What's up with solid-state batteries?

Volts

In this episode, CEO Siyu Huang of Factorial Energy talks through recent advancements in solid-state batteries, which promise significant improvements in energy density and safety and are paving the way for electric vehicles with substantially increased range to hit the market within the next few years.

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David Roberts

As Volts listeners know, batteries are key to the energy transition, vital for powering vehicles and equipment with clean energy as well as storing renewable power on the grid. So making more efficient and powerful batteries is critical — and there’s exciting progress happening in this area.

So, a battery consists of a cathode and an anode that exchange charged particles via an electrolyte. In conventional lithium-ion batteries, the anode is made of graphite. If you replace a graphite anode with an anode made of pure lithium metal, you can dramatically increase the number of charged particles it can hold, which means you dramatically increase the battery’s energy density.

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Unfortunately, if you use a conventional liquid electrolyte, metal anodes are quickly corrupted by what’s called “dendrite formation” (don’t ask). Researchers solve this by shifting to a solid (or semi-solid) electrolyte; in addition to keeping the metal anode healthy, solid electrolytes are also much more stable and less prone to fires, adding a safety benefit.

Siyu Huang

And that is how “solid-state” batteries (SSB) are made. The prospect of a safer, more energy-dense battery has made SSBs the Next Big Thing for well over a decade now, but it appears that they are finally, at long last, on the verge of commercialization — which means, among other things, that we could see electric vehicles with 40 to 50 percent higher range on the market within two to three years.

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To get the latest on SSBs, I contacted Siyu Huang, CEO of a company called Factorial Energy. Factorial has inked deals to provide SSBs to Hyundai, Kia, Mercedes-Benz, and Stellantis and has pushed those batteries further through official testing than any previous SSB. We talked about the benefits of SSBs, the challenges, when they will show up in commercial EVs, and the benefits they will provide consumers.

All right, then, with no further ado, Siyu Huang, welcome to Volts. Thank you so much for coming.

Siyu Huang

Yeah, thank you, David. Great to hear from you, and thanks for inviting me to join the recording here.

David Roberts

Yeah, I've been meaning to do something on solid-state batteries, I feel like, forever, and so I'm excited to finally jump in here. And with that in mind, I want to start just very generally, sort of introducing solid-state batteries and what they are, because I'm not sure everybody knows. Because I will say, for my part, reading around, something kind of clicked for me, finally, which is a normal lithium-ion battery has the anode and a cathode, they're exchanging ions through a liquid electrolyte — that's the standard mode — and a separator. And in the solid-state battery, the electrolyte and the separator become one thing, they're just a solid or a semi-solid instead of a liquid.

And that's where all the attention is. But, kind of what I figured out and what I want to ask you about is, that's not where the main performance boost comes from in solid-state batteries. The main thing is switching the anode from graphite to solid metal lithium. And everything else about the design of the battery kind of follows from that, follows from making the solid metal work as an anode. So, maybe you could just start by saying, why would we want to switch our anode from graphite to lithium metal? And then, sort of what follows from that?

Siyu Huang

Yeah, Dave, you are very acquainted with this technology already looks like. And definitely, the solid-state electrolyte is just a piece of it. What really drives the performance is the anode, which is lithium metal. Today, in lithium-ion, there are graphite and silicon in the anode. However, lithium alloy is the lightest metal on earth, and it has the highest capacity as an anode material, able to effectively deliver the highest energy density battery compared to the others.

David Roberts

When we say highest capacity, we mean it will hold the most ions, right, basically?

Siyu Huang

It will hold the most energy per weight or per volume. So, there is energy defined by the gravimetric energy density and volumetric energy density. So, by volume and by weight, that's basically the definition of energy density.

David Roberts

Right. So, you get much more energy density and a much lighter anode here. But then, if you do that, what happens, especially if you have a liquid electrolyte, is you start getting what are called "dendrites" growing on your solid metal, lithium anode. So, maybe explain what those dendrites are and how to prevent them.

Siyu Huang

Yeah, so dendrite is a quite common phenomenon that you see in batteries. It's not only happening in lithium metal batteries, but it's also happening in lithium-ion batteries and lithium metal, just because of the nature that it has denser lithium in it, and it is more prone to have a dendrite formed. But, I mean, there are various ways to suppress the lithium. Like, one of the important ways is to use a stable electrolyte. That's why we're able to have a solid-state electrolyte that's differentiated from a traditional liquid electrolyte to be able to suppress the lithium in the anode.

And there are multiple other ways to do it. But that's why, by nature, we're having a solid-state instead of a liquid electrolyte.

David Roberts

All right, so you go to the solid electrolyte in order to prevent these dendrites from forming, basically.

Siyu Huang

Exactly.

David Roberts

I've been reading about solid-state batteries, I feel like for a decade now, or longer, or 15 years, and it's kind of started feeling like one of those things that's perpetually just around the corner, perpetually just over the horizon. So, part of my question is, why is it so difficult to go to a lithium metal anode and suppress dendrites? I mean, is it just the technical feat of figuring out how to suppress those dendrites? Is that what has taken so long to develop this? Like, why is it so difficult, I guess?

