This Is The Challenge Of Securing The Battery Supply Chain

this is the ultimate irony. Just as oil prices are spiking and everyone's going, oh, we need to, you know, quicken the transition away from fossil fuels, it seems like all of the commodities that you actually need for that transition for decarbonization, those are spiking too. Yeah. Not only

are we seeing a surgeon price. And if you look at all these crucial metals, whether it's nickel or cobalt, or the price of lithium, all these crucial ingredients, not only are the church mostly up into the right, there aren't that many of them. It's not just that they're costly. It seems like these markets again kind of like we are extremely tight. There's not just a bunch of it to be easily procured from what I can tell. Well,

so this is something that I'm really curious about. What exactly is the supply of these essential metals for batteries because I'm sure you remember the rare earths, Like I don't want to call it a bubble, because clearly there was something to it, but rare earth stocks where some of those um two Yeah, everyone was like, by rare earths, by rare earths, there's only so much of them, and it just seemed a little speculative. And so I'm wondering

how much of that bowl case was true. Is there actually a finite amount or is it the case that it just takes long to get the mind's up and going, it takes a while to increase production. I honestly don't know. With words I recall a lot of the story too is they're not that rare, but they are, they're very pollutant the process of mining, and so which countries actually want to do that? And China seemed to be the

most willing. So the other thing that happened recently in battery news specifically is Joe Biden announcing that the Defense Authorization Act sort of these tools the government has for procurement would go to this space and American metal supply. So this is clearly a lot of interest. Who gets to build the batteries, how costly it's going to be, who has access to the metals, what it's going to

take to ramp up production, increased urgency. Clearly in this moment on these questions absolutely and all brought into focus by Russia's invasion of Ukraine and the subsequent sanctions, and the fact that Russia holds something like I think it was eleven percent of the world's nickel supply. But even that, you know, I don't know what type of nickel they actually hold. I don't know if it matters what type of nickel you have in the market. I have so

many questions, and yeah, I'm eager to learn. Great, Well, let's dive right into this. We're gonna be speaking all about batteries and the battery supply chains with James Fifth. He has a principal at Volta Energy Technologies, a VC firm focused on this area. Previously headed up energy storage at Bloomberg and f up until very recently. So James, thank you so much for coming out on odd lots. Tory Tracy great to be on here and yeah, big clime fans, so so thank you very honest to be

able to speak well we we we uh. We spoke with their former colleague Net Bullard earlier in the year and when we asked him who should we talk to about batteries, he said, you were the man so very excited about this. Why don't we start very big picture? What is when we talk about the battery market, what is the market today? How much is evis, how much is grid storage? Like, what are we talking about when we sort of take a big, sort of eagle eye view at the battery market. Yes, so it's it's a

great starting space. And I think that's probably what I started is if we go back a decade, really the battery market was confined to consumer electronics, so your cell phone, your laptop, your iPad, that's what Littiman batteries went into. And at the time kind of passenger vs were almost nothing. But by the time we got to the end of the last decades kind of twenty, what we found is that the kind of biggest demand sector for litty Mind batteries had flipped and it was no longer that consumer

electronics sector. It was instead passenger electric vehicles, And just to kind of, you know, try and put it in a bit of context. Back in kind of twenty nineteen, at the end of the year, there was almost two

hundred giga one hours of battery demand. Now there's lots of jargon in the battery industry, so let me kind of try and break that down a little bit more So, essentially, if you look at a passenger EV if you look at your Tesla model as for example, you might find that you have a hundred kill or what our pack Now there's a lillian kill what hours in a gig of one hour, and so if you have a hundred kill what hours kind of per vehicle, what you find is that you're looking at around um what does that

end up being kind of ten thousand vs per gig or what hour. So when we had two hundred giga one hours UM on the market, that's you know, enough for around two hundred thousand evs. But of course, as I say, I wasn't just going into kind of Tesla's etcetera.

