You're listening to Redefining Energy.
Your co hosts from.
Berlin Gerard Reave and from London.
Laurent Sag Today on really for an energy job. We're going to talk about batteries again, but is the angle of the human capital.
Don't say bachies again. Bateries are revolutionize in our world, my friend. We have to keep talking about them.
Yeah. The Batlin fastactu are currently is growing, I don't know, three or four times faster than the solar industry. We have records beaten daily. I saw that in August for the first time. Listen to this. Chinese battery factories past one hundred what our production mark?
Wow?
Amazing. Meanwhile Northwold's struggling for one giga what our Yeah.
I was looking at the results recently on Bloomberg negative ghostm Margins. That says everything.
The price are collapsing, chemistries are changing. We've already done an episode last months on it. This time we said let's bring an expert who really is in the thick.
Of it, and Lron We've got a great guest on guy I've actually known for a long long while, the founder and chair of a very interesting business called battery Associates, So it's great to have Simon and Gelke onto the show.
This young German company has been developing a world class expertise on how to train the future workforce, how to build giga factory, how to optimize them. They've got great clients Tesla, Cattle, Polswagen and so Better Associates, Big the MIT of Batteries.
Good partner, so let's why don't we bring him on the show.
Simon, Welcome to the show.
Thanks for having me. Great to have you.
Well, let's kick off.
We're going to talk about the Baschari coaster, which is obviously the up and down of the battery industry. Simon, what's your take on twenty twenty four and what's going on in batteries.
It's a fascinating time. We have seen massive price factoration, especially on the raw material site for the last years and which has been really I think putting off stress. But then this year we really have seen a massive drop in cell price as well as in the system level prices for batteries, especially in China. You know, we're going down to the fifty dollars per kilar our price mark, which I think has been one of these holy grails. I think many of us have been looking forward to.
Of course there's new ances to it if you look at the world market, et cetera, and also on the chemistry of course out of p et cetera. But after a time where the entire conversation was it's too expensive, it's getting too expensive, there's a shortage, et cetera, we're going to a time where it becomes really cheap compared to what it was about a year ago. So I think that's just something really fascinating.
Simon, just to put into perspective what fifty dollars a killer WAUR means, just give you an idea where it was, maybe even five years ago, what it was a year ago, why that was the As you say, it's almost like a holy grail within the industry.
To hit that number. I mean that's really looking at kind of like about half in about a year's time, which is I think we significant. And if you look at in the early days, we look at you know, overdo a thousand and all particular hour and then of
course reduced quite quickly. We have usually seen reductions right over the last few years, we have seen what'd say, I want twenty percent, of course go up to thirty five and down to six percent cost reduction per year, and there also has been a year we actually had the first time a price increase. Ever really in the last kind of decades we have been kind of observing the price reductions. So this was due to a higher mature costs right about it, and now one two years ago.
But yeah, now we're looking at halfing right really quickly. And of course this is of data of course based on you know, what different companies getting for different agreements, et cetera. But we have been visiting you know, ats of companies in China more recently, and a lot of them reported actually because the pressure is so high, there's so many cells available, they would sell lot of their
cells at cost. And that's already a good case for them, because otherwise they would lose money because they're not running their factories. Because EDFP and China has been so competitive because so many lines came online that the cost just really you know, went down to cost at cost level and the profits have really been dropping even further.
Simon.
That sounds a little bit like the solar industry over the last ten years.
And I don't know if.
I want to put my money into it.
It's a real challenge we have, you know, we know the other form a while back, so we have had these discussions for some time. Yeah, it's a challenge for the world market if you kind of want to now enter the battery game, Like what's the number you're actually working on? You say, now, okay, I'm going to sell myself to this price point, and suddenly somewhere else they're getting produced much cheaper. How do I going to compete with that? But of course, and there's also right like
the cost and the price of it. One is like what are the margins people having and what's the local pressure you on one hand, what it means right now, a lot of these companies in China right they're looking at expanding. That's the one strategy they have. They have to go overseas because locally it's too competitive, which of course is then what you mentioned is solar is a
big issue. But even pretty much all of the companies that spoke there as saying this is not sustainable how it is currently, so they're going to be probably consolidation.
