The Exchanges

Q So the technology that we're talking about is lithium iron phosphate, um, for the cathode in a battery. It was discovered and improved by U.S. researchers. Can you just explain the significance of that discovery of the chemistry and its subsequent commercialization by A. one, two, three systems?

A Back in the, this is in the mid-nineties, 1995, uh, is when John Goodenough and his team, um, discovered that LFP, you could make a viable cathode that was stable, uh, cheaper than, like, the nickel out of the nickel-based batteries on the market. At the time, you know, battery technology, uh, is still pretty young. It was only, lithium-ion batteries were developed, like, in the 19 seventies. So, at the time, you know, you had the Sony Walkman that came out in 1991, that used lithium cobalt oxide. So, Battery scientists were always looking to find something that was cheaper, better, more powerful. So when Good Enough discovered LFP, this was sort of, there weren't that many viable materials that can, you can make a battery out of, and this represented a whole new category. So the significance of it is that, yeah, America invented, American scientists discovered a new battery chemistry that was cheaper and more stable than what existed on the market at that time, and they did try to commercialize it, but they were not very successful.

AI assessment note: “So the significance of it is that, yeah, American scientists discovered a new battery chemistry”

Q So, A-one-two-three has some government money, partnerships are forming in consumer electronics and in the automotive business, they're expanding, they're hiring hundreds of people, and then things suddenly took a turn, and then spiraled. What happened?

A Even though they were having a lot of talks with people, all of that is contingent on actual sales of electric cars or hybrid. Like, you know, there has, if you're a supplier, you know, you know, A. One, two, three had invested all this capacity. They had built these plants. They had all this capacity to make batteries, and anyone who's, you know, familiar with manufacturing, you know, it's a lot tougher than like, oh, hey, I just wrote an app, and now I'm generating some revenue or something. You basically invest billions of dollars or hundreds of millions of dollars up front And then in order to actually make a return on that investment, you need volume. You need to make a lot. You need to utilize all of that capacity that you just invested in. Really, I think one of the really tough things for them was Chrysler that year, that same, you know, was basically, uh, sold to the Italian carmaker Fiat, uh, uh, who was led by Sergio Marchionne, who was sort of like a rock star, uh, You know, uh, CEO in the auto world is just known as one of the sort of craftiest, smartest, most brilliant strategic minds, you know, and he was able to turn Chrysler from sort of like a, on its, turn it from being on its deathbed to like a very profitable, you know, car company. When, when Sergio Marchionne got in there, he was notorious for hating EVs. He just thought they were money losers. He just th…

AI assessment note: “all of that is contingent on actual sales of electric cars or hybrid”

Q Things changed pretty dramatically for A. One, two, three when the, there was this failed test drive of a Fisker Karma. Fisker, by the way, was an auto manufacturer supported by the government that went bankrupt as well. Um, so the, the, the, this particular Fisker model was running on A. One, two, three systems technology. What happened? Why was that such a pivotal moment?

A Well, it's interesting because if you, uh, I think, again, there was sort of a conventional wisdom about A-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I-I With demand. You know, they had all these contracts, but the, the car makers kept cutting back the volume of what they actually wanted, because things weren't selling, or it was also the financial crisis. I mean, you know, it was not a great business environment. The economy wasn't great at the time. So they were very weak, because they didn't have enough customers, or they didn't have enough, they had customers, but those customers weren't ordering enough batteries. So they were already shaky. They were weak. And then with this Fisker recall, What happened was, right, there was a problem with some of the pouch cell batteries in those, in the Karma, Fisker-Karma hybrid. A-one-two-three, you know, went back and did an investigation at the plant, and they figured out, ok, we didn't seal the pouch properly, and this is a problem. Um, so Dave, you, the CEO, decided to recall and replace the batteries and all the Fiskars they had already supplied. And the actual recall itself was not, ended up being much less worse than feared. It wasn't a huge financial blow. There was never any, like, thank God, like, nobody died. There was no catastrophic fire, nothing like that. But it was the optics. They,, A-I-I-I…

AI assessment note: “when that recall happened, they were dropped. So, because people didn't, I mean, people say”

Q So today, China accounts for 83% of all lithium-ion battery manufacturing, according to Bloomberg New Energy Finance. Um, and, and this lithium-ion phosphate technology, which was pioneered in America, is the dominant cathode chemistry coming out of China. Um, 10 or 15 years ago, that didn't have to be the outcome, did it?

A Absolutely not. I mean, I think that, you know, hi, I want to be fair, like hindsight is twenty-twenty, nobody has a time machine. It is, I mean, to be honest, it is very hard to imagine a world in which Obama would like, in the midst of the twenty-twelve presidential election, and at a time when America was still very much believing in the knowledge economy is the future, and it's okay to outsource manufacturing because we can just write, teach everyone to write code, and that'll just be like this sort of natural evolution of our economy. That was the, you, you would have had to change the entire zeitgeist of like American capitalism to save eight, one, two, three. But what's happened, what I think should happen now is that we should do that, or at least question it or tweak it. I'm, and I want to be clear, like, I am not saying that, I do not think that America should have a command economy. I'm not saying, I'm not advocating that's what we should do. I'm saying that we need to look at the Chinese model. We need to rethink our own model in order to effectively respond to it and protect our interests. That means that we need a manufacturing base, and I think politicians realize that now, but I'm still worried that our own kind of internecine political infighting and partisanship can threaten that, you know, because when it comes to politics, theater, you know, that look at A-o…

AI assessment note: “Absolutely not. I mean, I think that, you know, hi, I want to be fair”