Exploring Diverse Commercialization Strategies for Emerging Rechargeable Lithium Battery Technologies

This article is contributed by Nicholas S. Grundish

Scaling new battery technologies is not as straight-forward or “drop-in” as it may be for other industries because of the complexity of rechargeable batteries and the interplay between different components during formation and operation.The established route is for a new market entrant to take a technology from lab to full-scale cell manufacturing all on their own, which is a time and capital intensive process.Alternative routes to commercialize battery technology advancements are presented with industry examples where applicable.

In the ever-evolving landscape of energy storage, rechargeable lithium batteries stand as a transformative force, powering everything from our smartphones to electric vehicles and grid-scale energy storage systems. As advancements continue to push the boundaries of energy density, safety, and lifespan, the commercialization strategies for new lithium battery technologies become increasingly pivotal as many advancements never make their way into a commercial product. Here, we delve into the evolution of a new technology as it makes its way from conception to commercialization. Typical strategies towards commercialization of new technologies will also be discussed in depth as well as alternative approaches that may hasten time to market.Technology ReadinessThe technology readiness level (TRL) outlines the evolution of a new idea from conception to commercialization. A general TRL scale has been provided in Figure 1 to demonstrate the typical journey of a new technology from idea to commercialization. This scale works well for any “drop-in” technology that has a straightforward path to implementation in a well-established industry with well-understood infrastructure. However, the journey of technology development is challenging regardless of the industry and application. Many new concepts can be developed to a TRL 5 or TRL 6 relatively quickly, but the path becomes exponentially more difficult beyond that as scale-up, production, and cost feasibility considerations come into play. At this point, many technology developers are forced to evaluate their inventions with a new perspective beyond that of purely scientific superiority or simple technical feasibility.Rechargeable batteries are complex systems that have come to prominence over the past decade that have an intricate supply-chain and manufacturing infrastructure. For these reasons as well as the narrow material tolerances required at every level of manufacturing to yield a product that meets consumer specifications for a “Grade A” cell, commercializing a new battery technology is currently a tenuous process. In many cases, technology developers are required to go far beyond just developing their specific technology to commercial levels and must engineer an entire cell chemistry around their innovation. This added difficulty often brings with it the responsibility of developing specific manufacturing capabilities as well if the technology calls for it — as is the case for many proposed solid-state battery concepts. With these concerns in mind, a revised framework of the TRL scale specific for battery technologies has been developed and is shown in Figure 2.[1]For a novel battery material to make its way into a commercial cell there are several levels of optimization and development that it must go through via the full cell chemistry commercialization route — base material, electrode process and formulation, cell construction, which includes formulation of additional components to optimize cell performance (i.e. the electrolyte and counter electrode), cell architecture, cell design (i.e. N:P and electrolyte fill ratios), and lastly formation/aging/conditioning protocols before a cell is ready for deployment. Beyond the technical complexity, the added work and runway for implementing a new battery technology into a commercial product requires large amounts of capital with expertise that has yet to be fully developed in the current industry workforce.Commercialization StrategiesOnce a technology has traction and is in the latter stages of development, there are three primary pathways to commercialization that are currently prevalent in the battery industry, which are summarized in Figure 3 — Licensing, Partnership, and Direct Scaling. Each of these strategies can include various forms of collaboration between Academia, Government, and Industry.LicensingLicensing can be non-exclusive (licensor can license to several licensees) or exclusive (licensor only licenses to one licensee). Exclusive licenses can be further narrowed to geographical exclusivities that narrow exclusive rights to a particular geographic region, such as manufacturing or distributing a product with a given technology in a particular country, or use-case exclusivities that limit the exclusivity to a particular application, such as electric vehicles or portable electronics. With geographic or use-case exclusivities, a licensor can still license to other parties that do not intrude on the terms of specific exclusivity in prior licenses. The licensing model is not typically preferred by investors as it is not the most lucrative pathway to commercialization with a small percentage of revenue of the final product typically being a part of the licensing deal. Additionally, licensing packages have come under scrutiny as they are usually prepared up to a certain TRL level without much specification into manufacturing processes or equipment, which leaves a long road ahead for the licensee to take a licensed technology to market, even if they have a pre-existing manufacturing ecosystem in place. One prevalent example of this type of commercialization pathway is the licensing and Services Agreement in place between Freyr and 24M Technologies, in which Freyr intends to manufacture and scale 24M’s Semi-solid battery platform.[2] Currently, there is yet to be a fully commercialized technology based on this type of licensing model, and licensee’s are beginning to require close collaboration with licensers to ensure the success of technology scale-up as it has been realized that scaling up new battery technologies is not a straight-forward task of simply merging existing manufacturing know-how with new chemistry in place of the old.PartnershipsPartnerships can take several forms within the industry with varying levels of engagement. A joint development agreement (JDA) is a partnership between two entities that set the terms for developing a particular product or technology. The terms of who owns what in terms of intellectual property are established at the outset of the agreement. A JDA can be implemented on its own between budding companies with technical synergies, such as the JDA between Our Next Energy and Nano One, or in tandem with other forms of partnership, such as strategic investment, as is the case with Ford Motor Company and Solid Power Inc.