Siyu Huang

I would say there has been a lot of development related to solid-state in the last, I would say, two, three decades even. And initially, it was really driving for the performance and safety. But I think lately it's more even driving towards performance to overcome all the general theoretical limits of lithium-ion battery. The challenge for solid-state has always been the scaling up part of it. And then the safety is kind of taken for granted for solid-state. So, I think for people who are familiar with the solid-state space, that the safety has always been something that we have emphasized quite a bit.

David Roberts

Because the liquid electrolytes in normal lithium-ion batteries, that's where you get the flammability, right? So, if it's solid, it's just not flammable. Is it that simple?

Siyu Huang

I would say for a lot of materials, like even for an all-solid-state battery, it could still be flammable. It just depends on how you define the threshold behavior. Sometimes if a battery is flammable, typically for lithium-ion, like 100 degrees Celsius, then for solid-state, it wouldn't be flammable until 150 or 200 degrees. But if you're putting it in a 3000 degree oven, like, everything will be combustion, right?

David Roberts

Right. Well, let's just say, in a normal, let's say, auto accident context, you're unlikely to get to 200 degrees Celsius, right? I mean, I assume.

Siyu Huang

Right. I think it's relatively speaking. Because another difference for this, you cannot compare apples to oranges, right? You have to compare apple to apple. And if we're talking about the high energy density battery, like with the same energy density, obviously, solid-state will be much safer compared to lithium-ion. But if you compare like a 400 watt-hour per kilogram solid-state with 100 watt-hour per kilogram, lithium-ion, it's just — you cannot compare the two.

David Roberts

Right, right. So, it's safer. And so, why is the scaling — why has that been such a problem? Is that a physical issue that you run into if you're trying to scale these?

Siyu Huang

There are different types of solid-state batteries, and typically, for the all-solid-state battery, it is relatively more difficult to scale up. And the cost for scaling up is more expensive because you have a lot of disruptions to the manufacturing process. Therefore, the equipment will be different as well. So, if you're thinking about there's a new technology, you have to deliver a lot of breakthroughs at the meantime, you have to change all of this manufacturing process and equipment is a lot of hurdles to overcome. But for us, we have been focused on the quasi-solid-state battery, which is really a near-term solution that will be able to not only deliver high performance, but also be able to be easy to scale up.

Because of the nature we're using, we'll call it quasi-solid-state. We do have liquid in the entire process. That means that the manufacturing process can be enabled so that it's highly compatible with lithium-ion manufacturing.

David Roberts

I see. So this is another thing I was going to ask about. There's sort of a bit of a debate in the industry about — there are manufacturers making all-solid-state, meaning completely solid batteries, ASSB, or I forget what the acronym is. And then there are some, like you, who are making quasi-solid, which I take it just means — does that mean the electrolyte is like viscous, like it's a thick liquid? Or like, what is, what does quasi-solid mean exactly?

Siyu Huang

It's more like a gel-ish material, and it does have a polymer component in it, but it's not all polymer. And for the part that's usually difficult to wet, the interface between the solid-state electrolyte versus the cathode, you do have a liquid wet interface between the two. So, I think that's where we see the differentiation between solid-state and, like, all-solid-state versus the quasi-solid-state.

David Roberts

And as I understand it, the all-solid-state people claim that theirs are safer, less prone to thermal runaway. Is that true?

Siyu Huang

I would say it's all about what you're talking in the all-solid-state chemistry. There are different all-solid-state batteries, too. There are ones coming with silicon, for example. Those will usually have a much lower energy density compared to, like, a lithium metal solid state. And again, like, you need to compare apples to apples. I'm not aware of today there is a silicon metal based solid-state battery with a large scale that will be even able to do those tests yet. And I will be able to have, like, 380 watt-hour per kilogram. So it's really hard to compare apple to apple.

But I do think, like, when you eliminate all of the liquid, which for us, we do have a pathway to do that in the future.

David Roberts

Oh, really?

Siyu Huang

And also, to reduce as much lithium metal in the anode as possible, the battery will be safer. So, there is a pathway to be even safer than what we have today if we're talking about an apple to apple comparison.

David Roberts

But the big advantage you get from being quasi-solid rather than totally solidified is that you can slipstream into the lithium-ion manufacturing process with relatively few changes.

Siyu Huang

Right.

David Roberts

So what does that mean? Like, if there's a factory that's building lithium ion batteries, you could theoretically go to that factory, tweak a few things —

Siyu Huang

Yes.

David Roberts

and start making your battery. That's the idea?

Siyu Huang

Right, right. That's what we heard from the feedback, even with our OEM partners, with our customers, and they were surprised when they visited our factory, just like, how similar it is in terms of manufacturing process compared to lithium-ion. And we do have proprietary manufacturing design and process, but it's seamlessly integrated into lithium-ion manufacturing equipment, which means we don't have to buy new equipment. And the ballpark big blocks are the same. And if there is a factory already established with big capacity, that we might be able to retrofit it, especially when it comes to assembly process and the formation process.

