Item 1. Business
Item 1. Business
Overview
Solid Power is developing all-solid-state battery cell technology that replaces the liquid or gel polymer electrolyte used in conventional lithium-ion battery cells with a sulfide-based solid electrolyte. Our sole focus is on the development and commercialization of all-solid-state battery cells and solid electrolyte materials, which we are currently developing for the fast-growing battery-powered electric vehicle market.
We are currently producing 0.2, 2, and 20 ampere-hour (“Ah”) high-content silicon all-solid-state battery cells (“Silicon EV Cells”) using established manufacturing processes on our initial pilot production line. We are currently constructing a second pilot production line (the “EV Line”) at our headquarters in Louisville, Colorado. The EV Line has been designed to produce 60 to 100 Ah all-solid-state battery cells, which we refer to as EV-scale. We expect to begin producing EV-scale cells during the third quarter of 2022. In addition, we are constructing a second facility in Thornton, Colorado primarily to expand our sulfide-based electrolyte production capability. We expect this facility to be brought on-line in the second half of 2022.
We are developing our All-Solid-State Platform to meet the performance and cost demands from both consumers and automotive original equipment manufacturers (“OEMs”), with the goal of outperforming the best performing liquid or gel electrolyte-based lithium-ion technologies in driving range, battery life, safety, and cost. We have partnered with industry leaders, such as Ford Motor Company (“Ford”), BMW of North America LLC (“BMW”), and SK Innovation Co., Ltd. (“SK Innovation”), to refine and validate our all-solid-state cell designs and the sulfide-based solid electrolyte we manufacture at our headquarters in Louisville, Colorado.
In recent years, liquid electrolyte-based lithium-ion technology made considerable strides to increase stored energy while lowering costs; however, we believe that current technology is approaching its practical limits. To reach mass adoption where a majority of new passenger vehicles are electrified, we believe battery cell technology must take a big step to address the limitations of traditional lithium-ion battery technology. Specifically, we are developing our all-solid-state battery cell technology with the goal to improve, among other things:
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Driving range through increased energy by enabling higher capacity electrodes that are otherwise not considered viable in a traditional lithium-ion battery cell.
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Battery life through higher temperature stability compared to traditional lithium-ion and hybrid battery cells.
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Safety of electric vehicle batteries through the removal of flammable and volatile liquids and gels from the battery cells.
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Cost through simplifying the manufacturing process and removal or reduction of battery pack cooling systems and pack-level safety features typically seen in traditional lithium-ion battery packs.
Our business model comprises two strategic elements:
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Licensing our all-solid-state battery cell designs and manufacturing know-how to our commercialization partners.
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Selling our proprietary sulfide-based solid electrolyte material.
We believe this business model creates the possibility of multiple revenue streams and distinguishes us from many of our competitors. Longer-term, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material, which may be employed both in powering all-solid-state battery cells in electric vehicles and in other commercial applications. By not needing to construct capital intensive battery manufacturing facilities, which are commonly referred to as gigafactories, we believe we can be “capital light” compared to other development-stage battery companies that plan to produce their battery designs in-house.
As a development-stage company, we have historically generated revenue through research and development performance on government contracts and grants as well as a small volume of sales of our cells and materials into non-commercial markets. These activities have funded a limited portion of our research and development activities to date. In addition, we have been able to secure additional liquidity to support our efforts through various financing transactions. In May 2021, we announced a $135.6 million Series B investment round (the “Series B Financing”), led by BMW Holding B.V. (“BMW Holding”) and Ford. In conjunction with this capital infusion, we also announced an expansion of our joint development agreements (“JDAs”) with BMW and Ford to develop all-solid-state battery cells for future electric vehicles. In December 2021, we completed the business combination, the result of which is we secured $495 million, net of transaction expenses, of additional capital to pursue our research and development activities. See “Explanatory Note” above.
With the delivery of hundreds of roll-to-roll pilot production line-produced battery cells that were tested by automotive OEMs and top tier battery manufacturers as consistent with our in-house testing results, we believe we are a leader in the development of all-solid-state battery cells. The cell manufacturing processes we have developed use equipment that is already used globally for high volume traditional lithium-ion battery cell production. If we are able to commercialize our processes, we anticipate this will enable manufacturers of our all-solid-state battery cells to meet volume and cost requirements of OEMs with less capital investment than would be required to scale their operations to implement new production methodologies that may be developed by our competitors.
Our Silicon EV Cell and lithium metal anode cell (“Lithium Metal EV Cell”) designs use many of the materials that are standard in today’s lithium-ion battery cells, specifically in the cathode. Our third cell design, conversion reaction cathode cells (“Conversion Reaction Cell”), which is earlier in the research and development cycle than our Silicon EV Cell and Lithium Metal EV Cell designs (see “— Current Research and Development” below), is targeted to include a cathode that is free of nickel and cobalt, which could cut cathode active material costs by up to 90%.
Our core sulfide-based solid electrolyte technology uses earth-abundant materials. We currently produce up to 1.2 metric tons per year of our proprietary sulfide-based solid electrolyte and are working toward meeting our goal of being able to produce at the rate of 30 metric tons per year in 2022. We have plans to produce 40,000 metric tons of sulfide-based solid electrolyte per year to support commercial production of approximately 800,000 electric vehicles using our all-solid-state battery cell design by 2028.
Our long-standing partnerships with BMW and Ford have allowed us to rapidly achieve research and development milestones on our path to commercialization. Our goal is to provide these partners with the technology to secure all-solid-state battery cells for
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their future battery powered electric vehicles. Ford recently announced an increase in its investment into electrification of its fleet from $22 billion to $30 billion and expressed its belief that 40% of its vehicle sales in 2030 will be electrified. BMW similarly announced that it expects to produce 25 electrified models in 2023 and deliver two million electric vehicles to its customers by the end of 2025.
