Technological Pragmatism - A Conversation with Adrian Yao of EnPower & STEER

In this session of IONS, Cam is joined by Dr. Adrian Yao, founder of Lithium-ion cell development company EnPower and STEER, Stanford's center for energy feasibility research. Cam and Adrian have both been in the battery space for years, and their experience across chemistries, academia, and industry informs a conversation that ranges from material development to project economics and the approach needed to commercialize batteries in the west: technological pragmatism. 

For the first time, Cam and Adrian discuss STEER's 2025 study of sodium-ion cell cost-down curves and break down STEER's initial pessimism on sodium-ion cell economics against the movement of CATL, Peak, and GM into project deployments built on an underdog chemistry.  

Cam and Adrian find that the industry's perspective has expanded, growing from a granular focus on low-cost materials and R&D to real assessments of system-level viability. Cam and Adrian describe this as a "parallel journey" tracked over the last two years by academia and industry, driven by real-world concerns as energy storage projects take the grid by storm. 

🔋 Learn more about EnPower's American-built batteries

📃 Read Dr. Yao’s thesis on energy storage development

Follow us on LinkedIn: https://www.linkedin.com/company/peakenergytech

Transcript

SPEAKER_00 0:00

Hello everybody, I'm Cam Dale, co-founder and president of Peak Energy. Welcome to Ions. And with me today, I'm very excited for this conversation. An old friend of mine, his name is Adrienne Yao, has had uh a storied career actually uh in the battery space, both on the academic side and the industrial side. He's the uh one of the founders of a lithium-ion battery company called NPower here in the U.S. He is the founder of an organization that I hope to talk a little bit about called Steer, S-T-E-E-R, at Stanford. And then for some unknown reason, decided to jump back into the startup world, rejoin his uh battery startup Empower as the CEO. And so is um, I'm sure having lots of fun with that. So we'll dig into that over uh over the next few minutes or uh hours, depending on how this goes. But uh Adrian, welcome to Ions. Thank you.

SPEAKER_01 1:01

Happy to be here.

SPEAKER_00 1:02

Yeah, maybe, maybe um a couple of words of background kind of of your history. Um take us through how you how you got your start in the battery space, and then would love to talk a little bit in maybe in the beginning here about your time at Stanford.

SPEAKER_02 1:18

Yeah.

SPEAKER_01 1:19

Well, I think um again, happy to be here. Thanks for having me. Um I think like most people in the battery space, I think the start is by accident.

SPEAKER_00 1:29

Um if we actually knew how hard it was, we wouldn't have done it.

SPEAKER_01 1:33

Exactly.

SPEAKER_00 1:34

How hard could it be? It's a plus and a minus. That's that's how I ended up in the industry.

SPEAKER_01 1:37

Yeah. So um I founded the company 12 years ago, um, coming out of undergrad from Rice University. Yep. Certainly didn't know what the hell we were doing. Right. Um and like most of us. Like most of us, yeah. And I can talk more about that journey um later on. But uh really started a company out of Houston um again because of Rice University. Spent um a year in uh actually our first um uh our first start was out of uh U-Haul office warehouse space perfect in downtown Houston, yeah, right across from Specs, the liquor store. So in case things didn't go well, you're gonna uh in the early days. Yep. And then we had our first office in um formal lab space in NASA Johnson Space Center. Um through a journey which I'll I'll talk more about, you know, eventually moved to Tennessee for a year to work with partners on the East Coast and then moved to uh Phoenix, Arizona for two and a half years when we had a pilot line. And then in 2020, the basically last couple weeks of 2021, early 2022, that's when we acquired the factory um assets of uh formerly Enerdale in Indianapolis. Right. Um and that was a building that was built in 2009 with ARRA funding from DOE. Um and that, of course, allows us to suddenly be able to manufacture cells domestically, uh, and that's super exciting. Um, and I was a CTO at the time, and that's also a time in which uh I transitioned into a board role um and decided to come back to an academic setting, um, also going the wrong way. Um, my my my journey has just been um backwards from the start. Um, but I came to Stanford uh to get uh a PhD than ever got uh because I started the company out of my undergrad. Um and that's really to scratch uh an itch in furthering the technical deck. Right, but also to explore kind of what is further out there, right?

SPEAKER_00 3:34

Um and so tell tell me, tell me and us, uh our audience, a little bit about Steer. Yeah. And why, you know, my question is why would you go back to a great institution for academics like Stanford and then start an institute that is basically industry focused?