The coating part will be a little different because we do use a different anode material from the lithium-ion battery. So, I would say that's mostly the difference coming from we're not using graphite coating, but we're doing lithium metal. So that will be, like, most of the 10-20 percent differences coming from, as I mentioned. But the lithium manufacturing process is not necessarily more sophisticated compared to lithium-ion, which we also have gone through a lot of study with our customers.

David Roberts

Hmm. Okay. Yeah. And I just want to emphasize this, because this is a huge, huge — any battery discussion has to reckon with the fact that lithium-ion batteries have a huge, huge, huge head start, just in terms of scale, just in terms of the number of factories, the number of processes that are established. So this comes up whenever you talk about any alternate chemistry. An alternate type of battery is if they have to build completely new bespoke factories of their own, it's just going to be really difficult to catch up. So you can sort of, like, jump in mid-race here and start using the equipment that's already there. That's a, that's a very big deal.

Siyu Huang

Yeah. Especially, like, the industry is likely going to be over-capacitized in the next few years.

David Roberts

Yeah, I just read that article. I just read that article. Yeah. There's too much battery manufacturing capacity, which is a little crazy for me to think about, given how many batteries we're going to need. It's a little counterintuitive, but you can use that capacity to make yours. I know, because solid-state has been talked about forever and kind of theoretically possible forever. And there have been prototypes forever. I just want to emphasize for listeners that you guys, Factorial, are a little farther along than that. So the big news is that you just sent B-samples to Mercedes for testing.

Talk a little bit about what a B-sample is. What is the significance of that? What does it mean about where you are in development?

Siyu Huang

Yeah, so B-sample was a really big milestone that we hit over the last few weeks, and we're very proud of that to be the first one to announce the B-sample to global automotive OEM.

David Roberts

First solid-state?

Siyu Huang

The first solid-state that's shipped. Right. Like, there has been a lot of discussion about B-sample. Like, we're building a facility for B-sample. They're doing contracting for B-sample. But it's very different from, like, the shipment. Like, we delivered already. So we're not talking about building a facility. We're talking about, like, we shipped already. And this is a 390 plus watt-hour per kilogram battery. And it's about a 106 amp-hour cell. So this is an automotive size. It's not like a small battery. And it's being also underwritten by the OEM. Like, we had Mercedes put their testimonial on our press release as well.

David Roberts

Right, right. So, just the development cycle for a battery, there's a lot of, like, lab testing. There's all these stages. I read about all the stages. It is incredibly daunting, even just to read through. But the point is that, like, B-samples mean, like, the battery's built, the form factor is set. This is very close to a final battery. Like, the next step is putting them in a car. I mean, is that correct? Like, is it basically inevitable now?

Siyu Huang

It's very close. You're very close. I think, for example, it's usually a design freeze that we wanted to have a design validation. This basically means the battery cell itself works to the KPI. And once we have that validated, we do have a B-sample kick in with the process validation. So, we have to validate the manufacturing process and validate the module pack and vehicle integration, etc. So, that's more at a system level. And that's why the C-sample is usually coming into the manufacturing phase. We have to do PPAP and various validations on the entire manufacturing line, which goes all the way to SOP, which is the launch time for the commercial launch.

David Roberts

So, this is the testing of the cells, but the testing of the manufacturing process is a further step.

Siyu Huang

Right, right. But I would say the manufacturing process is part of the B-sample validation process. And I think it's really understanding the process is scalable and manufacturable, which at this stage is not a very big problem for us because OEMs have visited us and they've seen this process very scalable, like lithium-ion. But I think the bigger part of this process is going to be the integration into module and pack and the vehicle. So that's a really exciting part of it. But I think what we're most proud of is that A-sample has shared that we've gone a long way in terms of the battery cell, the product, which we have been focused on in the last ten years in terms of the development.

So, that was a really exciting milestone. And I think it's really a big testimonial from the OEM to be able to speak to the A-sample accomplishment. And we're moving full speed ahead with the B-sample development together.

David Roberts

And so, what does the timeline look like? Mercedes is testing your B-samples. When, theoretically, could a Factorial battery appear in a commercial Mercedes vehicle? Do we know, is that a set date or is it still somewhat up in the air?

Siyu Huang

That's a great question. I think I cannot speak for the Mercedes spokesperson.

David Roberts

I guess Mercedes has to make that decision.

Siyu Huang

Exactly. That's a public company decision. But what I can say is that for the solid-state battery players right now in the world, I would say the front side of players are all looking at like a 27, 28 timeframe. So, I would say we're definitely at the front of it. And if there's any vehicle launch and anything, I think we'll be one of the first, if not the first, to launch a solid-state vehicle.