Industry Background
The Electric Vehicle Transition is Underway
The Global Carbon Project, a leading non-governmental agency studying the effects of emissions on climate, estimated in 2019 that humans emit over 36.4 billion tons of CO2 equivalent greenhouse gases per year. The Global Carbon Project calculated that CO2 emissions from fossil fuels will rise between 4.1% and 5.7% in 2021 creating a new record level after a fall of 5.4% in 2020 from COVID 19-related lockdowns. The United States Environmental Protection Agency estimated that transportation emissions accounted for about 29% of domestic emissions in 2019, producing close to two billion tons of CO2 equivalent greenhouse gases, and approximately 14% of global emissions. According to the Rhodium Group, an independent research provider combining economic data and policy insight to analyze global trends, transportation saw a 10% increase in emissions in 2021 driven by a rise in diesel-fueled trucks used in e-commerce. According to research from International Energy Association, about 75% of transport emissions are from road transport, with passenger cars being responsible for over 45% of all transport-related emissions. We believe the widespread use of fully electric vehicles would significantly cut passenger vehicle emissions and help to reduce human-caused CO2.
The United States is making significant investments to prepare for the electrification of vehicles. In August 2021, President Biden signed an executive order setting a goal that 50% of all new passenger cars and light trucks sold in 2030 be zero-emission vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles. In February 2022, the United States Department of Energy issued two notices of intent to provide $2.91 billion to boost production of the advanced batteries that are critical to rapidly growing clean energy industries of the future, including electric vehicles, as directed by the Bipartisan Infrastructure Law. The Department of Transportation and Energy also announced $5 billion to be made available under the new National Electric Vehicle Infrastructure (NEVI) Formula Program to build out a national electric vehicle charging network, an important step towards making electric vehicle charging accessible to all Americans. In addition, there are federal and state tax credits available to consumers who purchase certain electric vehicles.
State governments also are being proactive to prepare for the electrification of vehicles. For example, in his proposed 2021-22 budget, the governor of California included $500 million to substantially increase the number of electric vehicle charging stations in the state, while the State of Michigan provides economic grants to install direct current fast chargers. In January 2022, New York State governor Kathy Hochul announced that more than $12 million will be added to the state’s Drive Clean Rebate program, which helps consumers save up to $2,000 on the purchase of an electric vehicle. Similar efforts are being undertaken in other countries as well. For example, Germany announced that it will invest €5.5 billion to incentivize installation of electric vehicle charging stations and provide a €6,000 subsidy to consumers towards the cost of an electric vehicle. Also, in India, buyers of electric vehicles qualify for certain economic incentives and subsidies.
Several Roadblocks Impede the Mass Adoption of Electric Vehicles
Today’s liquid or gel electrolyte-based lithium-ion battery cell technology helped introduce the possibility of broad adoption of electric vehicles. However, we believe this first-generation technology is reaching a practical limit where further investments into development provide diminishing returns due to concerns about safety, energy density, and high temperature stability. Without further improvements to electric vehicle battery pack performance, consumer demand for electric vehicles may plateau over time. Specifically, we believe that today’s liquid or gel electrolyte-based lithium-ion battery cells suffer from four key problems that discourage the widespread acceptance of electric vehicles:
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Limited drive range . Current lithium-ion battery cell technology does not provide enough energy to support extended drives before requiring recharging.
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Short battery life . We estimate that today’s electric vehicle battery cells typically will have a lifespan (i.e., before seeing significant degradation in capacity) that is shorter than the average age of the average passenger vehicle in operation, which IHS Markit estimated was 11.9 years in 2020. This disparity must be addressed so owners of
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electric vehicles can keep their vehicles, without having to replace battery packs, for at least as long as that they would typically keep their comparable traditional internal combustion vehicles.
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Poor safety . The liquid electrolyte-based lithium-ion battery cell used in current electric vehicle battery packs contains highly flammable and volatile components that create safety risks when exposed to abuse conditions.
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Expensive pack systems . Today’s battery packs are complex and, due to temperature sensitivity and the highly flammable and volatile components, require cooling systems to maintain stability and considerable engineering to mitigate risk. This increases the cost of battery pack production.
Solid Power’s All-Solid-State Battery Cell Technology Is Designed to Address These Roadblocks
As discussed in further detail below, we believe that our all-solid-state battery cell technology will help address the current roadblocks to mass adoption of electric vehicles. Based on testing results from our internal research and development, we expect our all-solid-state battery cell technology to provide key improvements over today’s conventional liquid-based lithium-ion technology, including:
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Increased driving range . Our all-solid-state battery cell designs improve energy on both a volume and mass basis by allowing the use of higher capacity electrodes than those used in today’s traditional lithium-ion battery cells, which in turn could increase vehicle driving ranges at the same battery pack volume and mass.
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Longer battery life . Through use of our sulfide-based solid electrolyte, which improves high temperature stability, we expect our all-solid-state battery cell designs to achieve improvements to battery life compared to today’s liquid- and gel-based lithium-ion battery cells.
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Better safety . By removing the flammable liquid and gel components from the cell, we anticipate the sulfide-based solid electrolyte included in our all-solid-state battery cell technology will bring safety improvements.
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Less expensive . We expect our all-solid-state battery cell designs to allow for simpler manufacturing and more flexible battery pack designs, including reducing or eliminating the need for complex cooling systems, which can enable cost savings and reduced pack complexity. In addition, we expect our designs to allow for manufacturing of all-solid-state battery cells on existing lithium-ion infrastructure, fostering production cost parity.
We believe these collective improvements are enabled only in a 100% all-solid-state cell format. While competing approaches may, for example, deliver improved energy by enabling similar higher capacity electrodes (e.g., lithium metal anodes), we expect any cell technology utilizing a gel or liquid electrolyte will suffer from the same safety and battery life issues associated with today’s traditional lithium-ion battery cells. We believe this would require compromising on many of the pack-level benefits that we believe will be enabled by our truly all-solid-state battery cell.