It's not going to work this way. And they also think, you know, let's give you an idea right this price point right now, right we're looking at something people talking about fifty dollars par kilo hour at least what they told me what they think it's going to go up again about eighty dollars per kilo hour for you know, lethumon LFP properly, and then maybe Solio mirond can come soup in and end up around to fifty dollars par kiled hour as one example. They're also trying to figure
it out. But I'm with you. I think the challenge is going to be how to stay competitive and not getting it reeded out the market in this really intense low cost times. And I think they've seen similar things in solar and I think that's what they're hinting at.
Well, this is why I definitely always talked about the solar coaster for a long, long while, and that's why I think it's the battery coasters what we're seeing.
Now, Simon, when we look at a price collapse. You mentioned lithium, and the price of lithium has gone down, and of course it's LFP because so nobody cares about nikio or cobalt anymore. Or maybe someone say that you Okay, fine, So that's why we have an ex spelt like you so you can contrady my platitudes. Is it the volume, is it the technology that is getting better? Is it
the manufacturing that's getting better? How can you explain? Because in solar we now know how the price went, you know, ten cents of what and of course when it was what people say, what you know it's gonna go back up? We can't, we can't do any think better. What's your explanation.
There's a range of factors, right, and I think you're already touched on a cup of them. Of course, one we talk them varmaterial costs, which have been relaxing, and I think there's a combination. One is there has been in a shortage twitch has been highly anticipated, there was some speculation. There's all different things, right, we have going into that. Also, of course the demand has been lower, right like if he demand has been lower than anticipated
but a year ago. So there has been much more BETH demand short term anticipated and we see right now. And then of course also manufacturing why chemistry changes like LFP being more cost effective there and IFP getting more energy dense on the system level, there's been progressed innovation there as well. Of course, also it has been subsacent parst. So I think there's really like a mix of things. Then local market competition, and I think also here we
should talk about the cells et cetera. Rights for example, like the best market in China, Like it's one of these things we're extremely competitive right now where the price has really dropped a lot because it's kind of became more and more of a commodity there. It's not all the same chemistry, is all the same quality on the same levels, right which experienced in the same things. Yeah, I think it's really like a multitude of factors for
that which kind of playing into that. And I think we haven't seen it all of them on the end consumer market. But I think, of course I'm an end consumer. It's fantastic, right we want these lower cost evs, so I think any up from cost production there as great. As we know it's a big part of the you know, can be the biggest part of the EVP to have the battery system. So I think having relaxation of you know, material costs, innovation and technology, et cetera, is all great.
It's vially a mix again, I think we don't see the squeeze to come up anytime soon. I think of more materials at least of what we're kind of hearing. But I think there's still questions kind of what's going to be the real price point then, you know, in Europe versus China or in the US, right because some of these prices are also a bit more local than their global.
Let's talk a bit about the chemistry. We have the feeling that LFP, you know, a bit like monocrystal line for solar's becoming like the standard. Is it something you see as well for the next five years, or talk about briefly about studium.
And by the way, I just want to just say one thing on top of that. Lauran used the word we. What he should say, is I not way because I don't agree with him, but sorry, go on, Simon, and I know you don't agree with them.
And I think it's really one of these things. LFP is a tremendous, exciting rollercoast story. In some way, not too many years ago wasn't looked at the same rate as now, and I think it got really popularized right of course, especially in China. But then also I think Tesla did a big waveype when they announced it will have a larger share for LFP, and suddenly, you know, we see high performance cars AFP, et cetera. So I'm with you, Lauren, that it's a massive chunk right of
of bad ways going to LFP. And I think especially for stationary we've seen also in China right like even it became the standard and also like even legal and regulatory topics on that right, so to have LFP for that, so I think I'm with you. I think that there's
a big, big market there. I wouldn't completely underestimate NMC chemistries either, just because one from a performance still performance you can get and that's of course also for longer range and things like that and some of the charging topics. And then of course also that nickel again cobet the price we use so much again so then puts a bit less pressure on this chemistry. I think big push alls we have seen for out of P and quickly has been because the Nickel and Cobert price went up
so high. Course next to lithium too.
And about solid state solid state, we had so many promises five years ago. For me, solid state is a bit like pov skyte for solar. You know, people talk about it, but you never see it. But of course we we we is it aii or we we we jarred.