It was going into consumer electronics. But also, as you pointed out, you know, staciary storage, but stacialy storage is again kind of a much smaller chunk compared to the the EV market, But just because it's smaller doesn't mean it's not important when we're kind of looking at that

energy transition kind of sector. Can I ask a really basic and embarrassing question, but you know, when we say lithium ion batteries, how exactly are these medals used in batteries And is it the case that you're always going to need a certain amount of them or are their efforts underway to make them more efficient and use fewer or less metals in them. So again, another kind of great question, um, and it's it's there's a fairly nuanced answer, but I'll again try and kind of you know, break

it down to the basics. So if you look at what's happened kind of over that period of time from two thousand and ten to twenty, the kind of average kilograms required per battery has decreased because there have been improvements in in you know, primarily the kind of cathode which is one of the active components. But again, you know within the battery space there are different chemistry, so

different cathodes that use different metals. The kind of key ones that have been used over the last decade is lithium, and you find lithium in everything, So you have lithium mixed with either nickel, manganese and cobalt, or you can have um lithium mixed with with iron and phosphate. So you have these kind of predominantly kind of leading and

competing chemistries, and each has its advantage and disadvantage. If you have the lithium mind and phosphate, which is called LFP, those batteries are a relatively low cost because you only have kind of lithium in it. That is expensive, but you have a lower kind of energy density, and what that means is in a given kind of volume or for a given weight, you can't get as many kind of kill what hours, So that limits the range of

an electric vehicle essentially. Whereas the nickel, manganese and cobalt batteries otherwise known as NMC, they have a higher energy density, so you can go further in your e V, but it comes with the downside of higher costs because you've got nickel in there, you've got cobalt in there, and you've got littium in there. So you're always kind of playing this this game to try and balance the kind of performance versus cost of any of these lifting mind batteries.

So when we think about the e V market, what is the current state of the art technology and is the roadmap for does it seem fairly clear words going in terms of say, what kind of tech will go into batteries ten years from now or is there still is it still open in terms of there being debate about what path the industry will ultimately take. Yeah, a great question and one that I could probably talk about,

you know, four and out that I'll get. I'll try and supervid just frame the debate for us a frame of the discussion. So you know, I mentioned we have this kind of n MC or this LFP chemistry, and over the last decade, you know what's happened was the use of LFP was really confined to China, and outside of China, in Europe and in the US, companies were focusing on nickel based chemistry, so like the NMC and the states of the art had kind of more and

more nickel being added. So that increased the energy density, which is why you know EV ranges have kept on increasing. And it seemed like that you know, those nickel heavy chemistries, we're going to be the kind of dominant technology over the next decade. But actually what's happened is Chinese companies in particular have come up with an innovative way to to in reality kind of squeeze more juice out of

the batteries using LFP. So now these low cost kind of lithium and phosphate batteries can give you ranges that are not as high as a nickel based battery, but you know, in most cases suitable. And that's why we see companies like Tesla and VW saying that they'll use these these LFP batteries and their kind of low cost entry level evs. So that's the kind of big trend that we see now is actually this this l FP

is coming back onto the market. While it's not kind of technically as stated the art as some of these high nickel chemistries, actually engineers have done a fantastic job at making it, you know, enough for what most consumers need and then just to kind of finish if we go, you know, in ten years time, I think what everyone's really hoping for and looking forward to, it's sort state batteries.

You know, you've probably heard people saying the Holy Grail, and that's probably taking it a little bit far, but certainly, you know, they promised to kind of make Evis faster pass um, you know, the performance that you get today, and make that kind of idea of a four D

five hundred mile range kind of realistic. So how much does the recent volatility in metals prices, the surges that Joe and I were describing in the intro supply constraints, given Russia's invasion of Ukraine and the subsequent sanctions, how much does all of that throw a spanner in the works of the sort of long term trajectory of battery development and technology that you just described. Yeah, it's it's kind of clearly been a pretty difficult time in the

battery industry. I mean, coming off the back of the kind of pandemic and the logistics problems that have come from that. You know, we're then thrown into this terrible war between Ukraine and Russia, which then creates kind of more turmoil in the commodities market. And you know, as you said, getting Tracy around kind of ten percent of the world's nickel is kind of mind in Russia. But actually, as as you kind of rightly pointed out, not all of that can be used in kind of electric vehicles

and littemon batteries. Nickels divided into kind of two classes, so you have class one and class to Class one is typically the higher purity material, whereas Class two can be contaminated with with iron in particular, So it's a class one material that you need in litemon batteries, and Russia actually produces around sev of the world's kind of supply of this class one material. So the sanctions imposed on Russia, you know, do create problems for the battery

industry going forward. And these are as, i say, kind of exacerbating problems that have actually been there in the past. I think it was two years ago so that Elon Musk pleaded for for for nickel miners to invest in more capacity and start producing more nickel, and that hasn't really had And there's some more capacity that's been in the works coming online in Indonesia for a couple of years, but not to the extent that most kind of automated is expect will be be needed. So there are kind

of supply chain constraints coming up there. And not to mention, you know, on top of that, the volatility and pricing doesn't help. And you know, I should I should point out that actually a lot of automakers and sell manufacturers what they've done is they've they've locked in long, longer term supply. So we heard of again Tesla locking in this kind of longer term deal with with Valet, the