David Roberts

You've got deals now with Mercedes, Hyundai, and Kia. I know that Toyota has its own whole team on this. I know a lot of different OEMs are pursuing this. So, it sounded to me, reading around, like there's going to be kind of a wave of these things hitting right around '27, '28, '29 from several different car companies. Is that fair? There's going to be sort of like a little boom, a little boomlet of solid-state batteries actually showing up then.

Siyu Huang

Yeah, I think I do believe that despite all the challenges in the last decades, this is coming, and this has never been more real than today. And I would say it's not only just automotive companies, but almost all the big five battery companies have their very aggressive agenda on building batteries. And there are various government organizations that have been pushing really hard on building solid-state as well. The great news is that the US is at the front and center for solid-state battery development, and we have this legacy of building great technology, great science, and product.

And I think it's all about our commitment and our conviction to push this forward as a technology with all of our industrial partners as well as supply chain partners.

David Roberts

But I think we can say now — and this is the overall point I was trying to emphasize for listeners — we can say now that this is no longer an idea, it's no longer a theory, it's no longer a possibility. These things are going to happen. They are coming to real cars. You are going to be able to buy one within, say, five years, almost certainly. So this is, like, not a — this is not a theoretical development anymore.

Siyu Huang

Right.

David Roberts

So, your battery — let's just talk turkey — like, compared to a lithium-ion EV battery, how much farther does it go? How much more energy-dense is it? Like, what are some sort of performance characteristics that we can take home here?

Siyu Huang

So, the lithium-ion battery today, they're running about 260 to 280 watt-hour per kilogram as of today. And if you go really aggressive and putting really high energy density, like with silicon anode and with various prelithiation, different protocols, you might be able to get to 340 to 360 watt-hour per kilogram. And for solid-state, I would say we started with 390 watt-hour per kilogram. So it's significantly higher to begin with. And that's pretty much the floor for solid-state. And we potentially can get to, like, 450 to 500 fairly easily.

David Roberts

Is there, like, a physical limit there, or, like, is there a ceiling that is visible yet?

Siyu Huang

I mean, I've heard of a company talking about 600 watt-hours per kilogram, but I would say 500 is probably what I see as more practical as the limit we're seeing today. But again, with the product and technology being developed, I'm sure there will be more opportunity to push down below for technology as well.

David Roberts

Right? Right. So, that's — call it 40% more energy dense, ish. Is that roughly right?

Siyu Huang

Yeah.

David Roberts

And that's with the same weight. Like, if you have the same weight, you have 40% more energy density. So, what does that translate to in terms of range? I don't think energy density means a ton to people. Like, how far will the car go?

Siyu Huang

Yes, so it's roughly, if we can translate it to the vehicle level, there will be a similar level, like 30% to 50% longer range that we're anticipating. And of course, we have to consider all the integration differences for solid-state versus lithium-ion. So that's definitely something we're going to be working on for the B phase. And in terms of what it means to the vehicle, it's not only higher energy, but also lower weight. And weight means, especially for the US consumers, we like the midsize, large size vehicles. And usually those are heavier. Those are usually like 1000 to 3000 pounds heavier compared to combustion engine for the EV's.

And a lot of that is due to the battery because the battery itself is really heavy. So, if we can reduce the vehicle by like one third of the weight, for example, because we're talking about reducing 30% of the weight for the battery, 30% to 50%, let's say 30%. If you translate to the vehicle level, it's a huge weight saving, which can potentially translate to the cost saving for the vehicle. And there is, I would say, a rule of thumb in the industry. So, for every pound, it's roughly $5 of the savings. So, if you're talking about 1000 to 3000 pounds of weight difference, and if we can overcome that, it's going to be a huge cost saving for the consumers too.

David Roberts

So, for a big EV truck, instead of making it go tons farther, you can sort of hold the range steady and make the truck much, much lighter and therefore cheaper.

Siyu Huang

Right. We do think that cost can potentially be a really good factor. Of course, you have to wait until technology to scale to substantial size because actually the cost of manufacturing for small scale is always going to be more expensive.

David Roberts

Yeah, yeah, yeah. So, this is more energy dense and has more range, is safer, and unlikely to catch on fire. What about charging? Is there a difference in the speed or other charging characteristics?

Siyu Huang

I would say if we're talking about the speed of charging, it's really about how many miles per charge. So, we can be very competitive in like how many minutes per charge. But if you're talking about the longer-range vehicle, we'll potentially have longer ranges, longer miles per charge per se. And another good advantage for lithium metal battery is it does have great power. So, the acceleration can potentially be much better, not only just because of lighter weight, but also the power capability is also much better than lithium. I, especially compared to, like, high silicon or high energy density silicon lithium-ion batteries.

David Roberts

So, we get more energy-dense, higher range, lighter, faster charging in terms of miles per minute, let's say, and you get more torque, more acceleration.

Siyu Huang

Right.

David Roberts

It sounds great. How much does it cost relative to the lithium-ion battery? I mean, sort of like currently, and then, you know, whatever, project 5-10 years in the future.

