and increase driving range, making electric cars more appealing and affordable for a wider consumer audience.
Sila claims a twenty-fold increase in lithium ion carrying capacity compared to graphite. With such exceptional results one has to wonder why BMW is the only car manufacturer to have jumped on the silicon-anode train. That is because silicon is not a slam dunk alternative material. Silicon has a bad habit of swelling, which could trigger adverse electrochemical reactions or worse, shatter the anode during charging.
The company is not alone in trying to overcome silicon’s shortcomings, but Sila Nano scientists claim they have made more progress than others. Sila solves the swelling problem by hiding its silicon particles in rigid spherical structures that leave room for the silicon to expand during charging. The micrometer-sized structures remain unchanged in size and shape, while the silicon particles expand within.
Another big plus for battery manufacturers is that Silas’ silicon structure mix can be used as a drop-in material in established battery manufacturing processes. This means reduces the cost of switching from graphite materials and could improve Sila’s chances in winning customers.
Financing a Better Battery Material
Early on Sila won research grants from the U.S. Department of Energy to support its research and development. In 2016, the company received an ARPA-E Award for $1.0 million to work on solid electrolyte technology. Of late Sila is backed by venture capital investment from the likes of In-Q-Tel, Bessemer Ventures, Samsung Venture Investment, and Matrix Partners. The most recent capital raise was a Series D round for $72 million in January 2018. Collaboration with BMW may have also put development revenue into Sila’s piggy bank.
Sila Nanotechnologies is worthwhile putting on a watch list for future financings. If Sila is successful in delivering on its BMW arrangement, it is likely that other automotive relationships could follow. That will require financing. With the days behind of ‘goose eggs’ at the top line, Sila is at a nascent commercial stage. Much of the technological risk has been eliminated - at least enough to win a paying customer. There is still plenty of execution risk and therefore potential reward in funding the early commercialization step. Sila will not be for the investor who lives and breathes by quarter reports. It will be three to four years before volume shipments begin to supply BMW for its batteries slated for 2023 market introduction.
A string of small, privately held companies - Nexion, SiNode Systems, Enovix, Enevate, and Amprius - also claim success with silicon in batteries. The next post will look at competing silicon materials for batteries.
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.