Brazilian nickel minor. And when you have these longer term contracts, you're not as exposed to the kind of volatility in the spot price market. But when it comes to renegotiating those contracts, you know, when whenever whenever, that is, if prices are high, the price that you'll end up paying for that kind of new contract is going to be higher. So the uncertainty, you know, doesn't help the industry at all.

And at the end of the day, it's it's really consumers that end up kind of feeding the bike because most of those prices have passed through to automatacy then process that through to the consumer. So you know, the other problem for consumers as far as I can tell, and I may be wrong, but as far as I can tell, yes, there is the cost, but there's also just like it seems like at least speaking from the

US perspective, that we're basically maxed out. Consumers are willing to buy not just all of the evs that exist on the market, but more. And so you have these waiting lists from the legacy automakers that you know, in some cases are over a year people waiting to say, like buy a new electric truck or something like that. So we have this it seems like the demand is massive. And then you look at these charts of e V market penetration expecting the future, and they're all like the

classic up into the right. And so I guess the question is, like, how much of a constraint is battery supply to essentially the trajectory of e vs the people forecast if it were just from a demand perspective, because it looks like demand is now the problem. Well, the supply of new of nickel and other metals allow for

that sort of like hockey stick like growth in EV penetration. Yeah, again, this is this is a million dollar question, um, And I think, yeah, certainly battery supply is consideration, you know, I think we'll certainly see that kind of hockey stick like growth up into the right in electric vehicles. I think the question is, you know, how steep is that transient? As you say, there's a number of kind of potential

bottomnecks within the supply chain that could limit that growth. Um, you know, if we go to the raw material side of things, it's literally is there enough lithium or nickel that can be dug out of the ground to meet that demand? And based on current trajectories, you know, well will will be okay for the next kind of two or three years. There's going to be potential shortages you

know in lithium and nickel and cobalt. Then after that it really depends on whether the new minds that are slated to come online do manage to come online or you know, if there are delays. One of the key that we should be watching one of the problems as I said, so so so within Indonesia, there's there's a lot of new projects which are using a technology called h PAL so high pressure acid leaching. Now this is a promising technology, but there's only one operating mind in

the world that uses it today. So there's a lot riding on a technology that is to some extent not that widespread. And if those minds don't come on online, then then we start to kind of run into issues. Then on the lithium side of things, you know, there's there's there's a huge number of kind of minds that are looking to open. We have kind of new minds opening in Australia, we have new refining refineries opening in Australia. There's a Chinese company that's just helped open a new

lithium refinery. So we've we've got a lot of kind of potential projects coming online. And then within the US we look at something kind of new lithium projects that are that are being stated there. There are companies like Standy Lithium and others that are looking at geothermal projects. Similarly, in Europe we have Fulcan Lithium which is also looking at a geo thermal project. So there's a lot of

activity in the sector. It's just a question of can you push those through to the end and actually execute on them, and that's that's harder to do. So, just on that note, can can you go back to what Joe and I were kind of hinting at earlier? Are there enough of these medals in the ground to satisfy demand? And is it the case that it just takes a while to build the minds, develop new technology to actually extract them. So so there's slightly enough in the ground.

It is as you say, though, it just takes a while to develop these projects. If you look at a typical kind of mind development time, you could be looking at kind of seven to ten years, and that becomes an issue if that hockey stick growth takes off faster than expected. If of setting more uvs this year, that's hard because you can't just get a new mind operating this year. Similarly, you can't get a new cell manufacturing

plant operating overnight. So that that that's where the issues come as if demand is there faster than than supply can keep up, you know, which is always going to be, you know, an issue in any kind of growing market, how does that supply demand balance work. But until the last year or so, it seemed like supply was going to be ahead of demand, and suddenly that's flipped and we've seen this kind of great up taking in electric vehicles.