SPEAKER_01 3:56

Well, I came back to Stanford um partly to explore what I could do next. Um I certainly, of course, still wasn't deeply involved with NPower, but was curious about what comes after lithium ion.

SPEAKER_00 4:10

Yep.

SPEAKER_01 4:11

Um and was actually curious about some things like sodium ion back in the day.

SPEAKER_00 4:15

Yep.

SPEAKER_01 4:16

Um and before I wanted to jump in, because I jumped into lithium ion headfirst without knowing anything about lithium ion. Um, and having already kind of spent a more or less a decade of my productive life, I wanted to be a little bit more judicious about the next journey.

SPEAKER_00 4:36

And of course you ended up exactly where you started.

SPEAKER_01 4:39

We'll get to that. Yeah, exactly. Um, but yeah, I just want to be a little more judicious about where I should really focus my energy um and do a lot of this deep thinking about the the what to build before you dive in to do the how-to build. And I've and and I'm of of a tendency to just dive in. Um and of course, the really hard part, as you guys know here, is the how to build. That's the that's where you'll spend a lot of your hours in. Um, but I I think it's therefore critical to spend and give a little bit more time in the what to build. Uh that critical phase um really can set you up for success or failure. Um so as I was coming back and thinking, okay, this is a great place to really explore some wacky ideas. It's a great place to figure out what I could do next. Um, I wanted to spend some time focusing on what to build. And really, of course, anything in the energy space comes down to economics. Um, and so taking my learnings in the commercial sector and trying to pair that with the rigor that comes with the with the storied institution like like um like Stanford is really an interesting melding of um uh of superpowers, I think. And really that is how Steer got formed in partnership with and my co-founders of Steer, Will Chu, who's a um uh a deep batter expert, as well as Sally Benson, who just came back from serving time at the White House um as the uh chief strategic officer, strategy officer of the energy transition. There was a lot of good things there. Um and sodium mine just became the first question because of my background, because of Will's background, because of the relevance to the uh energy storage space, which is of course booming starting from 2022, um, as well as the criticality of supply chains. So it was really the perfect problem to really dig deep into and figure out if you were to do sodium ion, what what would you do? Right. Because of course, sodium ion, as we all know, um, is an umbrella term, just as lithium ion is an umbrella term. There are many strategies under which uh underneath sodium on the sodium ion and lithium ion that could work, uh, some that don't work, some that make commercial sense, some that don't. Um, and so if I were really to do um spend time in the tech dev portion, where you know, we all know hard tech is hard, technology development is time consuming. Can we first sit down with pen and paper and go really, really hard on the economics? Yeah, on the tech. And just figure out can we predict the viability before we spend all this time and effort? And and it is ultimately selfish for myself because I'm trying to figure out what my next journey is going to be. Yeah. Um and so that was really the the um impetus of something like steer. And and you know, we pitched this to the DOE early on, um, and we're very uh lucky to have their early support. So they tossed us seed funding, basically. It was running a startup within Stanford, basically. Um, and I'm uh just I have I think I have an itch to build things, um, and ultimately came out Steer with um which is a very interesting uh combination of industrial depth and connections and connectivity. Yeah, yeah, which is critical. I mean that that industry academia divide, I think, needs to be worked on.

SPEAKER_00 8:12

I totally agree with you. And and you know, so to just to summarize for our listeners, so STEAR is an acronym. What does it stand for?

SPEAKER_01 8:20

STEAR is not an acronym. It started off as an acronym, but I don't like it.

SPEAKER_00 8:23

So now it's actually ultimately it's just it's just a verb.

SPEAKER_01 8:26

It's exactly it's STEAR, it's it's a it's a way to help guide what to build, where to innovate, yeah, and how to build it.

