The Exchanges

Q like, a significant share of global energy storage, certainly stationary, possibly mobile applications as well. So let's run through the theoretical benefits, and then I think we can spend some time talking about the market and, and, like, how real some of these benefits are. But, but one big one is, like, it's a very different Supply chain, and perhaps one that is a little bit more palatable geopolitically, right?

A Potentially. Um, I say it is in some cases, and it isn't in some cases. So, so if we kind of come back to, uh, like how you put it, the theoretical benefits, um, I would categorize them into three buckets, right? There's, there's a supply chain argument, there's the drop-in manufacturability argument, and then there's a safety argument. Now, for all three, Um, there are asterisks, because it's never that simple. And so, we'll come back to those asterisks, I, I, I'm sure. But, um, if we just look at lithium, right, lithium in the supply chain bucket, the first bucket. Lithium, of course, famously went on this wild ride in twenty-twenty-two. Um, this is kind of post-COVID supply crunch. Um, nickel, as well, uh, went through, um, a, a supply chain crunch in twenty-twenty-two, really because of the Russian invasion of Ukraine.

AI assessment note: “I say it is in some cases, and it isn't in some cases.”

Q Okay, so that's, that's supply chain. So, like, replace lithium with sodium, you've got cheaper, maybe lower volatility, maybe the opportunity to onshore. Um, you mentioned number two, which is the drop-in manufacturing potential. This is one that I know is, is more nuanced than often is given credit to, but what's the, what's the high-level idea there?

A Well, the high-level idea, I think we touched on just now, is basically the structure of the battery itself is, uh, Is almost identical to that lithium ion, right? They're both sandwiched structures. The electrodes are, the material powders are brought in, mixed into slurries, coated onto foils, calendared, slit, um, punched, stacked, if it's a, you know, pout cell, or wound into cylindrical or prismatic cells. All of that stays the same between lithium ion and sodium ion. And so, basically, the potential to benefit from what is already A learned process, um, where we, we don't have to spend so much time traversing down that learning curve, is really the, the opportunity here, um, compared to other new emerging battery chemistries that, you know, might even use, for example, liquid-based electrodes, or, or air as an electrode, or, or something like that. So, that's really the, the, the argument here for, um, and, and why, uh, sodium mine has gotten so much, so quickly, uh, so much, uh, hype.

AI assessment note: “the structure of the battery itself is, uh, Is almost identical to that lithium ion”

Q Okay, so that's the first two. Supply chain benefits, potentially drop-in, semi-drop-in manufacturing, potential benefits. Um, and then there's safety, which to my understanding is kind of the least, like, Certain of the three, but what's the argument for why a sodium ion battery would be safer than a lithium ion battery?

A Um, this is the one that I also, I'll put a lot of, the biggest asterisk on. Um, it's certainly, I, I think this is why the discussion of the chemistries begin to become very important, because safety is really driven by materials chemistry, the flavor of the bread, effectively. Um, so, saying kind of a blanket statement that Sodium ion is safer than lithium ion. I can tell you that is objectively wrong, right? So, um, we need to be a little bit more nuanced there. Now there, so, so we can deep dive into some of those, you know, the chemistries that, you know, for example, phosphate-based chemistries, uh, similar to lithium ion. Uh, LFP is safer than NMC. So NFPP, which is the, uh, pyrophosphate version of sodium ion, is safer than NFM, right? The layered oxide, uh, cathode. Uh, variant for, um, sodium ion. Um, some of the other potential safety benefits that sometimes gets under the radar, but sometimes gets some, sometimes gets more attention than it should maybe, is that the transport of batteries could also benefit from some, uh, safety benefits of sodium ion. And that is really because, uh, of that earlier point I made just now where the, uh, negative electrode, the anode, can actually use aluminum as a current collector. I won't get into the electrochemistry of it, but basically that allows you to ship the cells at zero volts, um, basically completely discharged. That rea…

AI assessment note: “anode, can actually use aluminum as a current collector... ship the cells at zero volts”

Q spike again, this equation changes. So you got to kind of believe something about what's going to happen to lithium ion materials prices in order to get really excited about this, because otherwise you're just saying like, All this work, all this effort, and a decade, and we get in 10 years to where lithium-ion already is. Is that like an accurate way to think about it in your mind?