So we know that governments around the world are thinking about this and concerned, and of course we saw we got the news from the White House recently about wanting to accelerate domestic sourcing of key medals. What steps are being taken around the world to make it such that some of these new projects maybe move faster or approved faster or developed faster, and what are the what policies should be. We'll be watching to see whether or whether

they prove effective. Again, this is a This is a difficult one because I think there's lots of discussions around the world of needing to open new minds, and you know, the signing of the Defense or the invoking of the Defense Production Act in the US is a great indicator that the US government is backing the battery supply chain and wants these minerals to be there. But in most of the kind of western world, the problem isn't government

support so much, it's the permitting and the processing. You know, there's still amount of opposition to digging minerals out of the ground in Europe or the US. One of the kind of recent European lithium projects that was slay to start operation a year or two ago in Portugal ran up against environmental kind of lobbyists and and has been

delayed a couple of times since then. So we've got this kind of split environmental group where lifting batteries are good for the environment because you get evs on the road and polluting cars off the road. But there's still this concern around local impacts on the environment and and and kind of habitats. That's the real issue, and it's it's hard for a lot of Western governments to kind

of balance that. So although we see money and and and kind of government sentiments supporting these projects, it's slightly harder under ground to actually kind of carry them forward. There are some countries that are better than others. So Canada, for example, is expected to announce around one point six billion US dollars to support mining of kind of critical battery materials in its upcoming budget. And in Canada the kind of legislation is much more friendly to minors, so

there we can see projects coming online faster. You know. Similarly, in countries like Indonesia, as they say, where you have these nickel projects being developed, it can be easier to get these minds up and running from a kind of permitting perspective. So it's really, i think, i'd say, in in in the US and in Europe, it's watching see what else kind of what legislation follows things like the

Defense Production Act. You know, how how does the government then move to support these minds in a more material way? If you like I was about to ask, what does it actually mean if a government says they're going to spend X billion dollars to boost domestic mining capacity, Like, how does that money actually flow? And is it the case that maybe, I don't know, maybe designating land for for this activity would be more useful in terms of

boosting production. How does it actually work? It's it varies a lot by location, so we're still waiting to get the kind of final details. Canada's one point six billion, for example, But you know there that that that money might go to help carry up feasibility studies. It could be offered in the way of loans to kind of

buy equipment or to kind of start operating projects. In the US, the Defense Production Act makes will make around seven hundred and fifty million in funds available which companies can use for these kind of feasibility studies, so assessing where they could build new minds or for upgrading equipment and infrastructure so they can get higher yields have become more environmentally friendly in the process. So there's lots of

different ways that it can be spent. We don't kind of soft and see land being directly kind of designated four minds. But again that's that's an knocking that could be on the table. I want to switch a little

bit to the state of grid storage. And you know, obviously, as we've seen, particularly in Europe, the electricity prices have gone absolutely nuts, and there's a lot of interest in increasing renewables, particularly wind and solar, but of course it's seems like for them to really work and to have like a zero emissions grid, you would need a lot of backup battery power to back up those powers. So where how big is that market right now? Just grid

level batteries. Yes, the good market, as I mentioned, is smaller in terms of demand for batteries than the passenger electric vehicle market. But as you say, it's it's key to this renewable energy push. You really need to have those batteries on grids in order to kind of avoid

curtailment and and and really decarbonized grids. But if we look at it on a let's say, kind of giggle on our basis, So this this unit we use for measuring battery demand, um it represents somewhere around kind of five percent of the total demand for batteries today, So it's you know, it's very small, but it is it's critical, and its use is going to kind of continue growing.

So as we get into you know, as you say in Europe, particularly as we get it further into this decade, demand will will increase and we'll probably see somewhere around kind of a hundred thirty giggle what hours of cumulative batteries deployed on on the grid to help support renewable integration. So can I I apologize for this, but I always get lost at like d thirty kilt hours and how to how to think about that? And how big is that?

Like how big? Well, how big is there? Yeah? That's um that is one that I'll have trying to work out the top of my head. I think the way to think about this is that there's a project that's being built in Florida that's about nine hundred megawae hours and I can't remember the exact number that they gave, but that's something like thirty football fields. So it's a huge amount of space that's required. But the thing to remember is that these are generally not that nine hundred

megawae hour in size. You know, they tend to be smaller projects around anywhere from a hundred to two hundred megawa hours, and they're they're distributed around the grid where needed. So you're not going to kind of walk into, uh, you know, come off the highway and find just a field full of batteries. You know, they'll be more distributed probably on the edge of let's say solo farms, and the space compared to solo farm is kind of tiny.