[3,4] JDAs do serve as a level of validity of a company’s technology and know-how, and in many cases can be used to garner additional interest from the investment landscape.Early-stage companies looking to advance their technology almost always have significant capital requirements to take their technology to the next-level. Strategic investment occurs when this early-stage company obtains some of this required capital by a more mature company that has synergies with the technology being developed. In other cases, strategic investment can be made if a company is looking to secure their rights to a particular part of the battery supply-chain or a technology, with the North American battery supply-chain still in development. This type of strategic investment is becoming prevalent for battery manufacturers and automotive OEMs to secure materials that are compliant with the Inflation reduction act (IRA). General Motors has made several investments to secure their foothold into the North American battery supply-chain in such companies as EnergyX for their lithium extraction technology and MitraChem for their LiFePO4 cathode active materials.[5,6]Another form of partnership is a joint venture (JV) where a new entity is formed with the involved parties sharing ownership, risks, returns, and governance. This type of partnership is much more involved than a JDA, which can be considered more of a joint project between two parties. JVs make sense in situations where each party has unique expertise that can lend itself to the success of the project. Within the battery industry, it is common for an automotive OEM and battery technology or cell manufacturer to enter into a JV to produce cells specifically for electric vehicles, such as the General Motors-LG Energy Solutions JV known as Ultium Cells. Other examples of these types of JVs can be observed with Ford-SK Innovation (BlueOval SK) and the original Tesla-Panasonic U.S. gigafactories.[7,8] In some cases, the battery technology provider can be an advanced startup or early-stage company, that requires significant capital to continue advancing their technology and can benefit from the manufacturing/scaleup expertise of their JV partner. This situation was the case for the QuantumScape-Volkswagen joint venture for a 1GWh pilot-line facility to produce solid-state lithium metal batteries with QuantumScape’s core technology.[9] Many of these JV partnerships are on-going and it is unclear whether they will be successful. However, with scaling new technologies, there can be a mismatch between core competencies between partners — as in the case of solid-state batteries. Existing Li-ion battery manufacturing knowledge does not translate well to solid-state batteries and the partner that develops the technology often does not have extensive knowledge on how to readily amend current manufacturing infrastructure or of the challenges they may face developing new manufacturing processes for their technology from scratch.Direct-ScalingWith the breadth of new innovations in the battery space, many start-ups, both internal and external are developing with the intent of directly taking their technology to market. External start-ups require significant amounts of capital to take a product to market and are considered high-risk, high reward entities — which are preferred by venture capital and private equity groups looking for a high return on their deployed capital. External startups can incorporate numerous commercialization strategies at once in their path to direct scaling, as in the case of Solid Energy Systems (SES) and SolidPower, which both have garnered significant strategic investment as well as deployed JDA with automotive OEMs to help bring their core technology to a consumer product.[10,11] Additionally, Amprius and Our Next Energy (ONE) have both taken the direct scaling approach to take their technologies to market. Internal start-ups can operate as research and development arms within larger companies. Contemporary Amperex Technology Co. (CATL) and Build Your Dreams (BYD) have both launched internal programs to develop next-generation lithium battery technologies or alternative battery chemistries and take them to commercialization.[12,13] On the path of direct scaling, it is also possible for an external startup to run into a situation where a manufacturing entity is looking for technology to develop and wants to acquire them — as was the case with Cuberg and Northvolt, and Maxwell Technologies and Tesla.[14,15]Alternative StrategiesMore companies are starting to understand the difficulties intrinsic to taking a new battery material or technology from the lab to a commercial product via the full cell production route. Although it has a greater chance of achieving maximum performance owing to the optimization of each additional component to maximize performance of a company’s new material, the likelihood of producing a commercial cell is low. With this knowledge, companies are starting to shift or diversify their go-to-market strategy where applicable. Sila Nanotechnologies has taken the approach of becoming a next-generation material producer and targeting markets with a lower barrier to entry than EVs, such as consumer electronics. Therefore, they do not have to worry about a full cell product but can work with manufacturing specialists to obtain the final end-product cells that meet specifications for the desired market. This advantage is highlighted by their recent agreement with Panasonic.[16] Although this strategy seems fruitful, it only works with materials that fit within the current manufacturing infrastructure. In this same vein, SES has shifted from a target of only EV cells to also targeting entering the urban air mobility market.[17] EnergyX is also taking this approach with their electrolyte technology offerings for lithium-ion and lithium metal batteries. In the long-term, as technologies are scaled from bench-scale to pilot-scale to full-scale, having intermediate off-take potential for pilot-scale facilities that are in the portable electronic market can shorten timeline to revenue while also providing technology validation. Then, a decision can be made on whether to expand the business towards larger cells or production towards more ambitious end applications, or to expand pilot line capabilities to expand business towards an existing business stream (i.e. portable electronics).OutlookTaking a new battery technology to commercialization is arguably more difficult than for other industries owing to the intrinsic complexity of rechargeable lithium batteries, their operation, manufacturing, and air sensitivity of the constituent materials. With several companies forging a path forward, there is now much better transparency into the difficulties of following the technology commercialization pathway outlined in Figure 2 for a new battery material. With the recent success of companies primarily focused on material development with the goal of generating revenue just on material sales, there will likely be a shift in thinking moving forward about the pathway towards commercialization. This shift in thinking should be complemented with a greater abundance of companies that specialize in cell construction and manufacturing such that the overall supply-chain and infrastructure is not solely dependent on market entrants to see their technology all the way from material to battery cell. Difficulties will still arise from the qualification process for new materials — the current qualification process is 3–4 years for new materials to be implemented on a gigafactory scale — however, this process can be fine-tuned and hastened through partnership of material makers and entities solely focused on cell manufacturing. The rise of academic and governmental technology transition facilities meant to ease the transition of new technologies from lab to factory will also play a critical role in assisting in de-risking new technologies for cell manufacturers.