Insights from Volta Foundation’s “Battery Report”
Featured Talk of Annual Battery Report, Reviews Industry, Investment, Supply Chain and Talent
This is a thought leadership piece in which we summarize our key learnings from TDK Ventures Energy Week 2022. We invited Yen T. Yeh, the Executive Director of Volta Foundation, the largest global community of battery professionals, to give a presentation of the Annual Battery Report. Hope you enjoy the reading and are welcome to reach out for more discussions about battery technology and investment!
The electric-vehicle battery value chain and the investing environment are inexorably linked, as evidenced by the Volta Foundation’s latest iteration of its popular Battery Report. Yen T. Yeh, the executive director of the non-profit foundation comprising 30,000 individuals and 5,000 companies, guided attendees of TDK Ventures’ Energy Week 2022 through its 2021 edition, providing comments and explanations throughout. Now Volta Foundation has also announced its newest 2022 edition, which summarizes industry movement, academia breakthroughs, talent market, and policy changes in the battery industry. The Battery Report can be accessed for free.
Yeh’s presentation included a list of some innovators working in key sectors of the battery value chain as well as an overview of key value-chain sectors, the size of their markets, and their compound annual growth rates as of the end of 2021.
With the new Annual Battery Report 2022, the editors use the predicted market size of 2030, and further divide segments into Raw Materials/Mining and Refining, Materials Processing, Component Manufacturing, Cell&Pack Manufacturing, Battery Data and EV/ESS Application, Recycling and 2nd Life. The total projected market size of battery industry and supply chain will achieve more than $400B market, with many sub sectors annual growth rate larger than 15%.
“One of the most exciting areas of advancements is silicon anodes,” Yeh said. “We compiled a list of companies that are operating in the sector and the funding they raised as of the end of 2021. The funding levels for most of these companies has increased, and I note that Amprius went public in 2022. Another story is solid state batteries. This is a combination of solid-state electrolyte batteries and solid-state lithium-metal batteries.”
He remarked that climate-tech venture capital dramatically increased during the first three quarters of 2021, with startups in the sector raising $32 billion, a 5-fold increase from 2016.
“In 2022, with the IRA in the United States, funding will continue, along with people’s certainty of the future growth of the industry,” he predicted.
The latest data also validated the continuous growth of capital injected into battery sector despite the macro-economic environment. The total capital that battery companies have raised in 2022 is $39B, refreshed the record in 2021 at $33B. Investment in BMS, battery intelligence, pack manufacturing, as well as anode materials saw the most growth in 2022.
A slide accompanying Yeh’s comments noted that, “Deal sizes have ballooned. The average Series A and B rounds have doubled, and the average post Series C deals have increased from $139M to $379M. Large amounts of capital are flowing, owing to optimism in the industry and a strong push for electrification.”
With mega funds and capitals joining the big wave of battery investments pushing startups to grow fast, there are concerns of the battery companies are not ready yet. It worth us to pay attention of those already SPAC listed companies in the battery space. The market capitalization of 2020 and 2021 battery SPACs continued to trend downwards below their original valuation, as financial results have underperformed.
2022 battery SPACs are also underperforming, with even the amount of funds raised in each SPAC decreasing over the course of the year. Despite investor losses at current valuations due to initial overhype, the significant amounts raised via SPACs could still enable innovation and achieve long-term value as these new technologies reach the market.
Looking forward 2023, SPAC activity could decrease again in 2023 due to their poor performance on the stock market. By the end of 2022, nearly every e-mobility company with a SPAC exit was trading at a loss relative to its IPO price. One reason is that many of the startups with SPAC exits had little to no revenue.
The strong drive to electrify everything and the sluggish progress on technology and manufacturing readiness level shows the big gap of new innovations and commercialization in scale. Set aside technology innovation, the market for electrification is not ready either. Not only startups, but industry leaders, EV OEMs and governments, all need to move fast enough to build the whole ecosystem for electrification.
“Charging technologies is something that more and more folks are thinking about,” Yeh said. “As electric vehicles’ performance and cost improve, more attention will have to be paid to the charging infrastructure to support it.
In the latest Battery Report 2022, it suggests the private sector is actively participating in infrastructure investment, with Cumulative VC/PE into EV charging startups now exceeds $8.25B. Through year-end 2021, the cumulative investment in the charging infrastructure sector exceeded $50B, and the projected global capex on EV charging infrastructure will need $150–190 billion to support the forecasted adoption of EVs.
From OEM perspective, more efforts and investments are made in cell design, chemistries, and manufacturing. There is a trend away from cell-to-module-to-pack design, and toward cell-to-vehicle, larger cells, and reduced complexity. A few automakers, including Volkswagen and Tesla, are exploring dry-coating manufacturing facilities. All these efforts are moving towards bringing the cost down from both cell level and pack level.
“Battery form factor also plays a role at cell-level cost,” Yeh said. “As of today, a cylindrical cell system is still meaningfully cheaper than other forms. The trend of cost reduction in traditional lithium-ion chemistries might present obstacles for solid state and sodium-ion to catch up — something we used to see in the solar industry with silicon continuing to be dominant.”