So a lot of our discussions so far has been about the idea of countries securing domestic supply of medals that are vital to building batteries. What what do companies do in this situation. I mean, you mentioned Elon Musk saying that he wanted better domestic production of I think it was nickel. But what can you know big car companies or battery makers, actually, due to secure supply, there's

not a lot they can do themselves at the moment. Typically, battery manufacturers and particularly automakers have automakers don't want to be vertically integrated. If we look at what's happened over the last kind of a couple of decades, companies like VW have tried to reduce their kind of vertical integration and secure supplies. It's only that's now changing if they want to make sure that they can get hold of

these kind of critical battery materials. A lot of them are signing these longer term off take agreements, but actually, you know, increasingly more and more of them, they are actually investing in small scale lithium producers. So I Testa again as an example, invested in a company called Piedmont Lithium in the US or it has a long time

off take with them. Similarly, a lot of Chinese battery producers in particular are investing in or taking kind of exerting states in small scale minds in order to make sure that they have availability to that for that material in the future, and so they have better kind of visibility on what that pricing is going to look like. It helps reduce their exposure to the kind of volatile

kind of spot price market. Essentially. So I want really talk about the broader trajectory of batteries, and you mentioned something interesting at the very beginning, which is that maybe in ten years will have solid state batteries. Let's talk about that A bit more, what is the breakthrough that everyone is hoping for. Let's start there. What does that mean if we were to switch from the lithium iron approached to the solid state and why that would be

such a game changer. So, yeah, slid state batteries have have have really been on the horizon for for for well over a decade now, and the big difference is that today when we look at a lithium ion battery, there's three important components. So you have the two electrodes called the cathode and the anode, and then they're typically separated by a liquid electrolyte. So this liquid electrolyte helps move lithium between the two electrodes, and that's the kind

of basic principle of how the battery works. In a solid state battery, you get rid of that that liquid and you replace it with a solid material that lithium ions can can move through. So it's really kind of quite ingenious. And by getting rid of that liquid, you're removing fuel source. So one of the problems with lickingmone batteries, and it's a very rare occurrence, but you do often you do occasionally hear about evy battery fires and they're

often fueled by this liquid electrolyte. So if you get rid of that, battery has become much safer and actually it then allows you to manufacture much denser batteries as well, so smaller volume, less weight in some instances, and again that helps increase the range of your vehicle. That's also

another big debate. I think I mentioned this earlier, but some people believe that range anxiety is one of the things that holds back electric vehicles, and I think it's certainly true if you think about the you know, the one long journey that you do each year where in the UK where I'm based, you might drive let's say three miles in one go, and you can't really do

that in an evening today. It's going to be right on the edge of the limit of what navy can do, particularly if you have the air con on, if you've got the stereo on. All of these things drained the actually, so to range anxiety is considered by some to be, as I say, one of the things that kind of holds that back. When I think about when I get an e V, you know, I got a hybrid of plug in hybrid because I want to drive around London on electric But for that longer journey, I don't want

to be started charging for you know, minutes. With solid state batteries, you could get a four five hundred mile range out of that battery on one charge, and you know, then suddenly range is not an issue. Really you need to stop during that time anyway, to to grab a coffee, to run to the restroom, you know, whatever it is. And so I think solid state batteries that kind of promising technology that would just level the playing field between

internal combustion engine vehicles and electric vehicles. Here's another really dumb question from someone who doesn't know anything about this space. But you know, you're talking about increasing the capacity of the battery in order to increase the range. Are there any efforts underway to decrease the charging time so that, you know, actually charging your electric vehicle would be the equivalent of pulling into a gas station and just getting more gas. That's again one of the kind of big

focuses of a lot of water makers is this charge time. Today, charge times have come down, but a lot If you get a Porsche Tike and you can do k charge in about twenty minutes or so, so that's that's, you know, not too bad. I think it's probably slightly longer than most people would want to stop at a gas station if they're on a long journey, but it's not unreasonable. But mass market e vs, you know, the kind of v W golfs, etcetera, are not at that charging speed yet.

