I was beaming with delight when I read that John Goodenough, Stanley Wittingham and Akira Yoshino received the 2019 Nobel Prize in Chemistry for the “development of lithium-ion batteries.”

Wittingham’s initial work on batteries dates back to the 1970s while at Exxon. Goodenough’s seminal work on LCO cathodes at Oxford was published in 1980. Yoshino’s contributions on the graphite anode came in 1980s at Asahi Kasei in Japan. Sony converted their ideas into the first commercial lithium-ion battery product in 1991.

So it is about time that these scientists are recognized for their contributions and for initiating a revolution in energy storage. The award shines the light on the contributions of thousands of scientists and engineers who have diligently worked in the past decades to make lithium-ion batteries ubiquitous in our lives. Just imagine your modern digital life, your iPhone, or your Tesla vehicle, without a lithium-ion battery. You simply can’t!

With today’s Nobel award, lithium-ion batteries join the ranks of great inventions such as the transistor or polymerase chain reaction (PCR). The invention of the silicon transistor in 1951 became the catalyst that led to modern-day Silicon Valley. Kari Mullis’ discovery of PCR technique in 1983 set in motion a vast industry in biochemistry and drug discovery.

Nearly 30 years have passed since Sony manufactured the first lithium-ion battery. Over these three decades, the lithium-ion battery went from powering early models of consumer camcorders to transforming transportation. Nonetheless, the industry remains in its early days with many more challenges to overcome and discoveries to be made. 

As the adoption of electric vehicles accelerates in the coming years, the lithium-ion battery takes a fundamental role in our economy no less than that assumed by the combustion engine in the early part of the 20th century. Challenges in battery performance, safety, manufacturing, cost, integration with complex electronic systems, all must be resolved….challenges also mean opportunities for innovation, and opportunities for scientists and engineers to make lasting contributions.

In an era where the meaning of “tech,” especially here in the San Francisco Bay Area, has become synonymous with the creation of new gadgets or new business models, we should not lose sight that science remains the engine that powers technology.

New menu settings inside Apple’s iPhones display a warning sign if the device’s battery is not recognized as authentic. Other smartphone manufacturers are curbing users and unauthorized repair shops from replacing the battery.

Why it matters: Smartphone manufacturers and Apple say that their actions guarantee the integrity and safety of the batteries by preventing the possible use of counterfeit batteries. Some users have objected citing a right to repair.

Users perceive batteries as consumable:

• Historically, smartphones had externally removable batteries.
• After the introduction of the iPhone, all smartphone OEMs followed Apple by making the battery non-removable.
• This design change was necessary to make smartphones thin and light.
• Batteries are sophisticated components inside a precision-engineered smartphone. Much like other internal components, such as memory or display, they are increasingly difficult and expensive to replace. 
• A botched battery replacement can lead to a fire.
• The historical perception of batteries as consumables is no longer true. 

Why fake batteries are a real problem: 

• Fake replica batteries are inexpensive counterfeits largely from China, made by manufacturers with limited control on quality.
• Statistics show that counterfeit batteries have a much higher prevalence of fires than authentic batteries.
• Detecting counterfeit batteries is not easy without the use of battery intelligence.

Why smartphone OEMs do not sell batteries:

• Replacing the battery inside a smartphone is a complex operation with risk of damage to the battery. 
• Recall the Samsung Note 7 fires were connected to the mechanical sizing of the battery inside the smartphone causing a mechanical dent in the battery.
• To be safe, smartphone manufacturers direct users to qualified repair shops.

What smartphone owners can do:

• Take actions to ensure that your battery outlasts the rest of your smartphone. Avoid super fast charging if you can. Avoid charging overnight to 100%. Avoid hot temperatures.
• If you ever have to get your battery replaced, get it done at an authorized repair shop where the battery can be traced to a trusted manufacturing source.

You are an entrepreneur. You understand that batteries are powering the future. You think present battery technology falls short of market demands. You invented a new battery technology. You may even have some early prototypes that show some exceptional promise. So you start a new company to commercialize your new technology. Welcome to the Battery Gold Rush, ca. 21st century.

In the first Gold Rush, ca. 1849, many made fortunes, and many others lost riches. The new Battery Gold Rush will not be much different. So what factors should you be thinking about in your pursuit of the battery holy grail?

I will assume here that your battery technology is exceptional.You have tested it. It works in the laboratory. What I will address here is whether you and your investors will make money in this endeavor.

Five factors require consideration.

• Are the economics of the battery market in your favor?

As a young graduate student several years back, I was constantly advised to move my thesis work away from silicon to gallium arsenide (GaAs). Known as III-V compounds for their position in the periodic table of elements, these new materials offered immensely better performance than silicon integrated circuits. Yet today, silicon dominates the semiconductor landscape simply because its economics far outweighed the economics of any other competing material system. There is a lesson here for emerging battery technologies to be economically viable from the get go.

