By Alan Hatfield
Electric vehicle battery producer SES Holdings Pte. announced in July that it plans to list on the New York Stock Exchange through a merger with Ivanhoe Capital Acquisition Corp. (NYSE: IVAN). SES develops lithium metal batteries for use in electric vehicles through a combination of high-tech engineering and cutting-edge AI technology.
IPO Edge sat down with SES Founder & CEO Dr. Qichao Hu to find out more.
IPO Edge: Where are we today with the next generation of li-metal batteries for electric vehicles?
Globally, there are about eight or nine companies, both large and small, working on next-gen lithium metal batteries in the US, China, Japan, and Europe. It’s a very interesting situation and I love the technology. People actually started working on these lithium metal technologies-hybrid solid-state, liquid, different versions of lithium metal-way back in the 90s and 2000s. You have a convergence of technology becoming ready in the pipeline as well as a really strong market pull.
Ever since COVID, a lot of the traditional OEMs saw the success of Tesla and realized that the transition to EV is really just unstoppable, making a lot of these traditional OEMs realize the need to develop next-gen battery technologies. We have this convergence of technology readiness coming off the technical pipeline and a new demand from OEMs that no one has ever seen before.
IPO Edge: Why go public through a SPAC and why now?
It’s really to have the capital to grow in an EV battery industry being disrupted and changing rapidly. The battery company of the future will look very different from today’s EV battery companies and to really survive in this super competitive EV battery industry, you really have to compete, not only with other next-gen lithium metal companies, but also with lithium-ion companies. Sometimes you even have to compete with car companies to build a very robust supply chain from mines to raw materials, to battery materials, to batteries, to packs, vehicle integration, software, data, recycling this entire value chain.
To really compete, you have to be more vertically integrated to become a full-blown system provider because the number one target that all these companies are trying to hit is that magic $60 per kilowatt hour cost. To hit that, these companies have to be very vertically integrated throughout the entire value chain.
Going public through a SPAC gives you capital, a platform to raise additional capital, to attract talent, and also to build partnerships and to achieve the vertical integration that is needed to really compete as an EV battery company in the future.
Last time we spoke with your colleague, Rohit Makharia, we talked about partnerships with the likes of General Motors and Hyundai. Since then, you’ve had a major announcement with Honda Motors. What can you tell us about that and your other partnerships?
We are very grateful for the support from Honda and we have a few more partnerships in the pipeline. We started working with GM in 2015 and with Hyundai in 2019. Honda we started end of 2020, beginning of 2021, and more and more OEMs realize that the hybrid lithium metal battery that we provide is a much more practical approach to next-gen lithium metal batteries. You can test the cells, you can sample it, you can see the data, it’s a much more practical approach, and it’s much closer to commercialization than the alternative approaches is out there.
We don’t take this trust from Honda and these three OEMs lightly and we continue to push really hard to meet milestones. It’s very challenging, but our goal is to work on A-sample this year, start B-sample next year, then C-sample in 2024, and then get to SOB and start of production mid-decade around 2025 and 2026. In parallel and in addition to meeting the technical specs, we also have to meet the cost spec, which is much more challenging. We are working with OEMs to build this robust supply chain and really meet all the requirements.
IPO Edge: for the viewers who aren’t familiar with R&D terminology, can you describe what A-sample means?
Typically a battery company, in order to supply a new battery to a car company, has to go through pre A-sample, A, B and C. Pre A-sample is really a euphemism for R&D engineering. The cell could be very small, but you get very close to meeting all the specifications. A-sample is the battery that meets the final dimensional requirements and also meets most of the technical specs. B-sample is really A-sample, but you make it 10-30 times faster. You solve the manufacturing, the quality issues, and then C-sample is really B-sample but now put into the car allowing you to test the vehicles.
IPO Edge: Now, let’s drill down into the technology a little bit if we could. Tell us about the Hermes platform and your Apollo engineering capability, as well as your Avatar AI monitor software.
These three are the pillars of SES’ core competence. Hermes is really a small cell. It’s about the size of the cell that’s in your iPhone 13. We use it as a platform to test new materials, new high-concentration electrolytes, new lithium anodes, and anode coding. Since the beginning of the company, we’ve developed 12 different generations of electrolytes, all at high concentration. With each one we get closer to the OEM requirements covering safety, cycle life, and fast charge performance. The group of people conducting these tests is primarily composed of scientists from national labs, chemists, and other material scientists based in Boston, although we hire a lot of top scientists from around the country.
Apollo is basically taking Hermes-the same material, same design- but making it larger. You can see the image of the battery behind me. It’s about 600 millimeters wide and about a hundred millimeters high, meaning that there are a lot of engineering challenges. For example, how to make lithium foil that wide. This has never been done before. You then also have to work on the separators and the annual coating. How do you ensure when you make this lithium foil that wide that it’s still uniform on all edges. Basically a million detailed engineering issues.
When you build the cells, you have to stack the welding and fix the alignment, so those add additional issues. This group of people working on Apollo are primarily cell engineers. We develop an engineering process to apply this protective coating on the lithium foil to produce the required wide format lithium foil and ensure that these cells are built with good engineering and good quality.
The last part is software. The motivation behind the software is primarily safety. The issue with batteries is that it’s really impossible to make them 100% safe. Especially the higher the energy density, the harder it will be to make a battery safe. That’s just fundamental chemistry. So now we have to make the final cars 100% safe. How do you do that? If you look at how the traditional battery manufacturers are doing quality control, the defect is measured in parts per million, parts per 10 million, and parts per 100 million. But that’s a very traditional way of doing quality control. And even if you are at parts per 100 million, which is really good, when you have hundreds of gigawatt hours on the road, one gig being 1 billion, you’ll still have thousands of cells catching fire, which is still not good enough.
What we are doing is basically building this software that monitors every component and every step in the manufacturing process from the electrical coating, to the counting and the stacking, punching, lamination, welding, alignment, filling, and basically the entire process. We collect a lot of data and then we build this model.
Once the batteries are inside the vehicles, we work with the OEMs to collect additional data 24-7. When the car is parked, when someone is driving the car, when the car is being charged, by different people, in different locations, in different temperatures, with different behaviors, and then customize the battery to that user.
We build this software that’s based on a combination of a physics model and machine learning that can really predict defects like this concept in the movie Minority Report, where there is the concept of pre-crime. So imagine the battery has a pre-crime. The goal is to predict incidents before they happen. And you can do that. If you collect data just from the manufacturing to the battery inside the car, you can actually predict incidents before they happen.