But most automakers, for some of their models, they're looking to reduce charging time down to let's take kind of ten or fifteen minutes, and perhaps as a result of that, you need a smaller battery, so you're stopping a little bit more often. But actually on long journeys, most people want to stop everything let's say kind of two three hundred miles anyway, so it's perhaps not such. Are there any like big bang other big bang breakthroughs that people

are working on? So it seems like, you know, over time, engineers get more and more ingenious about as you mentioned the Chinese battery, engineers have found a way to get more range out of the cheaper approach, and that that's a potential breakthrough. Are we looking at a sequence of just ongoing like sort of like squeezing more water from the stone or squeezing more juice from the lemon or whatever.

Or are there other sort of like big step change breakthroughs, maybe like the solid state battery that we should be pursuing, because I feel like in the discussion, particularly around UM the grid and the use of renewal bars, people are talking about we just need to pour a ton of money in this into R and D, etcetera and get the big breakthrough. Is that how it's going to be or or just be just incremental progress over time. So I'm a big believer in kind of innovation helping to

reduce costs and improve performance. The question of is it going to be a big breakthrough is it going to be kind of smaller incremental ones. I used to be a believer in the kind of big step change, but actually I think now you know what I've come to realize after working in this field kind of twelve years or so, it's actually it's lots of kind of small incremental changes that add up to make the big difference,

whether that's in cost or or in performance. And just as an example of that, from two thousand and ten to battery pack prices fell by from over a thousand dollars parkular with our back in two and ten down to around a hundred and thirty dollars parkular what so kind of a huge change there, and there's not one thing that you can kind of pinpoint on that helped that, but there was lots of kind of small incremental changes, things like changing the mix of metals in the cathode,

so reducing the amount of cobalt, increasing the amount of nickel, as well as kind of improvements to the manufacturing process. Economies are scale and manufacturing as well and within the supply chain have been key to that. And so if we look at what's going to happen over the next decade, there's lots of kind of similar improvements and technologies on the horizon. Solid State is just one of those, and actually solid State will kind of will will benefit from

a lot of these other incremental changes. So the area that I'm really interested in the moment is the manufacturing process itself. It's it's something that although people have got better at doing it over the last thirty years, it hasn't really changed. And suddenly we're seeing a wave of new companies coming to the market who are really focusing on how they can kind challenge the status quo and reduce costs, and so there's a couple of technologies that

are going to throw out here. One's called prelithation. So this is is in theory, a relatively simple thing to do. You add a little bit of extra lithium into the battery during the manufacturing process, and for various reasons, that bumps the energy density by about And what that kind of increase in energy density means is that you need

less nickel, cobalt, manganese in the battery. And when you're looking at the kind of manufacturing capacity you're producing kind of more giggle what hours for every plant that you have, and therefore your your kind of cost per giggle what our produced comes down as well. So there's there's a lot of innovations like that that are close to being commercial commercialized, you know that they're in the pilot stage, and I'm really looking to all of those to kind

of see how the industry develops. But as I say, even technologies like that will will end up benefiting solid state as well in the future. So it's it's really no one silver bullet, but but lots of innovations at the same time that will help push the industry forward. So,

speaking of the future. Here's a big picture question. But the recent turmoil that we've seen in commodities, is that a net positive for decarbonization and battery adoption or a net negative because I could kind of see arguing it both ways. So on the one hand, you have higher oil prices and maybe people look for alternatives to traditional

fossil fuels. But on the other hand, you clearly have higher metals prices as well, and that might make batteries even more expensive for consumers, as you described earlier in the conversation. So what's your your gut take on whether this is all good or bad for batteries. There's one I've been thinking about a lot over the last couple of weeks. I think if I go with my gut, I think it's a good thing. You know, as you say, high oil prices do incentivized people from from driving their

combustion vehicles. It makes them think about, you know, what should I do when I'm getting my next vehicles? Should I go for gas again? What happens if I end up in this kind of same situation? And so I think that will push people towards evs. And although the metals prices are higher now, and that's not great for

the battery market. We actually went through a similar situation back in two thousand and eighteen where cobalt prices hit almost a hundred thousand dollars per metric time, and and lithium prices were at an all time high back then. That that they're now higher than they were then, but that actually resulted in innovation within the battery space. Suddenly manufacturers looked to reduce the amount of cobalt that were in their batteries, and that resulted in in kind of