The report aims to “show the strategic partnerships between the main auto OEMs and their battery suppliers,” Yeh said. “We see three high-level trends. American OEMs are building relationships with Japanese and South Korean battery manufacturers. European OEMs have announced plans to cultivate local battery supply chains. Chinese, Japanese, and South Korean auto OEMs are working closely with their respective local battery makers.”
However, as cell manufacturers continuous putting efforts on cell manufacturing and pack design to reduce the battery cost, the fact is, the decline in battery pricing slowed as commodity prices increased, and we even witnessed the price increase for the first time in past 10 years.
According to BNEF 2022 annual price survey, volume-weighted average battery pack prices increased for the first time by 7% in 2022 compare with 2021. It is important to note there are significant regional differences. Prices in China average $127 per kilowatt hour, whereas in the EU prices are higher at $169 per kilowatt hour.
Yeh explained that competing forces exert influence on battery prices. Changes to chemistries, including increasing adoption of iron-phosphate in the EV mix, as well as improvement of high-nickel cathodes work to contain prices. Meanwhile, higher demand for raw materials — lithium, cobalt, nickel, and electrolyte — could outpace the rate of the physical supply chain, pushing costs upward.
Yeh continued the presentation with sharing more on the research section of The Battery Report. “The percentage of review papers increased, so there is less original research by percentage,” he said. “China continues to dominate in the number of papers published on batteries. Some of the most researched fields include cathodes, anodes, electrolytes, solid state, recycling, AI, modeling, costs, and policy.”
Before opening the forum for questions, Yeh addressed the worldwide shortage of engineering, maintenance, and other specialized talent in the battery industry.
“We should pay more attention to the talent pipeline the industry needs as we scale,” he recommended. “For example, Europe has launched an aggressive training program to tackle the talent supply shortage. The European Commission expects up to four-million new jobs to be created by 2025. They are planning to train 800,000 workers in the same time frame. There are a number of initiatives, including the European Battery Alliance launching the EBA250 Academy as well as training programs related to reskilling and upskilling workers.”
He said companies based in South Korea and China “have identified a similar shortage of research and engineering specialists as a pain point. South Korea is short nearly 3,000 graduate-level positions in research and design. China’s Manufacturing Talent Development Planning Guide estimates that the clean-energy industry by 2025 will need 1.2-million people and projects a talent gap of more than 1 million. The thousands of new graduates each year are insufficient to meet current demand.”
To better compete with overseas companies for qualified workers, Asian firms are building in-house training facilities and educational partnerships. LG Energy Solutions, the largest battery manufacturer by volume in South Korea, plans to launch a battery-smart factory department at Korea University this spring, with guaranteed jobs for graduates, while China’s Battery Production Engineer program has certified more than 1,000 workers in less than six months.
The U.S. too has developed its share of training programs to combat similar shortages. It also relies on skilled and educated foreign workers, enticing them with lucrative pay packages. Yeh noted that salaries for jobs filled by H-1B visa holders has surged more than 40% over the last five years. As one might expect, these jobs are concentrated in California and Michigan, America’s technological and motor-vehicle hubs.
At last, Yeh gave credits to all the editors and contributors that have worked on the battery report, also introduced more about Volta Foundation.
The Volta Foundation addresses four primary themes, Yeh said:
1. Bridging Silos — “We sit in the middle, connecting folks from industry, academia, finance, and policy circles.”
2. Developing Leaders — “Our member companies have a difficulty in hiring talent. We think a lot about increasing the pool of talent and helping people transition from other industries.”
3. Democratizing Access — “The most visible part of the foundation’s work. We have a large number of events, both virtual and in person, and publications. All events and publications are free and open access.”
4. Advocacy — “Culture and policies through which the rules, regulations, and funding are being decided.”
The Volta Foundation began hosting “Battery Brunch” in the San Francisco Bay area late in 2019, now has more than 30,000 members across the globe.
“It has evolved into a conference -battery brunch every month, where 500 to 1,000 battery professionals globally come together,” Yeh said. “Our virtual events have extended from the U.S. to Europe (Battery Pub) and a Chinese-language event called ‘Battery Roundtable’. As far as publications, “Battery Bits” invites those working in the industry to write about their occupations, including deep-dive content about the day-to-day jobs they are doing, bridging the gap between academic publications and news articles.”
Thanks for taking the time to read, and don’t hesitate to reach me on LinkedIn if you’d like to engage more on this subject, or any other topics related to deep technology innovations for the energy transition. You can also watch a recording of the full panel session on YouTube!
About TDK Ventures Energy Week:
TDK Ventures’ second annual Energy Week assembled some of the greatest minds and brightest lights in the fields of renewable energy, materials science, mobility, storage, and more. Over the course of 13 sessions — fireside chats, panel discussions, spotlight interviews, and in-depth reports — TDK Ventures and the expert businesspeople, researchers, academics, and investors presented their opinions and field notes on the world’s progress in solving some of its most pressing problems. Energy Week 2022 fulfilled TDK Ventures’ mission to spotlight the best ideas and most promising technologies to inspire entrepreneurs, inventors, and investors to redouble their efforts to mitigating climate change, hasten electrification, and develop the solutions that will herald a greener, more equitable planet.
