Late last December, lithium-ion battery builder Boston-Power announced that it had received $290 million in "financial support" from Chinese government agencies in order to scale its battery factories. The company's CEO laid out a goal of "competing with Elon Musk" in the deployment of batteries for electric vehicles.
We spoke with CEO Sonny Wu over the holidays. Wu was a managing director at GSR Ventures and chairman of Boston-Power before he took over the CEO post from founding CEO Christina Lampe-Onnerud in 2012.
Considering the entire $290 million as a venture round (admittedly a stretch) would bring Boston-Power's funding total to more than $600 million since it was founded in 2005. Recent investors have included GSR Ventures, Foundation Asset Management and Oak Investment Partners. Investors in earlier rounds included Venrock, GGV Capital and Gabriel Venture Partners.
Boston-Power was founded and funded in the U.S. but has moved its manufacturing to China while keeping some R&D functions stateside. The firm currently has 50 employees in Boston and almost 500 in China.
The company claims that this latest funding event allows Boston-Power to grow its Liyang facility fivefold by 2016 and expand its Tianjin facility capacity to 4 gigawatt-hours by 2017, aiming to reach 8 gigawatt-hours by 2018. Clearly, capex costs for a battery factory in China are cheaper than building a factory in Reno, Nevada.
As we've reported, Boston-Power uses a lithium-cobalt chemistry, the same battery chemistry found in notebook cells. (The "cobalt" refers to materials used in the battery's electrodes.) The company has claimed to have refined the casing, anode, cathode and other battery internals for longer life, more cycles, higher energy density and faster charge.
The CEO is enthusiastic about the $35 billion Chinese EV market, with demand for "high-end lithium-ion batteries hitting 100 gigawatt-hours." Wu suggests that China will see "significant battery supply constraints over the next three to five years, which we aim to address.”
The battery business is fiercely competitive, with a number of large and long-established incumbents. Products from LG Chem, Panasonic and NEC are already designed into the Chevy Volt, the Tesla Model S, and the Nissan Leaf, respectively.
Wu said, "Our battery is at 200 watt-hours per kilogram, with a longer cycle-life than [comparable products from] Tesla and Panasonic."
Here's a guide to gravimetric energy density:
- 117 watt-hours per kilogram: The level Tesla and Panasonic were achieving in 2008 for the Roadster
- 200 watt-hours per kilogram: The level Sonny Wu, Boston-Power's CEO, says the company is achieving today
- 240 watt-hours per kilogram: The approximate energy density of the batteries in the Tesla S
- 400 watt-hours per kilogram: According to Tesla's Elon Musk, the concept of battery-powered transcontinental airplanes becomes “compelling” once batteries hit 400 watt-hours per kilogram (as per this interview)
- 400 watt-hours per kilogram: The level that battery aspirant and ARPA-E grant recipient Envia claimed it could achieve (disingenuously, it turned out)
So Boston-Power's batteries are designed for Chinese automakers -- but don't think that the competition is the Tesla S; it's more like the Tata Nano.
And the difference between Boston-Power's approach and the market entry strategy of Tesla is aimed squarely at solving the "Chindia problem," a term coined by prolific investor Vinod Khosla, who suggests that energy solutions must work in China and India if they are to have any material global impact.
Prius hybrids? Not a solution to the climate or energy problem, according to Khosla. Better to take that money and paint your roof white to improve Earth’s albedo. And they certainly don’t meet the Chindia test. In order to do so, they would have to compete with the $2,500 Tata Nano, according to the VC.
Boston-Power is partnering with Chinese auto manufacturers to produce four-seater electric cars with an 80-mile to 120-mile range from a small 13-kilowatt-hour battery pack at a total cost of about $8,000. That price point seems more aligned with providing a cheap functional vehicle to a growing middle class than a $100,000 sedan or a $40,000 family car.
Wu was in China recently and reports that the company and its partners sold 205 cars in a single day in one city. Boston Power's automotive partners include ZD (Zhidou). Wu said, "We are a battery company enabling our customer -- we co-market." Boston-Power builds a specific battery pack for each vehicle model, including the battery management system.
The CEO says that markets are being driven by some of the 130 million electric scooter owners in China who are now beginning to upgrade to EVs for local commutes and for the convenience of a car that can plug into any AC outlet.
In this type of business in China, it's not just the technology but the levers of power that need to be engineered in order to proceed. Our understanding from a number of sources is that Boston-Power has some of the necessary banking and regional connections to execute on a project of this scale. Of course, Chinese consumers have to cooperate by buying millions of EVs.
The CEO said, "The market for EVs is very exciting given the backdrop of Tesla -- but Tesla, that's just the beginning."