The Powerhouse: Inside the Invention of a Battery to Save the World (21 page)

T
wo weeks after Orlando, Arun Majumdar presided over the ARPA-E Summit. He staged an atypical show for the unexciting Department of Energy. It opened with an appeal from Bill Clinton to Congress to significantly increase ARPA-E funding. The agency had much left to do and monumental gains to achieve, Clinton said. His image flashing onto three large screens within a large, darkened room, Clinton argued for ambition. Do not become mired in fretting. If you entered the room pessimistic, leave thinking of the grand possibilities, he said.

Clinton vanished behind a curtain and was replaced by Bill Gates and Steven Chu. They settled into armchairs. Gates was known for Windows, education, and health philanthropy, and not for his chops in energy. But Canadian energy thinker Vaclav Smil was his favorite writer, and Gates was a seed investor in a molten metal battery prototype invented by Donald Sadoway, a celebrity MIT chemist. Conversing with Chu, Gates said that clean power was perhaps the world’s greatest challenge. It would be exceptionally harder than anything he himself had attempted. Gates said that when you contrasted energy and computer software, “people underestimate the difficulty getting the breakthroughs. And they underestimate how long it is going to take.” Crossing from the invention to the marketplace was the longest wait of all—the general adoption of a new energy technology could take five to six decades, he said.

That’s right, Chu replied. You could achieve an extraordinary advance, but no one could know when or whether it would be embraced by consumers. If you did not believe him, he said, go downstairs to the rows of new battery prototypes on display in the ARPA-E exhibition room. Single out the one that will capture the market and “go and invest in that.” Such intuition stood little chance in deciphering the right electrochemical pathway.

Chu continued: “We need literally thousands of companies trying to increase the odds that we will end up with the ten or twenty approaches that will give us the magic solution.” But the rewards for success would be astronomical. If someone for instance managed to combine breakthroughs in inexpensive batteries and
solar cells, he said, the resulting invention would “go viral in the same way that cell phones went viral.” It would do good in the world, since village populations in frontier countries could finally have power and electric light, and would create numerous vast fortunes. “Let’s not blow it” through miserly energy research budgets, Chu said. “There is a huge market out there.”

Majumdar took the podium. He claimed the keynote spot for himself.

Another alumnus of India’s Institutes of Technology, Majumdar had previously been deputy director of the Lawrence Berkeley National Laboratory under Chu. In 2009, when Chamberlain held the very first pre-Hub meeting, Majumdar led the Berkeley delegation alongside electrochemistry pioneer John Newman. Although not a Bell veteran, a Nobel laureate, or a scientific impresario, Majumdar brought something more to the stage. Chu projected charm and charisma but Majumdar, resonant, grave, and confident, was theatrically masterful. In the basement, he said, were exhibitions of 180 select inventors—“the Wright brothers, Borlaugs, Salks, and Teslas of the twenty-first century. They are the crown jewels of our nation.” They would help create the future. Nine merited special attention. He began to tick them off, flashing slides to punctuate their achievements.

About midway through, Majumdar said that a battery powerful enough to propel a car the 225-mile distance from Washington, D.C., to Manhattan would cost $30,000. “Just the battery pack,” he said. Since very few people could afford a car containing such a battery, ARPA-E had challenged the research community three years earlier to create a battery that could compete with gasoline in range and cost. Then, he said, “Let me tell you the story now of Envia.”

A photograph of Kumar and the Envia team went up on the triple screens. The day before, Majumdar said, this start-up company had announced “the world record in energy density of a rechargeable lithium-ion battery.” Its 400-watt-hour-per-kilogram battery, if scaled up, could take a car that entire Washington-to-New York journey in a single charge at half the cost of the current technology. And more was coming, he said.

The New York Times
, granted an exclusive the previous evening, seemed uncertain how to treat the news. Its cautious headline read, “E
NVIA
C
LAIMS ‘
B
REAKTHROU
GH’ IN
L
ITHIUM-
I
ON
B
A
TTERY
C
OST AND
E
NERG
Y
D
ENSITY
.” Restraint vanished in the hours following Majumdar’s presentation. One reporter declared Envia “the Golden Child” of the summit. Everyone was discussing the company, the story said.
Scientific American
recalled Envia’s humble beginnings in the Palo Alto Library and calculated that its battery could fuel a three-hundred-mile car trip from St. Louis to Chicago for $10, an eighth of the cost of a gasoline fill-up for the same journey.

