Battery Wars (OT'ish)

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Have you heard of US based Enovix (ENVX)?

How is this related to Berkshire Hathaway: it’s not. Other than it is in the same business as BYD and Duracell…

Anyway, with that spurious link established, let’s get to it.

Buffett’s two rules are: don’t loose money and don’t forget rule number one.

Well, you will need to ignore that completely, if you invest in ENVX. It’s a moon shot. Position size or too hard pile is the way to address perhaps. Maybe like Buffett you limit your investment to his tiny investment in BYD ($232m).

“About Enovix
Enovix is the leader in advanced silicon-anode lithium-ion battery development and production. The company’s proprietary 3D cell architecture increases energy density and maintains high cycle life. Enovix is building an advanced silicon-anode lithium-ion battery production facility in the U.S. for volume production. The company’s initial goal is to provide designers of category-leading mobile devices with a high-energy battery so they can create more innovative and effective portable products. Enovix is also developing its 3D cell technology and production process for the electric vehicle and energy storage markets to help enable widespread utilization of renewable energy.”

In short:
. US company (Will batteries become the new oil. Strategic importance.)
. $2B market cap
. Venture capital type investment
. Company claim to have developed a new battery technology superior to existing batteries in commercial use. If proven correct the company would be in an incredible position to supply their technology into all kinds of commercial uses (phones, cars, glasses, watches, US military etc.)
. They have recently started shipping batteries to Garmin. They have moved from the core technology & design phase and the manufacturing development phase into the process validation and production phase (game changing and “poised for commercialisation”).
. Tiny company and is it really likely that they have developed something that companies like BYD, Duracell, Panasonic, CATL, LG and the hundreds of other have not. I have no idea but have been listening to a some chatter and there are some people around that think this could be big. Apparently there are some smart hedge funds involved. There is an ex Tesla engineer on the board. Board have been buying shares recently. 10x type stuff. Isn’t that just the perfect example of a stock that is going to zero.

We all know that batteries are extremely important now and becoming more and more important. This might be a lottery ticket on something big. No doubt it will go to zero and certainly down 50% by the end of this year. But who knows, maybe in 5 years its a 10X.

Jim said a few times here, that BYD’s cars were a side show. It was more likely about the batteries. He also said the best way to profit from electric vehicles, was to invest in some tiny company that supplies some key component. Maybe this could be one of them.

I have a tiny position and will start to follow the company. Tiny, as I don’t like the odds of competing against the 5,000 BYD engineers. I imagine that BYD, although using their current battery technology, as they can manufacture at scale, but that BYD has hundreds of new battery technologies in the R&D process just like the one that ENVX has. And BYD is just one organisation working on new battery technologies.

Any of you know anything about batteries? It might be that this technology will only work in small things like watches. I heard an ex Tesla battery engineer say that this could be an important technology. But I imagine even an industry expert has not real way of knowing if there is anything in this. As I say it’s a lottery ticket and we know the odds on that. I like the idea, of having a small stake, in something that is aiming to be an important player, in what we know, will be an important industry in the future. Thoughts?

Corporate blurb:
“Technologies of the future—Artificial Intelligence, Edge computing, 5G, Electric Vehicles, Augmented Reality and Virtual Reality—all require greater battery energy density. Building and scaling a battery containing a 100% active silicon anode has long been a goal of the industry because it dramatically increases energy density and performance. Enovix is the leader in advanced silicon-anode lithium-ion battery development and production. The company’s proprietary 3D cell architecture increases energy density and maintains high cycle life. Enovix is building an advanced silicon-anode lithium-ion battery production facility in the U.S. for volume production. The company’s initial goal is to provide designers of category-leading mobile devices with a high-energy battery so they can create more innovative and effective portable products. Enovix is also developing its 3D cell technology and production process for the electric vehicle and energy storage markets to help enable widespread utilization of renewable energy.”

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Jim said a few times here, that BYD’s cars were a side show. It was more likely about the batteries.

BYD is not the biggest battery company in China. Here is the top 10:
https://www.grepow.com/blog/top-10-lithium-battery-manufactu…

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This links shows global EV battery market share:
https://electrek.co/2022/02/08/catl-continues-reign-as-the-w…

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“US company (Will batteries become the new oil. Strategic importance.)”

Batteries will not “become the new oil”, despite the fact that many (including our media and politicians) believe this. Repeat it enough and people will believe it.

Batteries won’t help us produce plastics, cement, fertilizers and steel.

Germany learning this in real time.

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Batteries will not “become the new oil”, despite the fact that many (including our media and politicians) believe this. Repeat it enough and people will believe it.

My prediction: Batteries won’t even become the new sheet steel.
Sure, like a blast furnace back in the day, it’s a big task to build a factory to make batteries at scale that are reliable and cheap.
But in the end it just isn’t ever going to be a very interesting or high margin part of the whole chain.
Without shortages, they’re just commodities. Capital intensive products with cut-throat competition.
Just because they account for a big fraction of the cost of a car does not mean they account for a meaningful fraction of the profits to be had from that car.

I suppose a car manufacturing country might want its auto industry to have a reliable supply chain for them,
but there is otherwise no big reason for a strategic or investor interest in the battery business.
The battery manufacturing industry isn’t even going to be labour intensive enough to be politically relevant employers.

I remember once upon a time the Canadian government being all in a tizzy because there were no
Canadian factories capable of producing the latest super-high-tech product: pressed CDs.

A possible rule of thumb: the profitable parts of a vehicle are the parts that aren’t the same as the equivalent parts in the competitor’s vehicle.
Which can include the badge on the nose.