Our Technology
We anticipate our All-Solid-State Platform technology will:
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Enable several unique all-solid-state battery cell designs . Our Silicon EV Cell and Lithium Metal EV Cell designs use many of the materials that are standard in today’s lithium-ion battery cells, specifically in the cathode. We expect our third cell design, Conversion Reaction Cell, which is early in the research and development cycle as compared to our other two designs, to include a cathode free of nickel and cobalt, which could result in substantial cost savings at the cell level.
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Leverage existing lithium-ion battery cell manufacturing processes and infrastructure . Our manufacturing processes were specifically optimized around industry-standard lithium-ion battery cell manufacturing processes and equipment, which we believe de-risks industrialization.
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Be powered by our proprietary sulfide-based solid electrolytes . Sulfide-based solid electrolytes have the best-known balance of conductivity (i.e., the ability to move ions quickly) and processability (i.e., the ability to be produced defect-free on industry-standard roll-to-roll battery manufacturing equipment) out of all solid electrolyte classes. We develop our materials for stability and conductivity within each layer of the cell while also optimizing for areas such as cost and compatibility with conventional lithium-ion processing.
All three of our all-solid-state battery cell designs utilize high-capacity anode materials, including lithium metal and silicon. We utilize industry-standard and commercially mature cathodes, like lithium nickel manganese cobalt oxide (“NMC”). We are in the early stages of developing our Conversion Reaction Cell to remove nickel and cobalt from the cathode entirely, which, if successful, could significantly reduce the cost of the cell and potentially be deployed in both electric vehicle and non-electric vehicle battery markets. We believe that our all-solid-state cell designs can unlock the potential performance of lithium metal, high-content silicon and conversion type cathodes that are not suitable for use in liquid electrolyte-based cell designs.
Benefits of Our Technology
We expect our all-solid-state battery cells to provide an increase in energy on both a volume and mass basis compared to today’s best performing lithium-ion battery cells. Together with anticipated reductions in mass at the pack level due to improved safety and removal or reduction of battery pack cooling systems, we expect this improvement in energy to allow automotive OEMs the flexibility to balance cost and driving range when designing their electric vehicles.
We expect our all-solid-state battery cells to have significantly improved high temperature stability compared to current liquid electrolyte-based lithium-ion technology, which could allow for the removal of expensive and extensively engineered battery pack cooling systems and provide significant cost savings at the pack level. Based on internal modeling, a potential added benefit of the high temperature stability of our all-solid-state battery cells could be a longer life of the battery cell. This high temperature stability could lead to less permanent degradation in battery capacity when exposed to elevated temperatures (e.g., during high rates of charge or discharge).
In internal testing, our all-solid-state battery cell designs have demonstrated superior safety characteristics in comparison to traditional lithium-ion or any other organic or flammable liquid or gel containing battery cell. The safety of our prototype all-solid-state battery cells has been confirmed by third-party testing through nail penetration, external short circuit, and overcharging to show that our cells to-date have not negatively reacted to harsh abuse conditions, including those expected to occur in vehicle crashes. Further, in October 2021, we received testing results from an independent research entity, which conducted a preliminary safety study of our prototype 2 Ah Silicon EV Cells in accordance with standards set by the Society of Automotive Engineers. These cells demonstrated benign failures when subjected to nail penetration, overcharging and external short circuiting. The results further our belief that our all-solid-state battery cells have the ability to reduce the risk of electric vehicle fires, which according to a 2020 National Transportation Safety Board study, require the use of different firefighting techniques that few fire departments have implemented. If borne out, we believe this potential for reduced risk of fire using all-solid-state battery cells could lead to fewer recalls. As we move into automotive qualification testing, we will need to conduct additional and rigorous safety testing on increasingly larger format battery cells.
At scale, we anticipate a highly competitive cell-level cost in comparison to traditional liquid electrolyte lithium-ion design, enabled in part by leveraging existing industry-standard manufacturing processes and infrastructure. We also expect that we will be able to leverage future lithium-ion cost reductions in both materials and production in manufacturing our cells. We believe our all-solid-state battery cell costs become more compelling at the pack level due to reduced engineering requirements to meet the same level of safety and the ability to significantly reduce or remove pack cooling components.
In response to consumer demand, as well as government mandates and incentives, many major traditional automakers have made commitments to electrify significant portions of their fleets. Specifically, traditional OEMs, including Ford, BMW, GM, Toyota, Daimler, Honda, Hyundai, Jaguar Land Rover, Renault-Nissan Alliance, Stellantis, and Volkswagen, as well as new entrants such as Rivian, Nio, and Vinfast, have publicly stated their commitment to developing solid-state battery technology. Automotive OEMs are incentivized by the technology’s potential to achieve higher energy density, longer battery life, lower costs and increased safety.
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Our Competitive Strengths
Only known sulfide-based all-solid-state battery cell architecture expected to enter automotive qualification in 2022 . Solid Power is the only known sulfide-based all-solid-state battery cell company that has showcased the ability to manufacture electric vehicle-relevant battery cells in dimensions suitable for automotive applications using scalable manufacturing processes. Through our partnerships with Ford and BMW, we have designed a larger cell format intended for future electric vehicle integration and use. We are currently in the process of constructing the EV Line at our headquarters in Louisville, Colorado that will support the production of the cells needed to formally enter automotive qualification in 2022. We expect Solid Power will be the first sulfide-based all-solid-state battery cell company to enter such qualification.
Industry leading in-house production using lithium-ion manufacturing processes and equipment . We are the only known sulfide-based all-solid-state battery cell company that has showcased the ability to manufacture its cell products using industry-standard, scalable roll-to-roll manufacturing methods and equipment that are commonplace in traditional lithium-ion gigafactories. Our pilot production line became fully operational in early 2019. Since that time, we have delivered and had externally tested and validated hundreds of production line-produced battery cells.
Multi-pronged revenue streams from cell products and electrolyte sales . We intend to license our battery cell architectures and manufacturing know-how to third party commercialization partners, which could include automotive OEMs and top tier battery cell suppliers, that, in turn, could serve multiple automotive OEMs. Further, we plan to sell our sulfide-based solid electrolyte to our commercialization partners and other solid-state cell producers who may or may not be using our unique all-solid-state cell designs. Long-term, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material, which we expect to have higher margins than the battery cell manufacturing business and requires substantially less capital equipment investment than battery cell production.
