If electronics are the underpinning of our modern economy, then batteries are what make the world go round. And since its commercial introduction in 1995, the lithium-ion (li-ion) battery has been king.
Over the past 30 years, a three-fold improvement in energy density has driven li-ion batteries far down the cost curve, from more than $3,000/kWh to approximately $150/kWh today, making li-ion the battery chemistry of choice for our toys, consumer electronics, medical devices, power tools, and increasingly, cars. Applications for household and grid storage that balance the intermittency of renewables are already hitting the market. Indeed, the $30 billion industry is expected to clock a blistering 11.6% annual growth rate through 2024, to a valuation of nearly $80 billion1.
If electronics are the underpinning of our modern economy, then batteries are what make the world go round. And since its commercial introduction in 1995, the lithium-ion (li-ion) battery has been king.
Over the past 30 years, a three-fold improvement in energy density has driven li-ion batteries far down the cost curve, from more than $3,000/kWh to approximately $150/kWh today, making li-ion the battery chemistry of choice for our toys, consumer electronics, medical devices, power tools, and increasingly, cars. Applications for household and grid storage that balance the intermittency of renewables are already hitting the market. Indeed, the $30 billion industry is expected to clock a blistering 11.6% annual growth rate through 2024, to a valuation of nearly $80 billion1.
The grass isn't always greener
This technical and economic progress belies a more disturbing trend. Battery startups are failing - spectacularly. High upfront capital requirements, long R&D timelines, low margins, and few opportunities for technical de-risking make the battery industry a tough business. Since 2000, of 36 companies that have raised more than $500,000, fewer than half ever achieved pilot manufacturing or a key corporate partnership, and only two have had positive exits (paying back at least invested capital). Missteps among some of the highest prospective flyers – A123, Ambri, Envia, Leyden Systems – include excessive capital raises, a go-to-market strategy immediately attacking a large-scale market, and an excessive appetite for R&D spending. In all, of $764 million invested between 2004-2014, only $123 million has been returned. This staggering 84% loss rate has, perhaps predictably, resulted in funding retrenchment, wherein materials/chemical/process startups were less than 30% of all venture capital (VC) cleantech investment in 2014.
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Image: Materials science and engineering co-authors Professor Vinayak Dravid and doctoral candidate Eve Hanson
Image Credit: Northwestern University