SPEAKER_00 8:32

Where to steer the ship in research and in company building and in where we want to put our development dollars, right? And I think um noble goal and absolutely needed as we think about sort of industrial policy and um how to be competitive in the world. We'll get into a bunch of that, particularly in batteries, which has become such a big topic geopolitically even. Yeah. Um I've personally been an admirer of what you and your team have done there. Um the connections you've built with, let's call it the real world. Um I I think were great. And you also, you know, in my humble opinion, you know, were willing to um take feedback and listen to what you were hearing in the world as opposed to, you know, sometimes the danger of the academic world is that it's just very um inward looking, right? And I have to admit, in the beginning, we were pretty mad at you here because you know, you you you took a look at sodium ion from the cell level. And, you know, I think the first paper you you published was in in nature, like very early on um in the sodium ion sort of journey, trying to look forward and trying to look at, you know, are there cases where this could make sense and when and what has to happen? And um, there's a lot of nuance to that, and I think we agreed with much of what you were saying, and you I don't want to d delve into that too much, because I think there's a lot more um history that has come from that, and you've talked about it before. But if if if you if I summarize it the way a journalist would, Stanford says that sodium ion batteries will never be competitive. I don't think that's what you were actually writing. And I don't think that's what the conclusion was, but that was what was out in the world, and those, you know, I know I personally got that question from like five different journalists. Yeah. But um what I thought was really interesting and surprising in some ways was that that was sort of where it started, but then you brought it through or you developed the institution of steer to be what has become not a very it may not be a very famous um group and industry organization, but I think it's become one of the most influential in the industry, primarily because I think, you know, complimenting you and your team, but probably especially you, you have been able to bring really, I think, the um some of the most important thinkers in the space together for some of the conferences that you've done, which has led to feedback, which has then led to um conclusions that maybe are a little bit different than they were before. So can you can you walk me through that journey of um, and I know a little bit about your background, you guys you and I have been friends for a long time, so I'm cheating here a bit, but um, how the initial view um around the cell technology of sodium ion evolved into a broader view that ultimately became part of your PhD thesis, I think, right?

SPEAKER_01 11:31

Yeah, yeah, yeah. I mean, I think the the the founding and the start of Steer is really kind of in parallel to the founding of Peak. I remember we were in Eclipse's office. That's right, right down in Palo Alto. Yeah. And that was right when I had first, you know, done some modeling and and you guys were just starting, and then I was like, hey, this is what I'm finding. Yeah. Um, and anyway, it's just been a fun journey.

SPEAKER_00 11:59

And yeah, I you're right though, it has been a parallel um, you know, collaborative set of work that uh that I think ultimately informed a uh you know a broader conclusion. Yeah.

SPEAKER_01 12:11

And I and I I genuinely hope, and I do think that it has steered the industry um towards more of what I like to say technological pragmatism.

SPEAKER_00 12:22

Yeah.

SPEAKER_01 12:22

And that is something that I think generally we tend to lack. Yeah.

SPEAKER_00 12:26

Particularly in the West.

SPEAKER_01 12:27

Yeah. In the West. I think we are very enamored by R D. Um we are very enamored by material material science, which is the field I come from. But and and actually it's a it's a it's a point to say that you know we we have to focus at system scale. Um, we have to focus on what is actually commercializable. Um but in general, I I do think that uh hopefully um that overall um uh effect has come through. But of course, if you want to do something, if you want to focus on and do a full deep study on sodium ion, you need to start with the ion, right? You need to start at the thing that gives it its name. But then you cannot start, you cannot stop there. And really the journey of going from looking at cell level economics to then system level economics and not just system level costs, but also system level financial viability. Um that is the three chapters of my thesis. It's available online. Oh, is it? Has it been published? It is published in my thesis form. So yeah, so you can go download it.

SPEAKER_00 13:37

Brandon Kelly, our head of RD. The one question he wanted to ask is when are you going to publish your well it's already published, so there I'll point you to it.

SPEAKER_01 13:44

You know, link it in the show notes. My work here is done. Um But yeah, so we had to walk through that journey, and that journey was very much informed by people like yourself, right? Um very much of the the central identity of steer, which you can think of as a think tank, um, is really to pair this really deep uh uh technical nuance, technological nuance with economic rigor. Um but really pair that with deep integration and feedback from industry. And I think something that I'm proud of for Steer in terms of the identity, and I hope this comes through, is being disarmingly humble. And I think that is critical because uh certainly nobody has all the answers. And the benefit really is if the superpower of the technical depth and the economic rigor only manifests if you compare that with actual feedback from the practitioners in the front lines. Yeah, yeah, which is yourself and other sodium mine companies. Yeah, and hearing well.

SPEAKER_00 15:09

But um, you know, customer side of things, IPPs, you know, the utilities themselves. Yeah. You brought together a really broad cross section of voices from from the whole industry, which is pretty unique. Yeah. I don't I don't know of another organization that does that.

SPEAKER_01 15:26

Yeah. And and I think I think baked into that identity is basically the that we embrace being wrong.

SPEAKER_00 15:34

And so are you saying you were wrong about sodium ion batteries?

