I was waiting for a bus in front of Kleiner Perkins Caufield & Byers yesterday morning.
But before I got to ride Proterra's electric bus (KP is an investor), I was distracted by a tricked-out Good Humor ice cream cart parked next to the bus. It was startup FreeWire's mobile charger -- and the company's CEO just happened to be in the neighborhood. The startup purchases used batteries from EV manufacturers such as Nissan and repurposes them -- in this case, in the form of a mobile EV charger.
The mobile EV charger stores energy in two 24-kilowatt-hour battery packs for a total of 48 kilowatt-hours per ice-cream cart. The cart can be moved around parking lots and fleet storage areas to charge seven to eight electric vehicles per day. FreeWire CEO Arcady Sosinov called it "a cost-effective solution to EV charging." In the world of liquid fuels, the analogous process is called "wet hosing."
The CEO told GTM that his firm "gets the batteries directly from Nissan," the No. 2 battery supplier behind Panasonic. Sosinov said that there are "already thousands" of available battery packs stored in a facility in Oklahoma City where Nissan tests them monthly and cycles them every six months. The CEO noted, "It's a pain to store them."
Approximately 300,000 EVs have been sold in the U.S. to date.
So, the company's mobile battery charger is cool. The firm has plans to deploy "networks of grid-smart EV chargers" with potential applications at airports, corporate campuses, or anywhere an EV fleet is managed. The unit is capable of dual Level 2 charging. The startup envisions "an organization's entire EV charging operation...outsourced to FreeWire so that facilities managers and employees can focus on their jobs."
But here's the real punch line: the cost of the second-life batteries is "a sixth of the new battery price," according to the CEO, who added, "What people expect to pay in 2030 for battery prices, we pay today. Plus, we get a battery management system, busbars, and cabling."
He notes that the batteries might not be vehicle-ready, but they are "good packs" with about five years of life left in them if cycled twice daily. If the typical installed cost of a lithium-ion battery energy storage system is approximately $1,000 per kilowatt-hour (or less) -- then used battery packs are in the neighborhood of $100 per kilowatt-hour.
One-sixth the price of new EV batteries
Finally, a number now exists on the value of a used EV battery.
Matt Horton, Proterra's VP of sales and marketing (the bus story is on deck, people), had this to say: "We need someone to establish the residual value" of second-life batteries, adding, "Today there is effectively zero value built in to the model for residual value." He predicted, "That market is going to mature a lot." Horton also said, "As this market continues to mature, it will open up some interesting business opportunities."
FreeWire's CEO and Jawann Swislow, VP of business development, suggest that the EV charger is just one of the products that will come from low-cost second-life batteries. Other applications include replacing diesel generators in instances where operation needs to be quiet and emission-free, such as movie sets or cell towers. Limited-discharge stationary power is another application.
Entrepreneurs can now start answering the question: What can be done with $100-per-kilowatt-hour batteries?
FreeWire has raised $425,000 in very early-stage funding from the usual Berkeley-Haas suspects and others: Steve Blank, Jerry Engel, Center Electric, Arjun Divecha, Erik Steeb, and Jay Zarfoss. The startup is part of the LA Cleantech Incubator and the Energy Excelerator, where it was awarded a $500,000 grant from the Navy’s Office of Naval Research for a project in Hawaii. FreeWire will soon be looking for its first institutional raise.
One last question: What is Tesla going to do with all those used Model S and Model X battery packs? We'll let you know tomorrow evening as we report live from Tesla's energy storage product unveiling.