|04/14/2010 2:17 $� EDT)
|MOUNTAIN VIEW, Calif. — The multi-billion dollar battery industry is poised for huge growth. But lithium ion, today’s fast rising technology, faces significant limits and a race is on to find better chemistries.That was the conclusion of a panel of experts at a Silicon Valley gathering of investors Tuesday evening (April 13) sponsored by Silicom Ventures.
Lithium ion makes up about $10 billion of the $50 billion worldwide market for batteries today, but “every link in the whole value chain needs to scale up by three orders of magnitude,” said Mark Platshon, a partner with VantagePoint Venture Partners (San Bruno, Calif.) that has investments in electric vehicle maker Tesla Motors, battery recycler Better Place and other battery companies.
“Given adoption in everything from consumer electronics to hybrid electric vehicles, we will need to grow production of lithium ion batteries a thousand fold, and not many $10 billion industries will grow a thousand times bigger,” Platshon said.
Lithium ion batteries will see “in ten years a ten-fold increase in production, and that’s only with tiny growth of things like electric vehicles,” said Atiq Raza, an entrepreneur in residence at Khosla Ventures and chief executive of lithium ion battery maker Seeo (Berkeley). That’s why battery maker A123 Systems [that recently went public] has a billion-dollar market cap,” he said.
“A123 was the hottest IPO of 2009 despite having $91 million in annual revenues and $86 million in losses–this is how the market is valuing the promise of batteries,” said Doron Simon, general partner of consulting firm Simon Says (Los Altos) who moderated the panel.
Although lithium batteries are the fastest growing segment of the market, the technology has limits in energy density and readily available raw materials. In a video segment below, panelists generally agreed the market for electric vehicles will be limited as a driver for lithium batteries.
Researchers and investors are combing through opportunities in batteries beyond today’s growing lithium market.
“You can only make batteries incrementally better with same materials and beyond that you have to go to different chemistries,” said Platshon. “That’s why everybody in batteries is actively looking at other alloys and compounds and all the nano guys from Stanford to Carnegie Mellon are working in battery materials,” he said.
Wildcat Discovery Technologies, a 27-person San Diego startup formed in late 2006, is using a system originally geared for high throughput combinatorial DNA research to investigate new battery chemicals, said Mark Gresser, chief executive of the company.
“We have unique tools to look at thousands of materials in the time it takes most researchers to look at a handful,” said Gresser. “We think we are on the verge of some transformational discoveries in battery world,” he said.
“You could almost throw darts at the periodic table between any two materials and come up with interesting different galvanic voltages–zinc chloride, zinc bromide, iron chrome, a whole litany of different chemistries,” said Platshon. “The reality is they all work with different limitations,” he said.
Some car makers see fuel cells, not batteries, as the best sustainable energy source for vehicles. But the technology is a decade or more away, according to Naoki Sugimoto, the principal of a small strategic investing group at Honda Research Institute USA.
Honda is reluctant to introduce a battery-driven car because such vehicles are still not practical for consumers and only serve to “push [the energy] problem to the grid,” Sugimoto said on the panel.
“If every house has one electric vehicle to charge you need a big upgrade to the grid and power plants,” he said. “That’s a problem, so we are trying to build a self-sufficient energy cycle,” he added.
Sugimoto said a combination of fuel cells, solar panels and chargers that use natural gas could create sustainable zero-emissions vehicles for the mass market. The biggest challenge is the cost of creating the infrastructure for such a solution. “That’s still far future,” he said.
Likewise Mercedes-Benz has been spending as much as $1.5 billion a year on a fuel cell program and “expects it will take 10 years before it comes to fruition,” said Marv Bush, chief executive of EV subsystem maker Atria Controls.