Investors Still Betting on Next Big Energy Storage Technology: Solid-State Batteries

The U.S. may have fallen behind Asia and Europe in battery manufacturing, but a number of well-funded companies are looking to get the country back in the game with a technology that could supersede today’s lithium-ion chemistries.

Companies including Ionic Materials, QuantumScape, Sion Power and Solid Power are developing all-solid-state batteries (ASSBs) that are expected to be safer and more energy-dense than the lithium-ion products used in today’s electric vehicles and battery systems.

“Lithium-ion today, with a metal-oxide cathode and carbon-based anode, is starting to approach its theoretical limits,” said Solid Power CEO Doug Campbell in an interview.

Current lithium-ion technologies might achieve specific energy of up to 300 watt-hours per kilogram, Campbell said, but not much more. “Solid-state is a platform that allows things like metallic lithium as an anode,” he said. “That’s perhaps the most direct pathway to significantly increasing the energy.”

ASSBs will not have liquid electrolytes that are susceptible to thermal runaway, so the batteries should be inherently safer. And because today’s lithium-ion products require costly thermal control systems, “a safer battery pack is a lower-cost battery pack,” Campbell said.

That combination of potential upsides is attracting big bucks. Massachusetts-based Ionic Materials has drawn investment from a fund backed by Nissan, Mitsubishi and Renault, in addition to Sun Microsystems co-founder Bill Joy. Samsung and Hyundai have invested in Colorado-based Solid Power.

According to Wood Mackenzie, U.S. investments in ASSB and advanced lithium-ion players amounted to $300 million in 2018, $250 million in 2019 and $200 million so far this year, with the 2020 figure made up by a single cash injection from Volkswagen into QuantumScape.

Solid-state battery commercialization still a few years off

Tucson, Arizona-based Sion Power has been working on ASSB since 1994. Yet despite decades of development and all those hundreds of millions of dollars of investment, the technology still has a ways to go before hitting the market in a meaningful way.

"The technology is still in its very early stages today,” said Wood Mackenzie energy storage analyst Mitalee Gupta in an email. “It is still a few years until these batteries become commercially viable.”

In terms of the transportation market, "you will not see solid-state widely deployed until probably the middle part of this decade," acknowledged Solid Power's Campbell.

James Frith, head of energy storage at the analyst firm BloombergNEF, said that sometime around 2025 is a realistic timeframe for the widespread commercialization of ASSBs. That's not terribly far off in energy technology terms. "It’s fair to say the U.S. has a lot of startups that are working on this,” Frith said.

While the technology continues to march forward, a growing ecosystem is emerging to support the future ASSB industry. Michigan-based Coretec Group recently announced a manufacturing partnership with chemical giant Evonik Industries to supply cyclohexasilane that could be used for silicon nanoparticle anodes in ASSBs.

Challenges to a U.S. manufacturing base

Even if American companies take the lead in developing ASSB technology, the prospect of a big U.S. supply base is anything but certain. North America currently trails Asia and Europe when it comes to making traditional lithium-ion batteries.

U.S.-based ASSB companies have attracted investment from Asian and European battery and carmakers, but "it’s worth remembering that the majority of the large battery manufacturers will have researchers working on these technologies as well,” said Frith.

Information on such research activities is hard to come by, but there's little doubt that there will be plenty of global competition in the race to get products to market.

Once they achieve commercialization, U.S. firms have to overcome another hurdle: The relatively slow pace of electric vehicle adoption in North America, compared to that seen in Asia and Europe, means the biggest markets for ASSBs could be overseas.

“We don’t see that same need for capacity in the U.S.,” Frith said. “And if you don’t have the need for batteries, then it doesn’t make sense to build manufacturing capacity there and ship it around the world.”

The smart option for U.S.-based ASSB players, then, may be coming up with a great technology and licensing it to other companies.

“The commercialization route for electric vehicles is more likely to be through partnering with battery manufacturers rather than building their own capacity,” said Frith.