Your dad's definitely. I think it's an interesting perspective. I think if especially connected to solar, I think solid states, it's other companies in China. They have seen consortium be built with the biggest players working together and even saying, you know, they need looking at a decade or it can be less, but to really commercialize that. And we have seen, of course a couple of companies announcing kind
of some semi solid something. Often we have seen they're focusing then more on silicon write notes rather than with the metal, which of course is why you would do it. Do you want to make solid state where you don't do as much as improvement by not using, for example, with the metals, I don't know. I actually tend to say I still see some of at fifty to fifty how it will kind of crystallize to it to stay
with maybe some solid topic. Yeah, solid state is still a fascinating topic, but it's not needed I think one to scale up wide batteries. I think it's nice to have if it ends up and it's a great you know, it would be a great addition to the portfolio. But
I think it's not a blocker. I think it's a real challenge to incorporate in your forecast for companies because a lot of companies keep looking for the special edge, especially in Europe, right because you want to offer something specific which kind of can justify, for example, higher costs if you have it in Europe. So I think Soliday was kind of this hope. But of course Asia and China and these you know, a lot of companies investing also as much or maybe even more money now to
protect themselves and building on this technology. Yeah, if it works out, they wigh. Some people hope it will. The question will still be who will actually commercialize at first and at what level? Yeah, I'm still a bit unclear.
Did you see a technological path towards ten dollar Poky? What hour? Or you're going to have like physical limits at some point and there is a bit of point where you just won't see the price going down.
There is some limits right off of materials, I would say, really there, but you can and theory can do quite a bit of reduction also. So in mind we've seen long term, we have we everything discussion, right, Can you go to the twenty five mark? I think there is there is routes to that. Will it work is a question. Yeah, there's a physical limit if it's not air you're driving with. I think ten would be quite ambitious. I haven't heard this number yet.
Very clear, we.
Don't need to get there. If we're talking about sorry, electrification of vehicles, like if you're able to get a battery at fifty cents, put a pack on top of it, Correct me if I'm wrong. You're at price comparaity with the internal compostion engine across all ranges of cars.
And I think we already have seen it, right, like in China where most of the vehicles are cheaper in the electric configuration are very cheap in China. If there was a study from Bloomberg Energy Finance, I think about said that more than half the vehicles now offered as a both BAF and ICEE configuration, the BETH would be cheaper in China. Right now.
It's a good beat about battery associates and what you're doing done in unique but I guess also all over the world, what's the main demand of your clients in terms of expertise.
White studying Battery Sociates, right, And I think it's really having the strong belief that this industry is very crucial about decarbonization from ability and energy and there's a lot of open question marks to make this work, and I think collaboration is a key one there, but also people and technology. So that's why Battery and Associates clientele. We have a lot of automotive customers, a lot of government clients, suppliers. It's really a mix, as you said, quite globally dispersed.
We do advising consulting all of major brand names, but also what we do we start on is really this topic of training then really equipping people with knowledge but also with the network, and that's why we created something called the Battery MBA. We're running now for I think
close to four years, which is really exciting. In over five nine people have participated from you know, all of the major names from Testa, CEDL, Volkswagen, et cetera, but in over sixty countries at this point and especially a
lot of leadership. The idea was really bring the latest industry knowledge to these people because I think a lot you can maybe find those academic knowledge et cetera, But really why they're the industry insights and not just one step of the battery valid chain, but the full value chain, because as we just discussed earlier, right like why is the price factuation and these kind of things, you really have to look at the value change to understand things.
And then regulatory understand you have to understand how is a mind connected to you know, your technology, and how's your technology affecting what minds you might want to open? And also then what is recycling will.
Do with this?
What will your regulations like the European but regulation and other irregulations around the world to impact that. What are geopolitical trends you have to take into accounts. So really equipping people with the knowledge to make a good decision, that's something I'm personally passionate about and I think knowledge is a key, but also a network is key to make this work.
What do you say is very interesting because there is a lot of nervousness around the leadership of China, quite some in Europe, a lot in the US. But inside your program you would see those three blocks, communicate, collaborate or probably do have a too much kumbay our vision of the world.
There's an individual level wide in this organization level just to cover as a split. Right. So at the moment in the program, we have about fifty percent from Europe, twenty five percent from North America, and then about teventy five percent, which is against sixty countries al so in China of course being one of them. We have business partner in China. Then looking at the batterlell chain, about
ninety percent is in China's for batteries. So if you want to understand it and really you know, have the state of the art and latest insights, it's pretty much impossible to operate without China right now, right and without having seccess especially what our lessons learned. But I think the seal lot of interest from Chinese players to actually export their knowledge abroad and it can be all kinds
of ways from licensing IP insights. So example, I think, if you want latest example, what we're currently working on with all of our business partners in China is to do process engineer training outside of China. What do we mean with that?