Siyu Huang

So, currently, it is more expensive because the scale is much smaller than the whatever, the 400 gigawatt hour out there in the market already, and the labor cost, etcetera. And it's less automated as today's lithium-ion. But I think when it comes to the future manufacturing cost, there are like three folds where I see here. One is the BOM, the raw material side. One is manufacturing cost. And the other one is really about how the facility and etcetera, all this ramp up and scaling cost. So, from the initial material perspective, we don't use any precious metal, we don't use any rare earth metal other than just the existing lithium-ion components in it.

So, that's fairly competitive, especially when you're counting a thinner lithium anode, which actually can be competitive and even potentially more cost-effective compared to graphite. Especially, there are a lot of geopolitical challenges on graphite recently.

David Roberts

Well, China — I mean, this is worth seeing — China utterly dominates graphite. I mean, utterly, like 90%, whatever, 98%. It's, like, ridiculous. Like, almost all anode graphite comes from China. And theoretically, you could get lithium for your anode from the US? Theoretically.

Siyu Huang

Yes, we have, like, I mean, the North American continent has very abundant lithium sources there. So, I think there's definitely a good opportunity for us to develop the source.

David Roberts

So does your battery have more lithium in it than a lithium ion battery?

Siyu Huang

So, it does have more lithium because it does have lithium metal.

David Roberts

Right.

Siyu Huang

But I would say if you're looking at a lithium price, if you are using very thin lithium, it does have very competitive cost compared to graphite, and the thickness is much thinner compared to graphite. Also, with the current lithium commodity pricing, it's actually very attractive. Even for the next ten years, being forecasted as being very attractive, although subject to volatility, it could be very competitive to graphite from the raw material pricing perspective.

David Roberts

Well, there's a lot of unknowns about lithium prices just because there's so much activity now looking for mines and opening up new — I mean, there's that big field they found in the US. I forget exactly the details, but maybe they tap that and that would bring prices down. So, big picture, you're not worried about supply chain stuff. You're not worried about finding a reliable, affordable supply of lithium.

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Big picture. You're not worried about supply chain stuff; you're not worried about finding a reliable, affordable supply of lithium?

Siyu Huang

I wouldn't say everyone is not worried. Like, nobody's worried about it. And I think our worry is not worse than lithium-ion players. We do use nickel, we don't use manganese, and our cobalt content is less compared to a lot of other lithium-ion battery players because we use a higher contact nickel material. However, if you're thinking about it from a refinery perspective, the recycling of lithium metal will potentially generate much more value compared to graphite and silicon as well. So, it's better for future recycling as that business ramps up, too.

David Roberts

You have built a manufacturing facility. You're making these things now, yes? In Massachusetts. Is that like a test manufacturing facility or like a prototype? Or is that an actual scale — you know what I mean? Like a full-on factory.

Siyu Huang

So, we are right now working on the prototyping. But in the future, it has the potential to expand into pallet manufacturing and even bigger potential in the future. I think right now it's really focusing on getting the right product and getting the right yield to our customers is tremendously important. We have been very proud that we have scaled up to the right volume at the right yield, which brings down the cost substantially in the last few months. And I think, at the end of the day, what we need for the US is not only just support from the investor side, like our great partners investors, but also from the government to support the manufacturing activities will be very appreciated.

David Roberts

Well, that's in place, is it not? I mean, IRA has — the Inflation Reduction Act — has a ton of manufacturing subsidies, does it not? Are you getting those tax credits?

Siyu Huang

Yeah, that's a very interesting part of it. So, IRA has mostly been used to supplement lithium-ion battery production. They're targeting a product that's ready to be deployed for manufacturing purposes. And, you know, right now, 95% of the global manufacturing is based in Asia. Basically, they're subsidizing all foreign companies with $350 billion of the funding to build factories in the US. I would say potentially, I've heard that there's a notion that by 2025, 80% of some funding will be used to support lithium-ion manufacturing. And even for the rest of the decade, the rest will be supported for lithium manufacturing, especially for foreign companies.

So, this is something I do want to highlight. If there is some attention that can be allocated to US players and allocated to next-generation battery makers, that will be tremendously helpful. Just as an example, if you can have whatever foreign company they build, a ten gigawatt-hour factory or 40 gigawatt-hour factory, the general return for a ten gigawatt-hour factory is roughly around $6 billion. If you have $6 billion, that's more than the entire funding for all of the US next-generation battery makers have had so far, publicly and privately.

David Roberts

Yikes. But what would that mean exactly? Just to clarify, is your manufacturing facility getting the IRA clean manufacturing credits?

Siyu Huang

No, I don't think. I mean, we can technically claim that, but it's really the size that we're getting. The return is very minimal compared to what the other players are having. And it's almost like it doesn't make sense for us to claim it right now, but rather waiting until the mass production happens. So, for a lot of companies, for the next-generation players, they're kind of crossing the chasm for commercialization. And this is the part you need a lot of funding and government support to fill this production and manufacturing capability.