Jim

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A possible rule of thumb: the profitable parts of a vehicle are the parts that aren’t the same as the equivalent parts in the competitor’s vehicle.

Right now, battery is the major part of differentiation in EV: range of single charge, charge time, weight, cost. In the long run, it may become like fuel and differentiation disappears.

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Right now, battery is the major part of differentiation in EV: range of single charge, charge time, weight, cost. In the long run, it may become like fuel and differentiation disappears.

I think batteries are already like fuel, and are NOT the major factor differentiating competing electric vehicles. Witness the fact that Tesla uses batteries from Panasonic, CATL, and LG, and these are the same batteries that are used by many other EV manufacturers. And as far as I know, no major EV producer makes its own batteries.

Where Tesla shines is not in battery differentiation, but in how much mileage Tesla squeezes out of generic batteries, by its advances in battery management and electric motor efficiency.

dtb

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Batteries will not “become the new oil”, despite the fact that many (including our media and politicians) believe this.

“Reality is that which, when you stop believing in it, doesn’t go away.” - Philip K. Dick.

Batteries only store energy. Oil produces energy.

Indeed, oil (and gas and coal) can produce the energy for a battery to store. The other way around doesn’t work.

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Batteries won’t help us produce plastics, cement, fertilizers and steel.

This brings to mind a remark made to me by a prominent professor of chemistry at UC San Diego back in the 1970s. He said that our use of oil to fuel our vehicles is a potentially catastrophic mistake, as oil is a finite resource, and its uses are crucial in so many other ways.

Tom

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Batteries only store energy. Oil produces energy.

Well, an equally valid viewpoint is that oil is also just a storage mechanism for what is ultimately just sunshine.

Sure, that’s a technicality in many contexts. You don’t have to charge oil you just dug up, it’s pre-charged.
But on rare occasions, that’s even the most appropriate way to think about it.
Fossil fuels are just one source of oil, after all.

For example, it’s possible to make nicely portable liquid hydrocarbon fuel from nothing but sunlight and water and air.
Not very efficiently, it should be noted, unless you’re thinking of plants. But progress continues.

Even a bad first try isn’t THAT bad:
"The team’s demonstration rig, which they installed on the roof of ETH’s Machine Laboratory
Building, had a typical yield of 32ml of pure methanol per seven-hour day—tiny, but a clear proof of
principle. A back-of-the-envelope calculation suggests that substituting the world’s aviation-fuel
market entirely in this way would need 45,000km2 of suitably insolated land. That sounds a lot, but
is equivalent to about 0.5% of the area of the Sahara Desert."
https://www.economist.com/science-and-technology/plucking-ai…

Jim

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I think batteries are already like fuel, and are NOT the major factor differentiating competing electric vehicles. Witness the fact that Tesla uses batteries from Panasonic, CATL, and LG, and these are the same batteries that are used by many other EV manufacturers.

Sort of. Most EVs that are not Teslas are using pouch rather than cylindrical cells. Pouch cells are harder to manage efficiently and safely. As Musk said last year: “… probability of thermal runaway is dangerously high with large pouch cells. Tesla strongly recommends against their use.” (https://twitter.com/elonmusk/status/1433670656315600919)

And as far as I know, no major EV producer makes its own batteries.

Tesla has started manufacturing its own cells to its own design. However at this point most of its vehicles still use cells from other manufacturers.

Where Tesla shines is not in battery differentiation, but in how much mileage Tesla squeezes out of generic batteries, by its advances in battery management and electric motor efficiency.

And software, and vertical integration, and manufacturing. Tesla’s far superior efficiency comes from all of these areas working together.

-IGU-

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it’s possible to make nicely portable liquid hydrocarbon fuel from nothing but sunlight and water and air.

Be careful.

These attempts have been going for last 30 years. These articles are like “breakthrough for cancer” articles.

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I see Enovix (ENVX) announced it

“has been awarded a follow-on contract to build and test custom cells for use within U.S. Army soldiers’ central power source, called the Conformal Wearable Battery (CWB). Created by Inventus Power, the CWB integrates into a soldier’s vest and powers vital communications and navigation equipment.”

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BYD meets NIMBY in CHILE

The Place With the Most Lithium Is Blowing the Electric-Car Revolution

A California-sized piece of South America is stifling production of the metal at a time when battery makers desperately need it

SALAR DE ATACAMA, Chile—Hailed as the Saudi Arabia of lithium, this California-sized chunk of terrain accounts for some 55% of the world’s known deposits of the metal, a key component in electric-vehicle batteries.

As the Chinese EV giant BYD Co. recently learned, tapping into that resource can be a challenge. Earlier this year, after BYD won a government contract to mine lithium, indigenous residents took to the streets, demanding the tender be canceled over concerns about the impact on local water supplies. In June, the Chilean Supreme Court threw out the award, saying the government failed to consult with indigenous people first.

“They want to produce more and more lithium, but we’re the ones who pay the price,” said Lady Sandón, president of one of two Atacameño indigenous hamlets that filed a lawsuit against the auction. A BYD spokeswoman declined to comment.

Similar setbacks are occurring around the so-called Lithium Triangle, which overlaps parts of Chile, Bolivia and Argentina. Production has suffered at the hands of leftist governments angling for greater control over the mineral and a bigger share of profits, as well as from environmental concerns and greater activism by local Andean communities who fear being left out while outsiders get rich.

more at…

https://www.wsj.com/articles/electric-cars-batteries-lithium…

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How dreadful that the nations in which the lithium resides want to control its revenues, and the people who live on the land it comes from, its use. How will capitalism ever survive them using their resources as they choose to, rather than how battery manufacturers in other countries want to? Truly it is the end times.

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