All-solid-state manufacturing removes costly and time-consuming steps required in lithium-ion production and can be done using existing production infrastructure . We use many of the same processes and equipment deployed in current lithium-ion battery cell manufacturing facilities to produce our all-solid-state battery cells, which can, down the road, allow manufacturing facilities to save on significant capital expenditures when transitioning over to manufacturing our all-solid-state battery cells. Furthermore, our all-solid-state battery cell designs do not require liquids or gels, thus allowing us to remove the electrolyte filling step from the cell assembly process, which accounts for approximately 5% of capital expenditures in a typical GWh-scale lithium-ion facility. We also expect cell manufacturers will be able to remove nearly all of the cell conditioning steps required in traditional liquid electrolyte-based lithium-ion manufacturing, including pre-formation, elevated temperature aging, degassing, formation and final storage, and replace these with a shorter cell quality check. These conditioning steps account for approximately 30% of capital expenditures in a typical GWh-scale lithium-ion facility and can take anywhere from one and one-half to three weeks per cell. In total, we expect our unique cell designs allow for the reduction of costly and time-consuming steps that currently account for approximately 35% of capital expenditure costs in a typical GWh-scale lithium-ion cell production facility.
Partnerships with two of the world’s leading automotive OEMs and a top tier cell manufacturer . We have ongoing partnerships with BMW, Ford and SK Innovation to jointly develop all-solid-state battery cells, with the ultimate goal of deploying our all-solid-state battery cells in certain of their forthcoming battery powered electric vehicles. We also have received investment capital from Ford and BMW Holding and in December 2021, in connection with the closing of the business combination, SK Innovation made a $30 million investment in our company. We have been working closely with BMW since 2016 and Ford since 2018 and entered into a Joint Development Agreement with SK Innovation in October 2021. Both BMW and Ford have made public their belief that the successful development of all-solid-state battery cells and technologies could put these automakers in an advantageous position over their peers in terms of driving range and cost.
High barriers to entry with extensive patents, trade secrets, manufacturing know-how, and industry relationships . We have spent ten years developing our proprietary all-solid-state battery cell technology and the past three years demonstrating that the technology can be manufactured in a high-throughput manner using existing lithium-ion battery cell manufacturing techniques and equipment. Throughout our existence, we have compiled a portfolio of patents and patent applications (including those we have rights to under exclusive licenses) alongside internally kept trade secrets and manufacturing know-how. Across this portfolio, we have intellectual property in areas including:
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composition of sulfide-based solid electrolyte materials and methods of production;
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electrode and cell designs;
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cell processing methods; and
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electrolyte precursor production.
Our Growth Strategy
As we continue our development activities with the goal of commercializing our All-Solid-State Platform in electric vehicle applications, we are pursuing an aggressive growth strategy. While we believe our goals are achievable, and our roadmap to hitting those goals is reasonable, as with any company that is developing novel technology, our strategy, forecasts, and timetables are subject to change.
EV cell development for official entrance into automotive qualification . We plan to continue refining our all-solid-state battery cell technology with the goal of validating our EV Line in 2022. We built our first 20 Ah Silicon EV Cell using our current pilot production line in December 2021 and intend to deliver 2 Ah and 20 Ah Silicon EV Cells to our OEM partners during 2022. Once we begin manufacturing EV-scale cells on the EV Line, we expect to utilize our current pilot production line to refine our cell products at the prototype scale. In 2023, we anticipate our OEM partners will complete concept validation of our EV-scale Silicon EV Cells and move into design validation.
Meet battery demand and increase battery production throughput . We have the current ability to produce greater than 100 all-solid-state battery cells per week via our roll-to-roll pilot production line. By late 2022, we expect to be able to produce roughly 300 battery cells per week on our EV Line. To support our automotive qualification efforts and meet our partners’ requirements, we expect to work with future commercialization partners, including SK Innovation, to further increase battery cell throughput using third-party lithium-ion manufacturing facilities.
Expanded sulfide-based solid electrolyte production . We currently manufacture our proprietary sulfide-based solid electrolyte at a throughput of approximately 1.2 metric tons per year. In 2022, we expect to expand electrolyte material production at our second facility to approximately 30 metric tons per year. We plan to continuously increase electrolyte material production up to a targeted level of 6,000 metric tons per year by 2026 to support the initial production of approximately 100,000 vehicles annually, with additional plans to further scale electrolyte production to greater than 40,000 metric tons per year by 2028. We expect the additional capacity to be able to support the annual production of 800,000 electrified vehicles using our all-solid-state battery cells by 2028.
Expanded lithium sulfide production . We currently take a multi-pronged approach to secure the lithium sulfide (“Li2S”) needed in the synthesis of our proprietary sulfide-based solid electrolyte. We currently source Li2S from leading lithium and chemical companies globally. While we expect Li2S production to significantly increase with commercialization of sulfide-based all-solid-state battery cells, we are also in the early stages of developing a novel low-cost Li2S production method at our facility to address potential supply chain risks. If we are able to do so at scale, longer-term we intend to increase in-house production of Li2S and continue development of low-cost production methods.
Establish and expand partnerships with other automotive OEMs . Our agreements with both BMW and Ford are non-exclusive, allowing us the ability to pursue relationships with other automotive OEMs. We intend to focus on establishing and expanding our partnership relationships with additional automotive OEMs through both our all-solid-state battery cell designs and sulfide-based solid electrolyte material.
Expand target markets . We are focused on automotive electric vehicle applications, which we believe represents the largest market opportunity for high-performing, low-cost all-solid-state battery cells. However, in the future we may explore the opportunity of supplying all-solid-state battery cell designs and sulfide-based solid electrolyte materials to other established and emerging markets, including electric vertical takeoff and landing aircraft, aerospace, defense, stationary storage and consumer electronics.