SPEAKER_01 15:38

I think we're all wrong about something. Um I'm I'll be the first to admit that we're all wrong about something. Yeah. The idea is to get less wrong over time. And so in the first sodium ion uh gathering or convening that we had, yeah. Um again, the question that we always ask is tell us why we're wrong. Yeah. Um and it's not necessarily tell us why it's not necessarily that we're wrong. It's just that, okay, what are we missing? Yes, but what are we missing? And a lot of that feedback in that first, I remember it was tax day 2024. Um, it was it was April 15th, 2024. I remember that the uh these events get kind of ingrained in your mind. Right. Um, that's when we had that first event, and it was good feedback from industry people like yourself and saying yes, but yeah. And the but was okay, at systems level, there's a uh a lot of nuance there that we gotta focus on. So in the in the beginning, we've again we based on also my background of being um deep in the cell level technology, that was helpful for us to chart the roadmaps of okay, which types of sodium ion, what chemistries, um, what design parameters, and what things can people do on a spectrum from those in the lab to those in in companies that are commercializing can really focus on the low-hanging fruits and the and the big goals to really change the equation and then actually get to a point where you beat LFP, for example, head-to-head on cell-level cost. Which you have which you have to do. And and so that there the initial understanding the thing and some somewhat of the quote unquote dogmatic truth, the first dogmatic truth that I think was worth challenging, that I think often flies under uh uh under the radar is that low-cost materials don't automatically equate to low-cost cells, right? Dollars per kilowatt hour is a combination of dollars of kg and kgs per kilowatt hour, right? That last portion, the inverse of which is energy density, and in t in general is just a metric of materials intensity, both of them matter. And so increasing cell level energy densities is an important way to um uh improve cell level cost. Now, of course, when things that require a lot of technol uh nuance um gets published, there needs to be a way for this to bubble up into the sphere of um the layman. And that's where I think a lot of the this is I think still an important place for us to focus on is how do you message accordingly and not overhype either answer because the answer wasn't sodium i is not competitive, right? It's just that certain directions for cell level absolute head-to-head um uh competition or or advantage uh advantage requires certain things to be true on the materials and innovation side, which we just talked about on your on your plant tour. Right. And that would be that would be great. Um if you if you could achieve those things. But it doesn't mean sodium i on its own, not inclusive of everything else, is is not competitive. So that's the first conclusion.

SPEAKER_00 18:51

And it's a difficult, it's a you're right, the messaging part is extremely hard, you know, in our modern world of journalistic deadlines and and sound bites and things like that.

SPEAKER_01 19:02

And and as someone who like again, I'm very much of at that point an industry returnee, so to speak. Yeah. That is that knows that the problem in this space, in the energy space, is not always, and in fact, most of the time is not RD. Yep. I didn't like that, you know, the answer comes out to be more RDs needed. I mean, I hated that that was a message, but more RD certainly is needed at cell level to get to absolute cost competitiveness. As is true always. But then the ability to then graduate above that level to the system, and then the financial viability portion is what came after. Um, and actually there's that sequence of um of discovery. Yeah.

SPEAKER_00 19:49

And we were on this parallel journey with you, too. Because I mean, we started the company with the thesis that sodium ion battery cells were going to become more cost effective than LFP. And we're I think on that road now. Um, we actually pretty well agreed with your methodology and you know the work that you did, which I thought was excellent. Thank you. Um, and rigorous. Our main disagreement was like, when is that crossover point going to happen? Yeah. And I think from our perspective, we we um, you know, with the benefit of probably 18 months of uh visibility into the industry that that was that that you didn't have when you wrote the paper, right? You know, we were we were looking at a starting point of cost sell cost that was quite a bit lower than what the assumption was in the beginning. And so that makes your learning curves go different, you know, speeds and things. All of which turned out to not actually be the point.

SPEAKER_01 20:46

Yeah, exactly. And I think the important message there was is and it is a message to every technologist out there, is that sure, we all know economies of scale, economies of scale and the learning curve and so forth. We we all know that's a phenomenon. Just don't blindly bank on it. Because there's a place where it applies, and it actually actually, as we moved on into the system level and even thinking about EPC, manufactured goods follow a positive learning curve, but manufacturing and sorry, not manufacturing, yeah, construction follows a negative learning curve. I mean, it follows inflationary pressures. So then you need to be just just don't assume that yeah, when we get there, we'll get to the scale.