In the audience, the Argonne battery guys cringed. Then they went ballistic. Kevin Gallagher said Majumdar’s claims about Envia were “bullshit,” making him wonder about the other eight start-ups that he showcased. ARPA-E as a whole, with its pressures to deliver big leaps, was “basically set up for companies to lie,” he said. Chamberlain didn’t go that far but said that deceit was in the DNA of start-ups and VCs: you needed that quality in order to raise funding, sell your product, and ultimately achieve a successful exit—to flip your company in either an acquisition or an IPO. There was no blaming anyone for this Silicon Valley peculiarity.

They knew their remonstrations rang of sour grapes. For Argonne, not to mention others in the industry, the situation was confounding. How was Envia, a lab with three dozen researchers operating on a comparatively shoestring budget, managing advances that surpassed everyone else’s, including the inventors of NMC 2.0? How had the company eclipsed the other NMC licensees, not to mention the Asian giants, all of whom were also working on both voltage fade and the silicon anode? Kapadia partly credited good office politics: All subjects were fair game—as long as they were respectful, any scientist could and often did debate any other. Anyone could attempt any experiment that he wished. Money was not held tight—they had $650,000 a month to spend and as long as the staff did not exceed it, no one challenged expenses. Kapadia said he worked “seamlessly” with Kumar, who was “a genius.”

Did such operational conditions truly explain everything? Argonne’s battery guys continued to grumble. They were not alone—Nissan and Samsung had come back to Envia with complaints that test cells provided by Kumar had swollen up with an apparent internal gassy buildup, and fresh samples had to be provided. In an unguarded moment, Envia cofounder Mike Sinkula had mentioned to Kapadia that their proprietary anode actually contained some Japanese material—it was not entirely Envia’s invention, as the company’s promotional material would easily lead one to believe. Kapadia was sufficiently concerned to run the claim by Purnesh Seegopaul, a materials scientist who served on the board. Seegopaul told him not to worry. “Great entrepreneurs bluff their way through. Look at Steve Jobs,” Seegopaul said.
1
If Kumar was somewhat exaggerating, that was part of the game. Soon enough, Envia would invent an anode that was entirely its own. Plus, what was the probability that the skeptics were right? Kumar’s peers were vetting Envia’s material as part of federal grant rules. The world’s biggest automotive companies were evaluating his cathode. Crane had weighed in. If Kumar was exaggerating, it seemed he would already have been found out.

Kapadia decided that Seegopaul was right: Envia continued to be ahead of everyone; such sniping was to be expected.

 • • • 

Chamberlain sank into a soft chair in the basement of the ARPA-E conference. The nearby cavernous exhibition hall was packed with the wares of ARPA-E winners, also-rans, and would-bes. He mulled over Envia’s recent history and decided that Majumdar’s high-profile announcement was politically driven. Department of Energy investments were a primary target of harsh Obama critics. The furor centered on Solyndra, a California solar power company that was awarded a $535 million stimulus loan and then filed for bankruptcy. Solyndra, critics said, exemplified the folly of “picking winners”—of favoring specific companies rather than general swaths of potential economic prosperity in which any enterprise might emerge a success. The loan, they said, was particularly suspect given that a Department of Energy official handling it was simultaneously a presidential campaign fund-raiser and married to a Solyndra lawyer.

In fact, ARPA-E and other programs
were
picking winners. But that was what they were supposed to do. The question was whether they picked wisely. In any case, while the wisdom of the Solyndra loan was debatable, its origins were in the Bush administration. ARPA-E was modeled after DARPA, a Pentagon research agency whose mission was to fund highly unusual ideas that otherwise might never be tried out. Solyndra, with its bet on a niche thin-film technology, fit that operating principle. The solar market had turned against everyone.