Continued investment in next-gen battery cell innovations . We intend to continue to invest in research and development to improve sulfide-based solid electrolyte materials and all-solid-state battery cell performance, improve manufacturing processes and reduce costs.
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Manufacturing and Supply
We have designed our battery cell manufacturing process to use much of the same equipment that is currently used in production of conventional liquid electrolyte-based lithium-ion battery cells. Since inception, compatibility with lithium-ion manufacturing processes has been fundamental to our strategy, driving the selection of a sulfide-based solid electrolyte solution and subsequent research and development. We believe that using industry standard lithium-ion production processes and equipment substantially de-risks commercial success and allows for rapid deployment of technology among early adopter platforms.
The manufacturing processes we have adopted significantly reduce cell conditioning steps and completely remove electrolyte filling, which account for approximately 30% and 5%, respectively, of capital expenditures in a typical gigafactory, respectively. This removes much of the one and one-half to three-week cell conditioning process.
Our operational MWh-scale roll-to-roll pilot production line has successfully produced prototype Silicon EV Cells and Lithium Metal EV Cells in 0.2 Ah, 2 Ah and 20 Ah form factors. The production line is capable of being transitioned between Silicon EV Cells and Lithium Metal EV Cells. We designed our forthcoming EV Line to have the same capability, with larger cell formats ranging from 60 to 100 Ah. Thus, we expect there are limited future capital expenditure requirements for us to demonstrate the viability of commercial volume production of our all-solid-state battery cells.
Our all-solid-state battery cell design is a multi-layered stacked pouch cell, which we manufacture ourselves. Our cell architecture relies on our proprietary sulfide-based solid electrolyte in a separator layer, which isolates the anode and cathode and conducts lithium-ions. We also manufacture our cathode and high-content silicon anode using materials sourced from external suppliers. We combine those materials with our proprietary sulfide-based solid electrolyte in each layer. We source other input materials from industry leading suppliers and emerging disruptive suppliers. Our sulfide-based solid electrolyte is made from abundant materials produced at industrial scale in multiple geographical locations, excluding the Li2S precursor material. Since we anticipate our need for Li2S to significantly increase with commercialization of sulfide-based all-solid-state battery cells, we are taking a two-pronged approach to secure the necessary supply of Li2S precursor material: sourcing from multiple global entities and working to develop processes to produce material in-house using novel production methods.
Partnerships
We have developed meaningful commercial relationships with our partners, including, among others, BMW, Ford and SK Innovation. These partnerships have played a significant role in our ability to achieve research and development milestones on our path to commercialization. To memorialize our partnerships, we have entered into separate non-exclusive JDAs, including those with BMW, Ford and SK Innovation. The ultimate commercial success of our partnership relationships is subject to various risks and uncertainties. For more information, see “Risk Factors — Risks Related to Solid Power — Risks Related to Development and Commercialization.”
BMW Group
We have a long-standing relationship with BMW, which began in 2016. Our relationship initially focused on all-solid-state battery cell research and development, and in 2017, we announced a partnership to jointly develop all-solid-state battery cell technology. In 2021, BMW and Solid Power expanded the partnership with BMW Holding’s participation in the Series B Financing and with the execution of a joint development agreement for EV-scale cells for testing and vehicle integration with BMW.
Generally, the JDA with BMW sets out the framework for collaboration on the research and development and vehicle integration of all-solid-state battery cells. The JDA requires us to continue our research and development efforts such that our products are capable of being deployed in BMW’s electric vehicles. Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV-scale Silicon EV Cells to BMW in 2022. Additionally, the terms of the JDA permit BMW to share in certain intellectual property developed through the research and development efforts required under the JDA. Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances. The JDA also contemplates that we will enter into additional agreements with BMW for purchase and pricing of sulfide-based solid electrolyte materials for integration into all-solid-state battery cell design, as well as licensing our all-solid-state battery cell technology to cell producers. However, the key commercial terms of such additional arrangements have not yet been determined.
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As part of the partnership, Solid Power and BMW Holding, an affiliate of BMW AG and one of Solid Power’s shareholders, entered into a Board Nomination Support Agreement, dated May 5, 2021 (the “BMW Nomination Agreement”), pursuant to which BMW Holding has the right to nominate a director for election to our Board. Rainer Feurer, Senior Vice President at BMW and BMW Holding’s nominee, has served on our Board since December 2021 and was a director of Legacy Solid Power from May 2021 until December 2021, in each case pursuant to the BMW Nomination Agreement.
Also, BMW Holding has the right to designate an individual to attend meetings of our Board and its committees in a non-voting, observer capacity, which it received in connection with the expanded partnership.
Ford Motor Company
We started our relationship with Ford in 2018, when it participated in our Series A-1 equity financing by providing both business plan validation and capital. In 2019, we announced an investment by Ford and partnership to jointly develop all-solid-state battery cells using our pilot roll-to-roll production line. In 2021, we expanded our partnership with Ford’s participation in the Series B Financing and the execution of a joint development agreement relating to testing and vehicle integration of our EV-scale cells.
Generally, the JDA with Ford sets out the framework for the collaboration on the research and development of our all-solid-state battery cells. The JDA requires us to continue our research and development efforts such that our products are capable of being deployed in Ford’s electric vehicles. Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV-scale Silicon EV Cells to Ford in 2022. Additionally, the terms of the JDA permit Ford to share in the intellectual property developed through the research and development efforts required under the JDA. Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances. The JDA also contemplates that we will enter into additional agreements with Ford for purchase and pricing of sulfide-based solid electrolyte materials for integration into all-solid-state battery cell design, as well as licensing our all-solid-state battery cell technology to cell producers. However, the key commercial terms of such additional arrangements have not yet been determined.
As part of the partnership, Ford was granted the right to appoint a director to the Legacy Solid Power board of directors and was given certain board observer rights, both of which terminated upon the completion of the business combination in December 2021.