much better performance and people were expecting. And so I think it's it's this uncertainty today will kind of result in innovation within the batteries base. And I think actually in the supply chain, higher commodity prices, you know, that typically incentivizes new production. So we'll see more companies interested in in in digging nickel, lithium, cobalt out of the ground. And so in the long run, I think this is

a positive for electrification. There's this old Thomas Edison quote, and I'm not sure if it's apocryphal or not, but I've seen it a bunch in battery talk, where I guess Edison was like a battery skeptic way back in the late eighteen hundreds, and you referred to the storage batteries quote a mechanism for swindling the public by stock companies, and you basically thought all these battery companies were frauds. They like weren't going to shake out and people just

lose a lot of money. Is there a lot of flim flammery in the battery world? Flim flammery. That's a great word. I think that's my my new favorite synonym for securities. Yeah, Like, is the is it a space that there's like a bunch of people promising all kinds of like yeah, we're have this big breakthrough blah blah blah, and it's always five years out or it's always ten years away. And meanwhile, a bunch of people there is a lot of money chasing something like Holy Grail or

a company they're just going to change everything. It's certainly true to say that there has been that within the battery industry, and there were a number of companies in the kind of twenty tens that over promised and underperformed. I think that the probably the biggest one that people

will remember is the UK consumer appliance company. Dyson brought a solid state company called sack T three in I think it was seventeen or so, and within to two or three years they had wound down that part of the battery research team because sack T three couldn't deliver on the promises that it had made. So there are examples of that, but I think there's a lot more. I would say that's a kind of transparency in the

battery market than perhaps when Edison was around. So I think companies so I think, you know, companies tend to understand these days that you know they won't get away with misleading investors. But I think it's certainly true to say that, you know, on the investing side, there's there's a huge amount of interest in the market. We see the valuation of companies kind of increasing at a phenomenal

rate in the VC space these days. So there's there's a lot of incentives for companies to really make sure that they can produce as much as they can, but that creates kind of disincentives or the wrong incentive at times. So there could be the possibility for somebody who's perhaps not repetable getting into the market and misleading investors. But if investors are smart about this, they will make sure they understand the technology and they'll make sure they're not

taken for a ride. And you know, if they are taken for a ride, perhaps that's you know, as much of a comment on their diligence process as it is on on whoever takes them for a ride. Does that hold true for China as well? I mean, I remember billions of dollars or I guess trillions of u N being poured into the e V and the battery space in recent years. And this is something that China has been very vocal about boosting as a strategic interest, strategic

industry for the country itself. And it seems like whenever China designates something to be strategically important, often there's a tendency for overproduction or a build up of over capacity and maybe inefficient allocation of capital. These are all euphemisms that I'm using what's going on in China. Yes, so, as you say, China has heavily invested in the EV and battery space, and we have seen that kind of

over investment in capacity over the last decade. If you look at the number of kind of tier three and tier two supplies in China, you know, there's a lot of excess capacity there particularly that's kind of tiers three space, where companies invested quite heavily in any fifteen and they really failed to secure any contracts with any large automakers, and so as a result, there's a lot of stranded capacity, and those companies tend to look to lower value markets

to try and utilize that capacity. But if you look at the kind of tier one and tier two sector, you have companies like c at, L, B y D, EVE, Energy, Ghost and high Tech, and you know, they have capacity. They're building more and more capacity every year, and most

of that capacity is being taken by automakers. So in that sense and the kind of tier one and tier two markets actually that that capacity that is being utilized, and those companies, you know, have a very kind of solid grip on the supply chain and and on battery technology. Can we talk dollar amounts for a second. I often when I hear things like kill a lot of hours, and it's hard for me to wrap my head around

how big that is. But I have a better sense of when we're talking about dollar It's like, what is the dollar size? Of the battery market these days. I don't know, however you want to measure it, whether sales or market cap of companies, etcetera, And like, where do you see that in ten years or what are the expectations of how big this industry is going to get

over the next decade or so? Yes, So, so if we put it into dollar amounts, if we looked let's say, yeah, let's let's say and your sales, Yeah, they'll be around fifty four billion battery sales in two If we go to you're looking at around a hundred and sixty billion. So these are markets that are that are big today but are growing, you know, very quickly, and market caps, you know, are kind of growing at a similar rate.

