Wednesday, March 15, 2017

"An Ex-Tesla Exec’s $4.2 Billion Battery Battle With Musk"

For folks new to the battery biz the thing to know about what Tesla is doing is there is not much new there, other than the sheer scale of production, which does matter bigly but leaves the lithium ion paradigm open to being overturned.

From Bloomberg, March 12:
  • Former Tesla executive expects to announce site in March
  • Battery demand seen rising sixfold through to 2024: BNEF
NorthVolt AB, the Swedish company founded by a former Tesla Inc. executive, wants to cut the cost of storing power in half with a 4 billion euro ($4.2 billion) lithium-ion battery factory.
The Stockholm-based company wants to raise 1 billion euros by 2018, when it plans to break ground on a factory during the second half of the year, according to founder Peter Carlsson, who was Tesla’s former head of sourcing and supply chains. NorthVolt will announce a shortlist of possible Swedish manufacturing sites in about a month.

“Europe will be a very important market for energy storage,” Carlsson said by phone. “There is a huge need for back-up power. There is also a sizable auto industry that has made big promises to go electric.”

Energy storage is seen as the missing link in the world’s transition to a zero-carbon economy. Batteries can fill power gaps from intermittent solar and wind energy. Lithium-ion packs are also key for automakers banking on a new generation of plug-in vehicles.

The 46-year-old Chief Executive Officer has already convinced Sweden’s biggest utility, Vattenfall AB, to invest 5 million kronor ($550,000) and has raised $14 million to date. Carlsson’s seeking equity investors for half the capital needed to build the factory with the rest raised through debt. NorthVolt is applying to the European Investment Bank for a loan and could also issue green bonds for funding.

“We typically don’t invest in hardware,” said Vattenfall’s head of strategy Andreas Regnell, who may be open to pumping more money into the venture. “We see this as more of a business development effort. There are huge benefits for us if this happens, given that we’re heavily invested in electric mobility infrastructure.”

“There are 19 million cars sold in the European Union per year,” Carlsson said. “If even 10 percent are going to be electric, which is a conservative estimate for 2025, that’s a huge opportunity for us.”
Automakers are racing to develop battery-powered versions of their vehicles to help governments meet emission-reduction targets set under the 2015 Paris climate accord. To meet EU targets, average fleet emissions would need to drop 27 percent by 2021, compared to 2015 levels. That would require vehicle efficiency to more than double in the next five years, compared to improvements made since 2010.

Tesla, Nissan Motor Co. and General Motors, are already selling electric models in Europe. Volkswagen AG plans to manufacture 30 different electric models by 2025.
While Tesla is said to be thinking of expanding to Europe, Carlsson is focusing on supply local automakers rather than his previous employer.
“All of Tesla’s batteries go to support their products,” he said. “There’s plenty of other demand out there.”...MORE
We must have over 500 posts on batteries, a few that have stood the test of time:
Why We Still Don't Have Better Batteries
Gates, Pritzkers vs. Musk: "The $5 Billion Race to Build a Better Battery" (TSLA)
We've been tracking the progress of the science for a couple decades now and can report, from hard won experience, there ain't no Moore's Law for batteries.... 

Our final paragraph from March 2012's "Batteries: The Venture Capitalist's Holy Grail":

...Microsoft famously didn't need venture capital either.
(Technology Venture Investors was the sole VC investor and got that plum only because Marquardt and Ballmer were buddies)
That's the Holy Grail, finding a company that doesn't need you but will let you in.

The battery on the other hand....that's going to be a longer slog than the press releases would lead one to believe. 
That was five years ago.
The change in approach probably happens with another  2 1/2 to 3-fold increase in lithium prices when we'll see massive substitution effects.