SK Innovation
In October 2021, we entered into a non-exclusive JDA with SK Innovation for joint production of our Silicon EV Cells and, contemporaneously, and in connection with the closing of the business combination, SK Innovation invested $30 million in our company. The JDA contemplates that SK Innovation and Solid Power will collaborate to validate that Solid Power’s all-solid-state cell designs and production processes are scalable and compatible with existing lithium-ion production technology to enable us to deliver pre-commercial all-solid-state cells to our automotive OEM customers as part of the APQP process.
Under the terms of the JDA, we expect that Solid Power will produce EV-scale Silicon EV “B-Sample” Cells in 2023 at our headquarters in Louisville, Colorado and SK Innovation will be capable of producing the Solid Power-designed EV-scale Silicon EV “C-Sample” Cells in 2024 at its facilities, each as part of the APQP process. The terms of the JDA permit SK Innovation to share in the intellectual property developed through the joint production efforts required under the JDA. The JDA also contemplates that Solid Power and SK Innovation will, upon the fulfillment of certain milestones under the JDA, negotiate a commercial agreement, which agreement is expected to cover terms and conditions for the sale of our proprietary sulfide-based solid electrolyte materials and licensing terms for our all-solid-state cell designs, manufacturing know-how, and production practices. We intend to negotiate the commercialization agreement simultaneously with fulfilling our obligations under the JDA for cell production.
Current Research and Development
We conduct research and development at our headquarters in Louisville, Colorado. Research and development activities focus on making further improvements to our all-solid-state battery cell technology, including improvements to component materials to optimize cell performance and cost. Our research and development programs are currently focused on the following initiatives:
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Sulfide-Based Solid Electrolyte Development. We are continuously working to improve the performance of our sulfide-based solid electrolyte materials and to develop new materials with priorities on high conductivity, cell processability, improved anode and cathode stability, cost, and enablement of energy-dense cell designs. Similarly, our research and development teams work to further optimize electrolyte production processes for low cost and high material quality while also exploring new routes to electrolyte synthesis.
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Improvements in Cell Performance. We are developing scalable routes to improve the performance of our various cell designs, including minimizing stack pressure requirements of our all-solid-state battery cells and minimizing resistance within the cells. We are also working to maximize the long-term cycling stability of lithium metal anodes across a broad temperature range and with high charging rates.
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Conversion Reaction Cell Development. We plan to utilize a conversion reaction cathode in future cell designs, including our Conversion Reaction Cell design, that could completely remove nickel and cobalt from the cathode active materials, and which could cut cathode active material costs by up to 90% if we successfully develop this for commercial use. We intend to continue our research and development efforts on this unique cathode design and eventually transfer manufacturing to our production line.
Intellectual Property
Our proprietary battery cell technology is protected through a combination of patents, patent applications, and trade secrets. Our patent portfolio includes technologies invented by us, in addition to exclusive licenses obtained from the University of Colorado Boulder and Oak Ridge National Laboratory. Solid electrolyte materials and methods of production make up the largest portion of our patent application filings. Additional subjects include electrode and cell designs, cell processing methods, and electrolyte precursor methods, among others. We accelerated our patent application filings in 2021 and are continuing that acceleration in 2022. We regularly file new applications in areas that are enforceable and/or reverse-engineerable. Processes for manufacturing sulfide-based solid electrolyte materials and all-solid-state cells make up the majority of our trade secrets. As of February 28, 2022, we owned or exclusively licensed three issued United States patents and 21 pending United States patent applications, 18 non-United States and PCT patents and applications, and two registered United States trademarks. We further protect our intellectual property with non-disclosure agreements for all employees and consultants and material transfer agreements and non-disclosure agreements with third parties.
Competition
The battery industry is currently receiving significant attention in part due to an evolutionary change in both technology and environmental, social and governance initiatives. Next-generation battery and electric vehicle technologies will underpin performance improvements contributing to global adoption of electric vehicles. The growing spark of global interest has heightened competition in the industry and increased the risk of potential new entrants, which could negatively impact the success of our business, results of operations or financial condition.
We compete directly with “status quo” and emerging electric vehicle battery cell producers. As we near start-of-production for the next generation of electric vehicles, new and emerging battery technologies could create impediments to our commercial success. Nonetheless, we believe we are uniquely positioned across the battery cell technology value chain, including material and cell development and production techniques. Our prospective competitors include major automotive OEMs and top tier battery producers currently supplying, producing and developing solid-state solutions.
A number of mature and development-stage companies are seeking to improve conventional lithium-ion battery cells or to develop new technologies for solid-state battery cells, including lithium-metal battery cells. Potential new entrants are seeking to develop new technologies for cathodes, anodes, electrolytes and additives. Some of these companies have established relationships with automotive OEMs and are in varying stages of development.
There are various competing electrolyte material pathways to enable all-solid-state or semi-solid-state battery cell designs. Broadly speaking, we believe the next-generation battery cell community has converged on three competing approaches to solid-state battery cells. Below is a brief overview of these approaches along with our opinion why we believe a sulfide-based solid electrolyte is the superior approach for deployment in passenger electric vehicles.
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Polymers. Considered to be highly manufacturable and thus proven at scale in commercially available products today. However, polymers have the lowest levels of ionic conductivity of the competing solid electrolytes and therefore require elevated temperature when in use (>60 ° C). Polymers may also require pack-cooling as they can degrade at elevated temperature (>80 ° C). Consequently, we believe polymer market penetration is generally limited to mass transit applications ( e.g. , buses, ride share vehicles, etc.) where continuous heating and/or cooling is considered acceptable.
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Oxides. Possessing higher ionic conductivity than polymers, enabling stable operation at room temperature and potentially below, and also capable of being more chemically stable against lithium-metal. However, oxides are highly dense (three times or more the density of polymers and many sulfides) and are a rigid and brittle material that requires high-temperature manufacturing (or sintering) processes that are not common in traditional lithium-ion battery cell manufacturing. Because of these high-temperature manufacturing hurdles, we believe that most manufacturers utilizing an oxide design have been forced to utilize a liquid or gel electrolyte in their cell design, which reduces the battery life, safety and electrode design benefits that accompany battery cells that are truly all-solid-state. To date we are not aware of any manufacturer demonstrating an oxide cell design with greater specific energy (Wh/kg) than traditional lithium-ion.