David Roberts

That's not really manufacturing subsidies, so much as like R&D and first of a kind, those kinds of subsidies. I thought we were doing better on that stuff. Like, is there, is there, no — are you not getting any government help to do a US-based company making US-based batteries? Are you not getting any subsidies?

Siyu Huang

So, we do have very, very small subsidies from the Massachusetts government, which was very helpful to begin with as we're looking at across the board in the global market. Obviously, we've been proposed by other countries with much more attractive subsidies too, compared to what we see in the US. Another interesting factor is like for the, especially for the federal grants — sorry, I'm just being very blunt here. You need to recruit a lot of people to help you write the grants and getting those fundings. And it's just not a very easy process like many of the other countries that you just have some, you know, the people, you know, the economic development people that you have a very clear view about, "Oh, this is how much I'm investing, this is how much I get a return."

So, that's why it's difficult. It's easy for some of a large conglomerate to navigate, but for a startup or growth stage companies, it's just a much more difficult environment. Especially, you're not just talking about gigafactory production yet.

David Roberts

Well, that's frustrating. I mean, I thought the whole point of the IRA was to bring manufacturing into the US. I thought that was one of the big points. It would be a bummer if we're only using that to subsidize big foreign manufacturers.

Siyu Huang

I mean, to some extent, it does bring manufacturing to the US from foreign companies. But if we can do some parallel passing with some of the US government support to next-generation US companies, I think that will be even better.

David Roberts

Now, is there a specific vehicle for that or a bill or a specific kind of policy you're looking for or just more help generally?

Siyu Huang

I would say, so far, we haven't identified anything that's good. It's either very early-stage scientific research type of grants and it's probably taking; it's not worth for us to take at this point for various reasons.

David Roberts

You're going to pass that.

Siyu Huang

Exactly, or like kind of TRL (Technology Readiness Level) eight, like the LPO (Loans Program Office) stage where you have a very established product like lithium-ion, but for anywhere between like TRL four to TRL seven, it is like this is a critical stage for the company that has gone a long way to be successful in the product and in the technology, but does need government support to build that capability up. And if you look at the recent announcement from the China government on the like 6 billion RMB or like 800 million US dollar funding to drive the six companies grants towards solid-state battery development, and that will be something will be really good fit for the US if we can do something similar on that.

David Roberts

Interesting.

Siyu Huang

And I think it's really coming down to if the government will be able to provide this support to the local companies, and not only just on like very little risk commodity product as of today, but also on the next generation. Because in the end, we're ten years behind from a lot of these Asian cell makers in the US.

David Roberts

Right. I mean, this kind of sounds like what the LPO ought to be doing, though. I mean, this kind of sounds like in their wheelhouse, like companies in that gap. Is that not what LPO is doing? Have you talked to LPO or?

Siyu Huang

I mean, we've had contacts on that front and so far, we've heard that they are more targeting towards lithium-ion batteries.

David Roberts

Frustrating. Well, I mean, one thing is your batteries, if you're manufacturing them in Massachusetts, will definitely be eligible for the EV tax credit, right? I mean, the EV tax credit —

Siyu Huang

Yeah, it is eligible. It's more like the volume is right. If you claim everything when you are in a small volume, you only have a finite timeline to claim it for five years. Right. Would you do that right now, or would you wait for five years to do that in the future?

David Roberts

Yeah, I see. So, you sort of, when you fire the starting gun, you get five years' worth of credits.

Siyu Huang

Right, right.

David Roberts

Basically, so you're going to wait until you're sort of scaled up your manufacturing before you claim those. So that's not helping you then now. Like financially, that's not really doing much for you at the moment. So when you think about expanding from this first manufacturing facility, are you committed to staying in the US, or is there a possibility that you might go manufacture somewhere where they're a lot more helpful?

Siyu Huang

Right. I mean, we very much wanted to stay in the US. This is where we started and where technology is developed from. At the end of the day, we're a technology company. We're not, I would say, a nonprofit. Right. We have to think about how we can return to our investors and return to our shareholders and also customers — they do have their mandate on cost and performance, as you all have been asking throughout this podcast. So we have to decide, wherever makes the most economic sense for the company will be the way to go. So any support from the local government funding, especially the federal government, on a really committed and visionary approach will be very helpful for the company to consider staying in the US.

David Roberts

I mean, it's a little maddening because that's exactly what happened with lithium-ion, right? I mean, most of the early R&D, most of the early development was in the US, and then it was just China like grabbed the manufacturing, the scale manufacturing, and subsidized the hell out of it and more or less grabbed that whole industry. It would really be a shame for that to happen all over again.

Siyu Huang

I know, I've been talking about it for three years now. I'm really glad that people started to realize it. It was invented in UT Austin, and it was initially commercialized by Sony in Japan. Korea actually ramped it up, and now it's China grabbing all the benefits of mass production. So, it's just crazy to think about it going through the same cycle again. Right. And if we don't, we just continue to play the catch-up game, like building the lithium-ion phosphate battery and continuing to study the technology that China developed like ten years ago. They were commercialized and manufactured, mass-produced at really low cost ten years ago. And our gap will be bigger and bigger.

