BatteryBits
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BatteryBits

Following the LiB Money Trail to Safety & Innovation

*:https://www.alixpartners.com/media/14438/ap_auto_industry_recall_problem_jan_2018.pdf
*includes reserves existing at the time of the corporate spin-off.
  • A Gross Margin in the range of 28% for the 13 months ending Dec 31, 2021. I suspect that in times of over-capacity, which will surely come at some point, this margin could go into the mid-high teens.
  • Operating Income margins in the range of 11%. Note the relatively high level of operating expenses–higher than I would have expected for this type of commodity business.
  • A Pre-tax Return on Capital from operations of 10% — perhaps a bit low for a commodity parts manufacturing business. Undoubtedly returns are compressed due to the highly competitive nature of the China market, where LG likely derived most of its 2021 sales.
  • Finally, the impact of the cumulative addition to reserves, presumably, is related to the Chevy Bolt settlement.
A comparison of selected figures-of-merit for sodium-ion and competing battery technologies (source)
  1. Battery chemistries that may have the slightest hint of a safety issue will be put on the slow track. This would include Lithium metal and high silicon content anodes. Expect that higher density anodes, which now contain an estimated 5–7% or so of silicon, will edge up in their silicon content over years –i.e., a gradual evolution. Fast tracks will go toward safer battery chemistries including the development of solid-state and in the nearer term, the wider adoption of LFP cathodes.
  2. Innovation Safety at the periphery of the battery cells, including battery management systems, pack design, and especially better diagnostic and testing tools are needed, though how much would come from the venture and how much from incumbents is uncertain.
  3. For battery materials start-ups, it may mean starting first with ultra-safe materials–and improving the spider graph dimensions from that point.
Stan Sakai

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