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Sulfides. Possess the highest levels of ionic conductivity and thus have greater potential to enable the widest temperature operation window than any other solid electrolyte material. While sulfides are an inorganic material, their relatively soft and malleable mechanical properties, unlike oxides, enable their use in a separator layer or cathode or anode (i.e., as an “ catholyte ” or “ anolyte, ” respectively) using industry-standard slurry-, coating- and roll-to-roll calendaring-based manufacturing processes. Sulfides must be stored in an inert environment and processed in a dry-room environment to prevent the material from degrading; however, cathode slurry and coating lines are now located in dry-rooms in state-of-the-art gigafactories. We have developed our processes around an industry-standard dry-room condition of -40 o C dew point.
Sulfide electrolytes generate hydrogen sulfide (“H2S”) gas when exposed to moist ambient air. H2S is a gas that is toxic to humans above a specific threshold and is regulated by the Occupational Safety and Health Administration. Through preliminary testing, we believe H2S concerns with respect to our sulfide-based solid electrolyte are limited to when it is in powder form. Our preliminary abuse and destructive testing ( e.g. , cell depackaging or layer delamination) generated negligible H2S gas. If additional safety tests are consistent with our preliminary results, we expect H2S safety concerns at the cell and battery pack level to be minimal. We have implemented robust safety protocols to mitigate H2S risk and other risks associated with handling large volumes of potentially hazardous materials ( e.g. , solvents, cathode/anode active materials, and electrolytes) in the manufacturing process.
We believe our ability to compete successfully with traditional lithium-ion battery cell technology and with other companies seeking to develop solid-state battery cells will depend on several factors, including cell price, safety, energy density, and battery life, and on non-technical factors such as brand, established customer relationships and financial and manufacturing resources. We believe our close working relationships with Ford, BWM, and SK Innovation can expedite our research and development process relative to our competitors by creating a constant feedback loop allowing for more rapid and intelligent iterations.
Government Regulation and Compliance
Government regulations frequently control how battery cells are stored, transported, used and disposed of. We are subject to regulations governing the proper handling, storage, disposal and transportation of products containing hazardous materials, including federal regulations governing transport of battery cells and state laws relating to recycling and disposal of battery cells.
We are subject to federal and state environmental laws and regulations regarding the handling and disposal of hazardous substances and solid waste. These laws regulate the generation, storage, treatment, transportation, and disposal of solid and hazardous waste and may impose strict, joint and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed. In the course of ordinary operations, we, through third parties and contractors, may handle hazardous substances within the meaning of the Comprehensive Environmental Response, Compensation, and Liability Act and similar state statutes and, as a result, may be jointly and severally liable for all or part of the costs required to clean up sites at which these hazardous substances have been released into the environment. We are also subject to the strict requirements of the Resource
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Conservation and Recovery Act and comparable state statutes for the generation or disposal of solid waste, which may include hazardous waste.
The Occupational Safety and Health Act (“OSHA”), and comparable laws in other jurisdictions, regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about any hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities, and the public.
In many cases, our products — including our all-solid-state battery cells and related technology — are or may in the future be subject to trade and export control laws and regulations in the United States and other jurisdictions where we do business. Such laws may include the export administration regulations and similar export control regimes, trade and economic sanctions maintained by the Office of Foreign Asset Control and other similar agencies, foreign direct investment rules and regulations, tariffs and quotas, and other related regulations in jurisdictions in which we operate. In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or may be prohibited. Obtaining the necessary export license for a particular sale or offering may not be possible or may be time-consuming and may result in the delay or loss of sales opportunities. Any failure to adequately address these legal obligations could result in civil fines or suspension or loss of our export privileges, any of which could materially adversely affect our business, financial condition, and results of operations.
In addition, our business may be subject to the Foreign Corrupt Practices Act and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations in the jurisdictions in which we have offices or do business, both domestic and abroad. Any failure to adequately comply with any of these obligations, or future changes with respect to any of these legal regimes, could cause us to incur significant costs, including the potential for new overhead costs, fines, sanctions, and third-party claims.
Human Capital
As of February 28, 2022, we employed 127 full-time employees, based out of our headquarters in Louisville, Colorado. Many of our employees have a technical background or hold advanced engineering and scientific degrees. We are committed to increasing diversity in the workforce and we believe building and maintaining an inclusive and positive culture is important for our success.
We are committed to compensating our employees in an ethical manner. We have taken steps to comply with Colorado’s Equal Pay for Equal Work Act. We offer competitive salaries and benefits, as well as a robust equity compensation plan, all with the intention of attracting and retaining team members capable of making our company a world leader in all-solid-state battery cell and electrolyte development. Our compensation decisions are driven by individual contributions, the overall market, and how critical the role is to our success.
To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good. None of our employees are either represented by a labor union or subject to a collective bargaining agreement.
Information about our Executive Officers
Set forth below, in alphabetical order, is a list of our executive officers as of March 15, 2022, including each executive officer’s principal occupation and employment during the past five years and reflecting recent organizational changes. None of our executive officers has any family relationship with any other executive officer, and none of our executive officers became an officer pursuant to any arrangement or understanding with any other person. Each executive officer has been elected to serve until his successor is appointed or his earlier death or removal or resignation from such office. Each executive officer’s age is set forth in the table next to his name.
Name
Position
Age
Joshua R. Buettner-Garrett
Chief Technology Officer
36
Douglas Campbell
Chief Executive Officer and Class I Director
48
Jon Jacobs
Chief Marketing Officer
51
David B. Jansen
President, Chairman of the Board, and Class III Director
60
Derek C. Johnson
Chief Operating Officer
44
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James Liebscher
Chief Legal Officer and Secretary
41
Kevin Paprzycki
Chief Financial Officer and Treasurer
51
Joshua Buettner-Garrett serves as our Chief Technology Officer. He served as Legacy Solid Power’s Chief Technology Officer since November 2013. Prior to joining Legacy Solid Power, he served as Program Manager of the Energy Storage Group at ADA Technologies, Inc., a research and product development business, from 2011 to 2013. He served as a Senior Research Scientist in the ADA Technologies’ Energy Storage Group from 2010 to 2011. Mr. Garrett holds a B.S. in Mechanical Engineering from Arizona State University and a M.S. in Mechanical Engineering from Colorado State University.