Right?
So we have people who have run the factories you know, with Panasonic, with Tesla, with CTL with Neil with with companies who are managed to scale up their production, and how can we use this knowledge and bring us to other organizations which are maybe struggling with that right now and also are lacking the talent and the knowledge and like people with the right skill set and knowledge space
to make it work. And that means reducing scrap rates, ramping up production quicker, things like that, getting costs down, et cetera. And that's something where we have, for example, partners in China because they have this knowledge, then there's a lot of knowledge it's really hard to find outside of China, and of course other regions where we also
collaborate with is Japan, Korea. But I think especially having this manufacturing expertise, the knowledge base over decades, I think is very important and it's something media we try now to make more accessible worldwide. And we have partners in China things similar and a lot of them have been working, right, I mean, they've been exported to US, to Europe and they worked in the European and in the US factories
as well. Because don't get me wrong, I think all of these will need the same talent, right, So a lot of these talents are moving around the world. And I quite open mind on that too.
The irony of what you're saying here, because we've spent if you'd like to say, the last thirty years, actually sending China technology know how, etcetera, et cetera. And in this core area for the future of a let's say, core industry in Europe, which is the automobile industry, we've been sleeping. We now have to go and import that know how from China. And also, by the way, the other thing you said was not just to know how,
but also technology licensing, et cetera, et cetera. It leads me to the question is what's the hope for the future of battery production in the Western world?
Still there? And I think that is sort of innovation we see in a vative approaches. One is really strategically right if you think about jobs and you can look at studies and seeing how many jobs I needed in batteries and how many will you know, disappear by a transition to bev right and this can be quite balanced. But this requires the batteries to produce being produced in Europe,
otherwise it won't happen. Right, So if you want to stay somewhere there, and you want to kind of localize the supply chain more to kind of keep this balance of jobs in Europe. That's one, right, and as a strategic that's more like a government incentive strategy. From a whole perspective, again, we see a lot of the Chinese
and Asian companies going to Europe to produce here. There might maybe some of the most aggressive IBC companies building you know, vision ac publicly and ancying you want to build thirty KI effectives around the world, right, So there we do on expansion Mode, CTL and others, and they're of course looking also to build them everywhere close to
the customer base. And I think that's great. I think we need that because otherwise the approach to just importing and shipping and we have local players and I think you spoke with it also about that in previous podcasts, you know, Northwold and others, and it's not easy. They're learning that. So if we can speed up looking other way around. Again, when I visited China and the players not ask the wow, you have all of these things implemented.
Where did you learn these things from? They're like, oh, yeah, we learned this from BMW. We learned this from these companies. They came to us, they showed us their ways. We incorporated and now we're doing this and then going back right. So as long as we're both humble on both ends to learn from each other and incorporate what works and scale it up, I think that's the way to do it. That's never lost. And I think we seem the same
as China. Right. If China would have had this thought of like we will always keep it, you know, in Europe we only will implement and build what they tell us, then they wouldn't be there where they are now in batteries, right. And I think the same way can go other around as well. And I'm very committed to make this a that's also bringing back to battery SOOCI it's right, very committed to make this a global success story where all the regions can benefit from it. And that goes way
beyond Europe and China. We're talking Indonesia, we're talking Philip a lot of other regions around the world. India big topic air farm. I'm going to be there again shortly. So there's a lot of areas who are working on how can they be part of this success story, and we're here to kind of smooth out a bit of the battery roller coast if we started with, because we all want to learn from each other and take the learnings rather than trying to do really do expensive learnings again.
Because if your company and says I want to learn all of this again and do all of the expensive mistakes, and they're smarter and more effective ways.
So I mean, I love your vision actually because well it's also I think has a little bit of a geopolitical lesson in it as well, which is we have to learn to compete and cooperate with each other across the world. That phrase competition comes to my mind in this a new way of thinking about this, and I think it's good for everyone. And we have seen this.