As batteries increasingly become the energy source powering everything from smartphones to electric cars, one key economic metric to pay attention to is $/kWh: the cost per unit of energy stored within the battery. For the big manufacturers in Japan, Korea and China, the cost metric stands today somewhere between $100 and $150 per kWh.  It is forecasted to drop below $100 by 2025 at which point the cost of an electric car is equal to that of a traditional combustion engine vehicle. 

If your technology increases this cost, or your business model is based on a significant premium, then you are at risk of serious commercial headwinds. It does not mean that you will fail, but it means that the adoption of your products may be limited to niche markets, or that the rate of adoption may be too slow for your company to reach profitability.

• Are you sure you have a working business model?

Most battery startup companies are exploring a wide variety of business models. Some favor building the entire battery. Others feel that manufacturing the materials are sufficient. A few others are content developing the technology and selling its underlying intellectual property. Which one is better? You will need to quickly validate the business model for yourself. 

If you choose to build the entire battery, will you be able to scale your manufacturing and distribution fast enough? Will you have the investment capital required to compete with the incumbents? Ramping up a battery manufacturing operation could cost in the billions of dollars. History has not been kind to battery startups. The rise and fall of A123 Systems is a business case worthy of serious study.

If, instead, you decide to build your business model on selling materials, your customers are now the battery manufacturers, the  vast majority of whom are based in Asia. Your technology may be differentiated but your customers are also your competitors. How will you protect your intellectual property? Will they pay you what you think is the value of your innovation? History also has not been kind here too. You will need to think out of the box to experiment and identify a working solution to the business model dilemma.

• Will your product scale?

I have seen many amazing demonstrations in the laboratory of innovative battery materials. It is truly exciting to see this degree of innovation. But I am not aware that any of these recent battery material ideas have made it to volume production, at least not yet. As companies begin to ramp up manufacturing, many problems rear their ugly head. Uniformity of manufacturing across lots; meeting specifications on larger batteries; cost overruns; scarcity of available capital; investor fatigue are only a few examples of headwinds.

• Do you understand your “exit” opportunities?

Your capital comes from investors who have an expectation of returns. A return of 5X or more is considered good; 10X or more is considered great.  So if you company requires $200 million to $500 million of capital to reach some degree of scaled operation (and hopefully profitability), then the expected “exit” valuation of your company is in the range of $1 billion to $5 billion. Congratulations if you achieved these valuations in your recent fundraising round. Very few companies can achieve this milestone. But will a potential buyer pay these valuations to acquire your company? Most incumbent battery companies in Asia have shown serious hesitation paying such valuations. You might, instead, choose to take the path of an initial public offering (IPO). A123 is such an example. But be careful, public markets have not been kind to company valuations with poor margins and tepid growth trajectories. In any case, the “exit” path — i.e., how you and your investor will turn your shares in the company into cash — is not well charted for battery companies. There are no easy precedents to follow and the path is fraught with incumbents who might choose to wait for you to reach desperation.

• What about the Dragon?

China is rapidly becoming the battery manufacturing powerhouse. It means that Chinese battery manufacturers will likely be customers or partners of your company, or even potentially acquirers. Given the geopolitical tensions between the USA and China, it is difficult that the US Government will authorize the transfer of your technology or products to China under the export reform rules of the Defense Authorization Act of 2018. Will you choose to build your company anywhere else, may be in Europe or other geographies that will allow you to work with China? If so, you will need to figure that out early on in your endeavor.

My intent here is not to scare you off. The battery industry is in need of innovators. But innovation alone is not sufficient. Reaching financial success is essential to you, your employees and your investors. 

Let’s say you love to ride your bicycle and that you want to measure speed without using fancy computers and GPS. What would you do?

High-school physics to the rescue! All we need is the circumference of the wheel then count the number of rotations the wheel makes in a certain amount of time that we can measure with our stopwatch. The speed, v, is calculated as the number of rotations, N, multiplied by the circumference, L — that’s the total distance traveled by the wheel — divided by the measured time, T. Put in one simple equation:

We replace the circumference with the radius, R, because it is easier to measure the radius of the wheel:

The speed equation becomes:

Therefore, measure the wheel radius, then count the number of rotations, and clock them with a watch…et voila, you can measure speed.

You quickly realize that you have an approximation of speed because it fails to take into account other factors that can introduce errors, for example temperature. On a hot day, the wheel expands a little making the radius longer.  Then you realize that the thickness of the rubber tire is not exact — it varies across manufacturers. With aging, the rubber gets worn out. It becomes thinner and consequently the radius is a little smaller. You may think these are small effects but if you are racing, they can make the difference between winning and losing.

So what is the relevance of a bicycle wheel to a battery?

Scientists understand the electrochemistry inside a battery.  They represent this science with many complex equations — like Fick’s law, Tafel’s equation, and several other mathematical forms. Yet, these equations remain insufficient to describe batteries in real life. 