A I think there are, um, a couple ways to look at the, the cost side. But the, the first on the outlook side, I think either we, we make some major breakthroughs in R&D to enable higher energy densities and therefore lower costs. Or we believe something will break in the lithium ion supply chain. And that increasingly could also be the case, right? I mean, again, coming back to graphite, um, where the majority of the graphite in the world that comes out of China and is already used, and already was, uh, export controls were just placed on it, um, uh, a couple months ago. Um, it could cause, it could cause domestically made Uh, lithium ion to see a spike in prices. And whether that, uh, uh, can, whether sodium ion can compete with that or leverage that opportunity to be, to break, uh, uh, the LFP price curve is a true opportunity. We actually model this and show that that can actually accelerate the point at which, um, sodium ion becomes competitive. But again, that is, to your point, lifting of, or causing, uh, um, a kink In the LFP overall learning curve to move up as opposed to a sodium mine curve coming down. Now, if we come back to the discussion of costs, I think there are a couple ways to think about this, right? First, we've talked about increasing energies to reduce materials intensity. That is, you know, maybe we beat that to death. Um, but then there are other ways to t…

AI assessment note: “either we, we make some major breakthroughs in R&D... Or we believe something will break”

Q So what people say sometimes is that if you wanted to swap an existing battery manufacturing line over from lithium ion to sodium ion, you could do it pretty quickly and pretty easily, and you wouldn't need to reinvest in a bunch of new capex. From what you know, how true is that?

A It is, I think, true in some cases, not true in others. I think if you're a small player in China today, you could, and I think there are anecdotal evidence of such things happening. I know of some cell makers who are experimenting or maybe toying with the sodium ion space, seeing that there's a lot of activity in LFP, low-cost LFP, um, because of how cheap it is, and there's just much more demand for it. And so they came to swap their lines. Um, obviously there's a lot of cleaning, there's a lot of cost contamination that you need to control. But in general, it's doable. But if you were to think about, like, a 35 or five, you know, 35 or 10 gigawatt hour plus factory that you were going to be building, um, for a dedicated supply, it is generally designed for one product that you make, um, and that flexibility, uh, could be there, or most likely you're, you're, you're really not going to, uh, experiment too much at that scale with swapping out with a chemistry. I mean, even Sticking in a new material from the, even sticking, for example, a new graphite product number or part number, uh, would require quite a lot of heavy lifting. So the portability, uh, the gigascale is pretty, pretty, maybe not as, as, as what we think.

AI assessment note: “It is, I think, true in some cases, not true in others.”

Q All right, let's talk sodium ion batteries. Um, why don't you start by explaining how a sodium ion battery works, I guess, in reference to a lithium ion battery, like, what's the same, what's different?

A Sure, yeah. So, I think anyone, um, or people around me know that every time I talk about batteries, I talk about sandwiches, because sandwiches are a great analogy. Um, so I'll do the same here. Um, basically, when we think about a Sodium ion battery or lithium ion battery. Basically, you can think of it as a sandwich with two pieces of bread, right? Those are, those are your electrodes separated by some kind of lettuce separator. That's a very boring sandwich soaked in some kind of soup, right? And so when you're charging and discharging, all you're doing is just passing sodium ions or lithium ions back and forth between the two pieces of bread through the lettuce in the soup, right? And so I think it's important to recognize that when we think about Uh, both lithium ion and sodium ion batteries, um, that those are umbrella terms, right? There are different flavors of sandwiches within both of those, and that's important to get into. Um, so we focus on lithium ion first, right? There, one side of the sandwich is almost always graphite, and that is the negative side of the sandwich, the, the anode. Um, and so we mostly distinguish, uh, lithium ion batteries by the positive side of the bread, right? And so this is basically swapping out You know, sourdough for, for whole wheat or something like that. Um, and so there's obviously mainly two kinds of, uh, uh, chemistries here. Th…

AI assessment note: “passing sodium ions or lithium ions back and forth between the two pieces of bread”

Q investment required and like the market demand for the early premium products and all that kind of stuff. But, you know, setting that aside for a second, like if we invested to scale up manufacturing of sodium ion, are we likely to see a similar cost trajectory, a similar learning rate to what we've seen with, with lithium ion and ultimately a lower cost floor in the end of time?

A So, so my answer is, is not, it is no. It's not about scale. It's not about just taking the chemistries and sodium mine today and then scaling the hell out of it. Because, kind of coming back to the example just now, that's assuming we can make a new sodium mine material today, or just any, any other material today, at the same costs. Basically, uh, there's, there's going to be a, an overhead of manufacturing costs for a given material. Um, so, regardless of what that is, uh, and that's assuming, you know, all the scale that has gone into, and the learnings that we've gone into, you know, establishing, uh, experience for a material like LFP, um, the, uh, the What drives the cost at the end is the materials intensity. So, so where do we need to then invest? We, should we invest on scaling, or should we invest on increasing energy density? And I would say it's the latter. It's really about how can we engineer these both materials and cells to have higher energy density. And so that is somewhat of a Um, maybe a, a positive light on this in that as a sodium on developer, you don't necessarily need to have in battle this chicken and egg problem of I need to scale to get to more low cost, and therefore low cost can get me to scale, and that kind of circular thing. I think we can actually get to low cost if we focus on getting the energy densities higher. But that becomes Inherently, …

AI assessment note: “my answer is, is not, it is no. It's not about scale.”