I think the one that probably most people like to point to is Quantum Escape, which is a listed company working on solid tape batteries and it's it's market cap when it kind of went public virus back went up to in the tens of billions. And this is for company that is pre revenue and kind of how hasn't produced anything yet. So there's a lot of money going around the market. Valuations are high, but it's going to be a big market and you know there's a lot

of fighting to win market share. Well one last point, you know, you mentioned Quantum Escape, but in my mistaken that they're really I feel like I've looked at this before, but am I mistaken? There don't seem to be that many like pure play public battery companies out there. Like when I've looked before, is I go who's public? Who's listed? What battery starcks? Should I be watching? My mistaken there

aren't that many, you know, so you're quite right. There are in China more listed companies, Contemporary and Forex Technology or CTL being the largest, But outside of China, a lot of the largest factory manufacturers that are there today are not pure place. So LG Cam, for example, had a battery manufacturing unit that was part of this bigger kind of chemicals company. They actually I POD earlier this year,

so they I fiods LG Energy Solution. And we then also have from Koreer sk Innovation the oil and gas company or one of the parts of the oil and gas company, and it has a battery unit that it's about to spin out called s k o N. So we are seeing more pure play companies, you know, starting to list but it's it's not kind of as bigger

public markets as it could be. But I think that would like to change over the next couple of years, as we have the Korean companies I p O ing more Chinese market, Chinese companies entering the market, and we'll probably see a few more I p O s in Europe and the US as well. I know British Fault looking to I p O at some point potentially, and I'm sure North Fault will in the future I p O. And you know, that's kind of great, kind of huge demand I imagine when they do well. James, this was

an absolutely fantastic overview. I think is Tracy and I we're talking about this is not an area that we know much about. The only thing we really know is that it's like really important and then we have to learn more. But this was like sort of a great intro to the topic. So I really appreciate you coming out outline, and I thank you for having made pleasure. Thanks so much, James. That was really helpful. Tracy. I found that to be extremely helpful. I mean, I joked

at the end, but it really wasn't a joke. All I really know about batteries is that they're a big deal. I'm going to get become a bigger deal. No, I totally agree, And this was a really good first step, and I thought James was very clear and a lot of the ideas that he laid out. One thing that I was thinking about throughout this episode, and I think this is maybe this will be the motto for odd Lots for this year. But any problem that can be

solved with money probably isn't really a problem, right. I think I've said that before, And with something like mineing these medals that are vital for the decarbonization process, for building these big batteries and getting everyone moving into electric vehicles, it seems like the issue there is really a time and be our country is going to be willing to actually dig up their land in order to do this. And I think there's still a big question mark. And

James kind of hinted at this. Canada in the US can throw billions of dollars at this issue, but how much is that actually going to speed up the production process and is it going to happen at all given environmental concerns. I love that as our new motto. I mean that is essentially what we talked about with the

Salton posts are right like that we've had. We are like we are past the age of monetary driven problems and now into the age of like sort of physics problems and engineering problems and domestic politics problems and geopolitics problems, all of these things like, yes, there is a monetary cost,

but also like will this through work or not? Well, this new method of cheaper extraction of medals that that James was talking about, I forget the acronym he used, but you know this new thing that they're using in Indonesia, will it pan out and proved to be a cheaper way of separating nickel and cobalt. All of these questions are like, they're very interesting and no amount of money

can guarantee their success. Absolutely, that's a perfect summary. Great, well that should we just yeah, all right, let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe wisn't All. You can follow me on Twitter at the Stalwarts. Follow our guest James Frith, Follow our producers Carmen Rodriguez at Carmen

Arman and Colin Tipton at Colin Tipton. Follow the Bloomberg head of podcast Francesco Levi at Francesco Today, and check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for listening. Hey, there are AD Thoughts listeners. We are very excited to let you know that Ad

Thoughts is nominated for a Webby Award. You know, Tracy, I'm not normally like a big awards person or get excited about that, But now that I saw that we were nominated for the Webby for Best Business Podcast, suddenly I'm feeling very competitive and I want to win. You really want it? Yeah? Okay, Well, on that note, listeners, if you enjoy add Thoughts, if you like what we do, we would really appreciate it if you take two minutes of your time and head over to vote dot Webby

Awards dot com. You can find odd lots in the Business Podcast category. We really appreciate it if you voted. If not, understand, but it would be cool for us. So you're fans. Thanks so much. Year to