Co-Founder and CEO of Group14 Technologies, a battery materials company developing silicon-carbon composite material for lithium-ion markets
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As more players enter the ever-expanding lithium-ion battery markets, companies face unexpected hurdles to reach the level of scale that leaders like Tesla have achieved. Even as Texas faced one of the worst energy disruptions the state has ever seen in February, the U.S. automaker continued its march and just weeks later announced its "gigafactory" will be built in Austin.
As we’ve seen in the past year, Covid-19 has disrupted not only our way of life but also, more significantly, our global supply chains. The pandemic has acted as a forcing mechanism for countries to reprioritize domestic supply chains to meet the demand for lithium-ion batteries.
But, as we’ve seen in other renewable energy industries from solar to hydrogen to storage, a company’s success is dependent on its ability to take it from the lab to market as well as opening its doors from one customer to many. Tesla's and others’ ability to scale — and to do so successfully and repeatedly — exemplify the depth of the chasms that today’s lithium-ion contenders must cross and the subsequent reward of achieving true commercial manufacturing scale.
The First Chasm: Transitioning Technology From The Lab Into A Business
As a serial founder in the energy storage sector, I can attest to the fact that while there is room in the sandbox for more battery innovation, the journey is challenging, and the race is heated. The path from idea to industry dominance is harrowing, and the key to success is avoiding common pitfalls. Through trial and error over the past two decades, I have learned that while a breakthrough can give you a serious competitive edge, that milestone is simply the beginning of a progression of many stages that must all succeed in order to move the technology out of perfect laboratory conditions and into the real world.
My second company was acquired by a larger chemical company, and what I learned as we grew from a five-person team to a 50-person team serves as a cautionary tale for this new storage era: In the beginning, we were focused on performance and creating the best product available on the market, spanning ultracapacitors to lead-acid battery additives. Although we ultimately scaled up production to hundreds of tons per year, our initial design was not cost-oriented, which is an expensive lesson learned.
I see many players in the battery sector now falling victim to this same error: They're racing to announce what are essentially academic projects with woefully inadequate considerations to the cost and process development necessary to successfully bring the innovation into the real world. This is a recipe for disaster once teams realize the product will be fundamentally too expensive to produce and too inefficient to produce quickly.
So, what's the takeaway? Performance isn’t everything, but cost is critical. By lowering cost, you open the door to scaling even further.
The Second Chasm: Transitioning A Business Into A Market Leader
Many teams can be overly optimistic and eager to claim quick success, but for me, it took multiple ideas, iterations and hard lessons learned to finally achieve real success on a larger scale.
As I mentioned before, one of the most important steps is to integrate process development from the very beginning. If companies are not doing process development at the lab scale, teams will be forced to not only address potential complications at the commercial scale but also likely find they’ve scaled the wrong process.
This approach typically requires that the leadership team to have experience in scaling technologies to even understand why it’s critical to allocate often-stretched resources to this step early on. Nailing this down is an unskippable step in growing a business to prove to investors, customers and the industry at large that your technology is easily manufacturable at scale from the first factory to all subsequent production facilities.
The Final Stretch: Delivering On Your Promise
It’s worth noting that the work does not end once you understand the pathway to scale up technologies. Even if a team has the experience and forethought to prioritize scaling during product development, it’s impossible to avoid all missteps during the commercial manufacturing process.
Hand in hand, companies need to remain focused on optimizing that technology to the highest performance to meet the needs of customers and partners. As consumers increasingly acknowledge that the climate crisis must be addressed through rapid electrification, I believe electric vehicle demand will continue to rise. A company that can produce its product at scale to meet demand without sacrificing performance, quality and safety will find a place on the market. And if you already have a refined process development to begin manufacturing at scale from the get-go, you will be able to jump in the HOV lane and zip along to commercial success.
Now in my third time at the rodeo, I know how critical it is to intentionally build up a company with the right footholds to scale quickly and ensure it bridges the chasm from lab to the market to commercial scale. One last tip? Make sure the launch of your first commercial-scale factory can serve as the blueprint for your next factory and the ones to follow. This long-term vision is what will set a company apart from the steep competition in the energy-storage market.
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