David Roberts

Yeah, I'm skeptical about whether we're going to catch up on lithium-ion. I know we can grab a little piece of it, 5% or whatever, but it would be nice for the US to own some piece of this. To own some piece.

Siyu Huang

Yeah, and it's not only just about our cell maker owning a piece of it. We have to think about our automotive OEMs and our consumers. Like, if we don't have a US company, who is going to prioritize us than their home country to deliver the best in class technology batteries? And it's really coming down to if our OEM doesn't really have the best cells, how could they survive in the future with electrification, with the engine being the battery, and they don't have the best engine anymore.

David Roberts

Okay, well, leaving that frustrating subject behind, let's talk about one thing I wanted to ask about: the sort of general sustainability of solid-state. So, you know, I've done a lot of reading, a lot of talking, and thinking about lithium-ion batteries and recycling, and there are all these companies popping up now to recycle lithium-ion batteries. And there are now techniques where you can basically get everything back out, all of the relevant metals. So it's a happy, more or less happy recycling story in the lithium-ion area. What are the implications of solid-state for recycling?

Are they easier, harder to recycle? Are there recycling facilities? Do they have to be specialized to do this? What's the story?

Siyu Huang

I mean, solid-state is ultimately meant to be easier for the disassembling and recycling of the battery. And hopefully, as I said, the regenerative value for recycling will be better, because you can use lithium, in our case, to regenerate lithium, just lithium metal out of the battery, too. So I think, overall speaking, we want it to be easier for recycling. And, of course, building a lithium metal and solid-state battery recycling process, it could be different from lithium-ion slightly. And that's why we have been working with various partners on recycling. Last year, we announced a partnership with Young Poong, which is a Korean conglomerate doing battery recycling.

So, they are one of the very few recyclers in the world that can do lithium metal recycling. So, that's definitely the area that we have been very focused on as fundamentally, we're not just a technology company, we're fundamentally a sustainability company. This is part of our DNA, and we wanted to make it work sustainably and close the cycle for carbon footprint.

David Roberts

Right. And I'm assuming that lithium metal is more valuable to recover than graphite. Is that accurate?

Siyu Huang

Yeah, absolutely.

David Roberts

So there will be money for this? There will be a financial incentive to recycle these things?

Siyu Huang

Yes, absolutely. Like, we finally see we don't have to dispose of our hazardous waste anymore. We have someone, like, pick up for free for our hazardous waste. But hopefully, in the future, they can pay us to pick up as well.

David Roberts

And what else are you doing in terms of sustainability? Like, are there other pieces of that puzzle?

Siyu Huang

Yeah, definitely. Developing a more sustainable material is going to be very important from the cradle to grave, right? Developing a more sustainable material and having a high performing material with less environmental impact is definitely something going to be very important. So, we have been working with various material suppliers. Related topics as well, like, for example, you have seen an announcement with LG Chem coming recently. We have done various development efforts with them, and it's been a really good, fruitful collaboration so far. So, yeah, I think that's really coming down to how we are working in the automotive space and driving this forward in the fastest way. If we can bring this technology to the market, we can unlock that 92% of the market, which is still not being converted into EV in the US. That's going to be huge progress for us. And that's where we see the gaps right now to the consumers. Number one is on a range. Number two is on the cost. I think that's where Factorial can unlock the potential.

David Roberts

Pulling the camera back a little bit and looking long term, if you can produce batteries that can be made mostly with existing lithium-ion manufacturing facilities that go further and are lighter, and eventually once they scale up, you think they're going to be cheaper too. Then, it seems to follow that solid-state batteries are going to take over the EV space on some time horizon eventually. Is that what you think? Is that what you believe?

Siyu Huang

I would say I see the EV battery space is going to be bifurcating into two segments. Solid-state will likely dominate the premium segment. So basically, the top half of the segment. And we do see there is a huge opportunity for LFP (lithium iron phosphate) as well, which will be more likely going to be dominating the value segment. And you know, there's been a lot of discussions around LFP is going to be more efficient and the vehicle integration is going to bring in a more like longer range battery in the future. That's definitely really great progress from that technology, but there is a natural ceiling for that as well.

And there needs to be a premium segment to accommodate various customer demands, even part of the middle-class demand as well.

David Roberts

Right, right. So, you will have a more energy-dense battery that will go into sort of higher performing or fancier cars like middle class and up, whereas lithium phosphate — the iron batteries we've discussed on Volts before — will have lower density, lower range, but probably also lower cost. And those, you think, will dominate in the value segment?

Siyu Huang

Right, right. We do think like it's going to be a healthy delineation between the two segments there. And LFP can be very cost-efficient, but when it comes to vehicle integration, it can be very bulky and heavy —

David Roberts

Right.

Siyu Huang

to accommodate for a big, especially if you think about like 9000 pound gorilla already for some of those UVs.