Douglas Campbell serves as our Chief Executive Officer and a Class I Director. He is a co-founder of Legacy Solid Power and served as Legacy Solid Power’s Chief Executive Officer since its inception. He was a member of the Legacy Solid Power Board since March 2014, when it converted to a corporation. In parallel with establishing Legacy Solid Power, he founded i2C Solutions, LLC (“i2C”), a thermal management company, and co-founded Roccor, LLC (“Roccor”), a component supplier for the small satellite industry. i2C and Roccor merged in 2015, with Roccor being the surviving entity. Mr. Campbell served as the Chief Executive Officer of Roccor until the end of 2018 and remained on its board of directors until the company was acquired in late 2020. He began his career in advanced technology development at the Space Vehicles Directorate of the Air Force Research Laboratory, Kirtland AFB, NM. Mr. Campbell earned his B.S. and M.S. in Civil Engineering with a Structural Mechanics emphasis from the University of New Mexico.
Jon Jacobs serves as our Chief Marketing Officer. He served as Legacy Solid Power’s Chief Marketing Officer since October 2021. Mr. Jacobs brings to Solid Power over 20 years of sales and management expertise, including experience with highly technical products and services requiring a value-selling approach. Most recently, Mr. Jacobs served as Vice President of Business Development at Wildcat Discovery Technologies, Inc. from November 2009 until October 2021. Prior to joining Wildcat Discovery Technologies, Inc., Mr. Jacobs served as the Global Director of Sales and Marketing for Material Sciences Corporation from May 2002 to November 2009. Before joining Material Sciences Corporation, Mr. Jacobs served in a series of successive marketing and product design positions. Mr. Jacobs holds an M.B.A. from the University of Michigan, Ross School of Business, an M.S. in Engineering from Purdue University and a B.S. in Mechanical Engineering from the University of Michigan.
David B. Jansen serves as the President, Chair and a Class III Director of Solid Power. He served as Legacy Solid Power’s President since February 2017 and was an advisor to the company since its inception. He was a member of Legacy Solid Power’s board of directors since March 2014, when it converted to a corporation. Mr. Jansen previously served as a Managing Partner of Murphee Colorado, a small business venture capital fund, from 2002 to 2010. From 2005 to 2009, he served as the President and Chief Executive Officer of Advanced Distributed Sensor Systems, which developed and manufactured remote sensors for intelligence, surveillance and reconnaissance applications. He has also served on a variety of boards and has been involved with helping startups from formation to exit. Mr. Jansen has a B.S. in Electrical Engineering from the University of Arizona.
Derek Johnson serves as our Chief Operating Officer. He served as Legacy Solid Power’s Chief Operating Officer since January 2020. From September 2016 to January 2020, he served as Vice President of Global Research and Development at A123 Systems (“A123”), a developer and manufacturer of lithium-ion batteries and energy storage systems for automotive applications. His responsibilities ranged from new technology development and IP generation, customer and strategic partner engagement, and production strategy and supply chain rationalization, prior to which he served as the Executive Director of R&D at A123, from April 2015 to September 2016. Dr. Johnson serves as a director of Symbios Technologies, LLC, an aqueous plasma technology platform, and previously served as its Director of Technology Development, Senior Scientist and Engineer from April 2009 to January 2014. He also serves as the President of Fields of Hope, a non-profit focusing on enriching the lives of at-risk youth. Dr. Johnson holds a B.S. in Environmental Engineering from the University of Florida, an M.S. in Chemical Engineering from Colorado State University, and a Ph.D. in Chemical and Biochemical Engineering from Colorado State University. Dr. Johnson has published 16 peer reviewed publications and holds 38 patents.
James Liebscher serves as our Chief Legal Officer and Secretary. He served as Lead Corporate Attorney of Legacy Solid Power from June 2021 through the closing of the business combination. Mr. Liebscher was a senior attorney at Aspect Holdings, LLC, an international energy company, from February 2020 until June 2021. He previously was in private practice as a securities and corporate attorney at Polsinelli PC from August 2016 until February 2020 and Dufford & Brown, P.C. from October 2014 until August 2016. Prior to his legal career, he served for nine years in the United States Air Force as an airborne cryptologic linguist.
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Mr. Liebscher holds an LL.M. in Securities and Financial Regulation from Georgetown University Law Center, a J.D. from the University of Notre Dame Law School, and a B.S. in Business Administration from Bellevue University.
Kevin Paprzycki serves as our Chief Financial Officer and Treasurer. He served as Legacy Solid Power’s Chief Financial Officer since October 2021. Prior to joining Legacy Solid Power, Mr. Paprzycki served as Chief Financial Officer, Treasurer and Corporate Secretary (Principal Financial Officer and Chief Accounting Officer) of Scott’s Liquid Gold-Inc. (“SLGD”) since June 2018, a member of its board of directors since 2019, and began serving as interim co-President in April 2021. Prior to joining SLGD, Mr. Paprzycki was employed by Westmoreland Coal Company and its subsidiary, Westmoreland Resource Partners, LP, where he served as Chief Executive Officer from December 2015 to November 2017, as Westmoreland Coal Company’s Chief Financial Officer from May 2006 to December 2015 and Westmoreland Resource Partners’ Chief Financial Officer from December 2014 to July 2015. Mr. Paprzycki was also a member of each company’s board of directors. Subsequent to his employment with the Westmoreland entities, on October 9, 2018, both Westmoreland entities filed voluntary petitions in the United States Bankruptcy Court for the Southern District of Texas seeking relief under the provisions of Chapter 11 of Title 11 of the United States Code.