Much like the wheel, there are significant variations in manufacturing across batteries from the same manufacturer or from different manufacturers. Temperature dependence, aging, presence of defects…etc. are significant additional considerations that impact the performance and safety of the battery.

Capturing these “real-life” considerations is what makes a model of the battery useful.  By “model” I mean a sufficiently accurate representation of the battery that one can use to make meaningful conclusions. For example, a good model can be used to predict the end of life of the battery. It can be used to identify counterfeit batteries or find defective batteries before they become a fire hazard.

Developing the model entails collecting data — millions of measurements — to capture manufacturing variations, temperature dependence, defects…etc. It takes a long time to collect statistically meaningful data across different types of batteries, from different manufacturers and across a board range of operating conditions.

The battery model is not static — it must improve over time or it becomes obsolete. One must keep updating it so it learns and adapts to newer battery materials, newer battery designs and manufacturing processes. This learning process can be in the test lab, or it can be in the field — in other words, intelligent algorithms can learn from batteries deployed in smartphones or other devices already in the hands of users.

Possessing intelligent algorithms and useful battery models is a powerful combination to make key predictions about the battery’s health and safety…that can make the difference between a safe battery and a fire.

Some time in August of 2013, hackers breached Yahoo! servers and stole private account information for up to 3 billion users. Verizon Communications received a $350 million discount in the price of its acquisition of Yahoo! in 2017, exemplifying the staggering costs of one single encounter with cyber risk.

The concept of risk and risk management is not new. In 1688, Edward Lloyd set up what would become today Lloyd’s of London to contain the emerging risks of the new and growing maritime trans-Atlantic trade. Since then, the business world has worked diligently to contain such risk in everything from food to the Internet.

Actually, almost everything. One such modern risk that remains inadequately addressed is battery safety, specifically the safety of lithium-ion batteries that are so ubiquitous. To be fair, industry has recognized long time ago the safety hazards surrounding the lithium-ion battery. Battery fires in the early 2000s caused expensive recalls. But they were largely treated as one-off events. These were times when the annual volume of batteries was a few hundred millions. These fires were not treated as an on-going risk. They were seen as failures in manufacturing that could be eliminated by improvements in factories or designs.

Today’s battery shipments have skyrocketed to billions of units and counting. Even a minuscule chance of battery fire becomes a real problem when multiplied by the sheer volume of batteries. Battery failures are an ongoing risk that needs to be contained.

Estimates place the risk of battery fire in the range of a few to tens of parts-per-million (or ppm). One ppm means that for every one million units shipped, there is a risk that one of them will catch fire. It does not mean that one *will* catch fire. It just means that statistically speaking, the probability of a fire is one in a million. Now that seems like a small number. You might tell a precious love that they are “one in a million.” In an industry that ships two billion smartphones annually, that translates to several thousand battery fires annually! Not acceptable! We need to bring this figure down by a factor of 100 or 1,000.

Edward Lloyd’s business was possible because it had its underpinnings in the mathematical advances of probability pioneered by Blaise Pascal and Pierre de Fermat early in the 17th century. In that same vein it is possible to make great improvements in battery safety because it leverages the advances in computation of the past 50 years.

Every smartphone is a miracle device. It contains a processor that is infinitely more powerful than the computer that landed Apollo 11 on the moon. It also contains sophisticated electronics that can measure minute voltages and currents, and in turn it is very telling of the chemical reactions inside the battery. Merge it all with intelligent software, and we can now predict what the battery’s health will be in the future.

But why can’t we just manufacture the perfect battery that will never catch fire? Simply put, it is prohibitively expensive. Consider this: nearly every person with a smartphone is also an amateur photographer. Despite the fact their camera lens is optically deficient, software allows them to take incredible photographs.

The same goes for batteries. Manufacturing batteries in large volumes means that some will have defects. That’s just the balance between quality and cost when it comes to battery manufacturing in large scale. To make matters more challenging, every person will use or abuse their battery in unpredictable ways. It becomes essential to catch and screen these few bad batteries in the field before they become a hazard. Naturally, this is not meant to supersede good manufacturing practices, but rather to complement them in our quest to reduce battery fires to zero.

So how does it work? I talked in the past about electrochemical impedance spectroscopy (EIS). It is a workhorse test instrument in battery laboratories around the world. It is capable of measuring the chemical processes that are taking place inside the battery. Now imagine if you had such a similar tool inside your device. With some expertise, you can now start making smart decisions about your battery. This is not a new concept; a similar concept, for instance, allows glucose measuring devices to save the lives of millions of diabetics.

It’s high time we get serious about battery health and safety. Let’s address this risk before it escalates. The spread between device capabilities and battery threats is only growing — let’s get smart and manage potential incidents before they blow up into something bigger.