I mean, China became is own local market and there's a lot of competition now locally and that's why they're you know, progressing so fast because they have tremendous pressure internally, you know, having again globe well, you know, more competition, I think be great. There's a lot of really amazing work happening all around the world in batteries. I'm always blown away of these innovative concepts et cetera, which are
coming up. But scale is one of these things where again China and of course all SOO, Japan and Career really has done a lot. I still have hope for Europe in the US and other regions on that too, if there's a lot of commitment on it.
Well, Simon, this is a wonderful vision that we share. I don't think China is the enemy. I think Russian and oil is the enemy. But that's just me or we job, I don't know. You tell me, Simon. I love the work that you're doing at Battery Associates. In conclusion, how do you see your company in three to five years.
We're going to be much more involved again on helping organization to really truly scale. We have worked a lot on with leadership and getting leadership equipped, and we think we going to keep doing that. We're really working further with say factories and you know, getting the knowledge in there which they require for example here in our training
post engineers, et cetera. Getting the blueprints in I think that's also long term vision which really excited for We're also launching our own curve of technology like hardwer software for battery testing, which really is to support the industry there as well. So I think that's something we also
personally quite excited about. And I think another thing, we can see more and more regions engaging more seriously in this transition, recially as sort of countries like we've seen in Indonesia as a region which has done a lot on the nickel topic than the mining and really interesting how they've approached it. We see other regions like Philippines, India, many other regions and a lot of African countries trying to further engage. So I think that's something I can
just see keep rumping up. And then the question is again how to incorporate all of this and make this a really great success story. And for me always looking at lessons learned, and I think that's one thing I really appreciate about you in the work you're doing on the education you're doing through this podcast to also look at other industries. You brought up SOLA in the beginning. Where can we take the lessons learned from other industries
but also from other regions. And I think these two together, I'm personal so passionate about, just very excited to also push forward in the battery industry.
Great Simon lovely vision about the future.
Of this Simon, thank you very much for coming on the show. Thanks for me well, y'all. Any thoughts about our conversation with Simon.
And I'd like to have your conclusions, because my friend, I know Simon in a long, long while at this point in time, actually even at some point I was actually teaching on his MBA program. So I like what these guys doing, right, I like what he does. I love the energy of his team, and you know he's doing great stuff.
Look my conclusion, it's all about human capital and the fact that Simon and better associates of clients around the world, and that gen Z is defying all the politicians who are anti this, anti that let's put buyers and that young generation is lowing buyers because let's face it, China has benefited for decades from our technology and right now, let's not be shy. Let's emulate their playbook. It will be more efficient in the long term than lobbying regulators, winging,
asking for tarry for subsidies. Thanks to Simon, we can take the best from China and not try to reinvent the wheel.
With no choice, no choice. If you think in the battery space. The Asians, but in particularly the Chinese, are just so far ahead of what we have in Europe and North America. No choice but to cooperation.
And when you know, when you talk about over capacity or capacity called that the battery coaster, never forget that in a fast going market chi short term demand is generally overstated, while long term demand is generally understated. So I have no problem with over investments in batteries.
I agree totally. Anya agree totally.
Any final thoughts back.
To actually when I started the podcast was actually people might say, well, why you keep talking about batteries, and I go back to it. It's one of the technologies that's revolutionizing our energy space, and so you ignore it your peril. But we talked about this revolutionizing the wrong. I think we both of us agreed it's revolutionizing the EV space. But I think what's happening in stationary storage is really interesting because we went back in three years
ago we were talking about batteries. We'd be saying, ah, yeah, you put the TMI in in for one hour batteries, and ah yeah, you know, there's long term storage. It's going to be other technologies and what you're saying is guys are putting in one hour storage three years ago are now taking that same plant and guess what they're doing. They're putting a new capacity beside it and they go to four hours. And that just gives an idea of the cost reductions that have happened and also down of
the technology improvements in that space. And it's maybe in two years ago, we're talking about six hours or eight hours, right.
And the interesting thing is, because I've read a lot of those literature of the long joytionarities storage, is that ninety six percent of the use case are below eight hours. So if Lecha Mayan can solve any storage issue below eight hours, the four percent remaining, okay, we'll find something. But in my opinion, the market for longer storage is shrinking in front of our eyes because Leja Min's eating the lunch.
I agree totally.
I found great coldly.
Okay, that's a great conversation, Chard, I'll talk to you next week.
Look forward to my friend. Thank you for listening to Redefining Energy. Don't forget to rate the show and subscribe on Apple podcast, Spotify for the platform of your choice.