David Roberts

What about buses or big vehicles? Do you think LFP will do that? Or, I guess, are there other vehicle segments that you think solid state could compete well in, like buses or trucks or whatever?

Siyu Huang

Yeah, heavy-duty trucks, that could be a potential application, especially for the commercial trucks that solid-state potentially can have a play. And some of the, obviously aviation, it could be a really interesting market. It's not the vehicle on the street, but it's a vehicle in the air. There are very, very different applications in the aviation industry that because it requires much — that like the lightweight is even more important to that business.

David Roberts

Density is all-important in aviation.

Siyu Huang

Right, right. And power is also much more consistent; high power is much more important to that industry. So, that definitely can be an interesting market. In addition to that, we may have other applications, like even motorcycles, et cetera, which require high power.

David Roberts

Yeah, I was going to ask, just sort of outside, you know, cars. Like, where else could you see solid-state batteries ending up? Motorcycles, planes, anything else, like leap to mind?

Siyu Huang

I would say, even boats. Oh, yeah, those electric boats. Like, they need a very high propulsion and very strong, like, propulsion system to push them forward. And they require high power too. So, those can be very, very interesting applications as well.

David Roberts

Interesting. Do you think that solid-state is going to be, in the end, the most energy-dense, the high-end battery in those terms? In terms of, like, packing power and energy into the smallest possible space, do you think solid-state is kind of going to be the winner on those metrics?

Siyu Huang

Yeah, we do think there is a great opportunity there to be the potential intake for those markets because we cannot say, like, indefinite. Right? Because there is always evolution beyond my generation, but it could be obviously for the near term at least, next, I would say, 10 to 50 years. I do see that's definitely the trend, and I think there is a big disruption coming in, and that could potentially help solve the softened demand in the EV in the market and also be able to help us propel to the next generation for various e-boat and e-bike.

Oh, yeah, I'll be just a very interesting market explorer.

David Roberts

Yeah, yeah. Lots of apps get used where weight is also a very big deal. We're getting the lightest possible thing is a very big deal. Okay, final question, which is, you sort of battled your way through ten years of R&D and development and have worked your way to an actual battery that's gonna be in cars in two or three years. What's the next step for the company? Are you just focused now on getting manufacturing down and scaling up? Is there a next technology or next market or what's sort of on the horizon for the company?

Siyu Huang

Yeah, that's a great question. We do have a lot of technology in our portfolio that we have yet to announce to the world, and at the right time, we're definitely happy to share with you more.

David Roberts

Is that battery related, I assume?

Siyu Huang

Yeah, they're all, like, synergistic to what we're doing today, and we're definitely happy to keep you posted.

David Roberts

So this is just be like more performance, more range, lighter, just boosting those metrics, you think?

Siyu Huang

Yeah, to some extent. And also, there is something that's different from what we have today, but it's very synergistic with the battery as well. So, we're definitely happy to keep you posted when those announcements come up. But it's really, I think for me, we wanted to be laser-focused on bringing technology out there to the world, and it's going to be exciting to see if we ever become the first company to launch that with a global automotive OEM.

David Roberts

Yeah, who's going to be the first? We'll finish with this. If you're predicting, who's the first solid-state battery in a car that theoretically I could go buy?

Siyu Huang

If you're talking about a passenger vehicle, we want it to be the first one.

David Roberts

You think you're going to get there first.

Siyu Huang

We think we're very well positioned, especially when you're talking about a commercial one, not just like in a showroom.

David Roberts

Yeah, yeah, that's what I meant. That I could go to a lot and buy.

Siyu Huang

Right, right. So, I think that's definitely what we're striving for. But in the meantime, I think we have to focus on getting the product right and delivering the best value to our consumers with the right range and cost. And that's why building manufacturing, as you said, driving down the cost is definitely an essential part of it, too. Looking at various adjacent industries to explore commercial capability, viability is another route to help us bring down the cost, even near term.

David Roberts

Yeah. Because there are some segments that are less cost-conscious, let's say, than passenger vehicles like aviation. I'm sure you could find people that'll spend big for performance in that space.

Siyu Huang

Absolutely.

David Roberts

Very exciting. I really appreciate this. This is just one way — something I say all the time on the pod — which is just that EVs. There's so much to come in EVs. EVs are not — the EVs you see around you now are just the beginning. There's cool stuff coming down the pike and all this talk about "Are we going to transition? Are people going to love gas cars forever?" I just feel like all that talk is going to look real dumb in five years. In five years, there's going to be better cars that are lighter and go farther than gas cars, and then the argument will be over. It's exciting, exciting times to live through.

Siyu Huang

I know, I know. There's no way back for combustion engine.

David Roberts

Awesome.

Siyu Huang

Thank you so much, Dave. Thanks for inviting me again.

David Roberts

Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially to my super producer, Kyle McDonald, who makes my guests and I sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leave a nice review or tell a friend about Volts, or all three. Thanks so much and I'll see you next time.