The politics remained unforgiving. In Washington, Republican congressmen held hearings accusing Solyndra executives and Obama officials of corruption. American voters would go to the polls in nine months. Obama could not be sanguine about reelection given these attacks and the listless economy. Against this backdrop, Envia was much-desired good news.

The announcement was extremely welcome at Envia. Kumar and Kapadia suddenly had the rare attention of the world’s media. As Chamberlain said, “It doesn’t hurt to have a splash in
The New York Times
.”

Chamberlain’s main preoccupation was the Hub proposal, Steven Chu’s initiative that would attempt to invent a new generation of batteries in collaboration with industrial partners who would manufacture them. The Department of Energy would select the site of the Battery Hub in a competition, and Chamberlain was working on the proposal in his hotel room. He said that about a hundred researchers and companies had expressed hopes of collaborating with Argonne. In addition to his core team, Chamberlain welcomed outside players because it was almost certain that three years or so down the road—if Argonne won—its plans would change, perhaps significantly.

This was why, in twenty minutes, Chamberlain and Gallagher planned to stroll the ARPA-E exposition and attempt to strike affiliate agreements with battery exhibitors. When advances were made, Chamberlain would possess a directory of who could make good use of them. “If our core partners aren’t interested, we already have an audience that we can say, ‘This is for you,’” he said.

Gallagher arrived and he and Chamberlain disappeared into the hall.

Kumar stood a few feet away, beaming and clutching a glass of wine. Men from rival companies and reporters crowded Envia’s booth. Previously, Envia had been covered only by the Silicon Valley and energy blogs. Now
The New York Times
was calling.

“Hey, Atul!” Kumar shouted.

Kapadia walked up.

“It is crazy,” the Envia CEO said. He had been fielding most of the media calls. His objective was to parlay the coverage into a commercial frenzy among carmakers over the Envia material. With the 300-mile range forecast, the calls weren’t coming only from the media.

Majumdar had defined the race as a determination to keep advances such as Envia’s in the United States. “If we don’t act now, many of these innovations will go overseas and be manufactured elsewhere in the world,” Majumdar said. Kapadia repeated that Envia in fact was in play. The Japanese automotive companies had initiated talks. After the Orlando conference, Kumar had also heard from eager managers at South Korea’s Samsung and the American-Japanese joint venture Dow Kokam. Kapadia said, “If America does not commercialize this technology first, the question [that] should be asked in Detroit and D.C. is, ‘Why?’”

General Motors was his and Kumar’s first choice as a commercial partner. GM had invested first, winning it a two-year head start on everyone else. That was “thanks to Jon Lauckner’s foresight,” Kapadia said. Two days earlier, GM had awarded Lauckner a substantial promotion—he was now not only head of GM Ventures but also chief technology officer. Kapadia said that Lauckner needed to press his advantage if he was to win the industry rivalry to dominate electrics.

Lauckner was still in the lead. A week and a half earlier, a GM team had called on Envia. Kumar presented his latest voltage fade results along with fresh tests showing that the start-up’s material met endurance criteria. Judging by the cells, the material could last fourteen years, longer than the ten years required under standard industry specs. A GM man said that an additional six-month test was required, but Kumar’s sense was that licensing was only a matter of time.

Kapadia called Lauckner a “patriot partner.” When the Envia CEO traveled to Japan, Lauckner peppered him with e-mails. His main message was not to sell the company to a Japanese or Korean buyer. “He will do whatever it takes with Envia to serve GM’s purpose. And we like him for that,” Kapadia said.

Envia had no intention of selling to a Japanese, Korean—or American—buyer. After months of consulting with Goldman Sachs and Morgan Stanley, Kapadia had decided that an IPO was the best option for Envia’s investors. Envia would remain conservative—it would sell just 8 percent of the company on the market. The idea was to raise $60 million by selling two million shares at $30 each.

Kumar hoped to use the money to make a manufacturing plant. But the pair’s goal wasn’t just the plant: it was the valuation. Such a sale would factor out to a company value of $750 million. It wouldn’t be quite the $1 billion of which he and Kumar had spoken, but it was a large sum. And perhaps, if a sufficient marketing effort was made, those shares might be sold at $40 each, which
would
achieve the aspired valuation.