SPEAKER_00 21:35

And and this is this is something that is pretty interesting because the application really is the paramount question to ask within many of these technology problems. In our case, it's how much does a project cost over 25 years? And that is pretty different from the way we've organized our RD, particularly in that you know, in academia. Where it's like material science or it's mechanical engineering, or it's, you know, it's it's it's siloed into these specific things. And in the case of the technology we're talking about here, sodium ion, you know, the world is organized to talk about cells and cell cost. Yeah. It's also got a mindset of electric vehicles, because that's been the biggest application. Then you start to move into stationary storage. It's really not about that. It's about the whole project IRR. Yeah. Which is a conclusion that we came to on our own. I think in parallel to you guys also really pushing the envelope there. And um, I must say the work that you did is way more rigorous. And I think um maybe appropriately for coming from an academic background, yeah uh more um, yeah, I don't want to keep using the word rigorous, but that that really was it is. I think your analysis was um very good. And uh I'd love to have you just kind of walk through, you know, in a high level, the conclusions that you came to to kind of bring to life these concepts that we're talking about in terms of cell versus system versus project and and what that matters and how ultimately we can apply that type of thinking to not just this particular problem, but other problems. And we'd love to hear a bit about that too.

SPEAKER_01 23:29

Yeah. Yeah. And and and just kind of continuing along along uh something you just mentioned, there certainly is a bias, right? There certainly is a material-centric or an RD-centric or a cell level centric bias to when we think about battery cells. And a lot of that bias is driven partly from the RD side from academia, and then a lot of that bias on the commercial side is from the EV world. And and you have to it's it's quite interesting to think about because in the EV world, ultimately you care about selling a car and the consumer sees one price point, and then they make that decision. And then it's kind of it's theirs to it's theirs to handle, right? That's not the case for almost every other battery application, apart from consumer electronics. That's a similar case, right? Yeah. I mean, uh EV is a consumer electronic big iPad on wheels. But in things that need to make money, that is not the case. The lifetime performance of it is critical to the ultimate economic decision of whether this is a good idea or a bad idea, regardless of what CapEx in the beginning is. And so to some degree, EVs are more of uh very capex uh biased, whereas other things are going to be a lot more optimistic.

SPEAKER_00 24:46

You know, the EV companies have struggled to convince consumers to think about total cost of ownership of the product.

SPEAKER_01 24:52

Like Yeah, maybe there's yeah, exactly.

SPEAKER_00 24:54

This has been an economic argument for 10 years around why EVs make sense, even though they cost more at point of sale. You know, you don't have to maintain them, you know, nearly as much. You don't obviously pay for gasoline, yeah, electricity a lot cost a lot cheaper. Yeah. Um but it's hard to get a consumer to do a total cost of ownership analysis. You think? On the other hand, it is really not hard to get a utility to think in those terms because every single thing they live and die by that.

SPEAKER_01 25:23

Yeah, exactly. So I mean, to answer your question more more uh and and for the audience about the journey. Yeah. I think my journey was really about challenging three dogmatic dogmatic truths, so to speak. That first one I already talked about, that low-cost materials automatically translate to low-cost batteries. That's not true. There's a nuance to it, and you gotta look at it. A second is, and I'm sure you've heard of this a lot, is that energy density doesn't matter for good scale storage. And I think intuitively it makes sense because land is cheap and so forth. It's not about land, it's really about construction costs. Totally. And when you think about just the level of energy you can stick within a given container, if energy dense if energy density didn't matter, then we wouldn't have seen the contain the container level energy density of energies of LFP go from less than a megawatt hour to two to four to five megawatt hours in 2025 to now like 20-foot systems that are basically 10 megawatt hours and more.

SPEAKER_00 26:23

I I completely agree with you that and that is the um biggest lever to reduce cost across the board. And I think the game, all of these things are balances, right? Because like, yes, low-cost materials definitely are a good thing, but it has a penalty in terms of energy density. Not necessarily, but yeah, it might have a hidden penalty. Yeah. Yeah. Which which would drive up exact manufacturing costs. And so you need to be so low that you're better than the penalty. And I think energy density is the same thing. Yeah, exactly. Energy density does matter even at the site level, primarily for construction costs. And there are certain that's called parts of the broader stationary storage that really does care about energy. If you're putting, you know, batteries inside of a building in your city or something. There's a real footprint question. But by and large, it's a cost driver. And so I think we would look at it and say you can afford to have a lower energy density to a point. Yes, but it has to give you a cost advantage against all of the disadvantages that come along with that construction cost, et cetera. And all these things are traits.

SPEAKER_01 27:28

Yeah. And that that turns out to be a logarithmic uh correlation. So, you know, a half megawatt hour container, well, it doesn't matter if the container were free. Right. The construction costs of installing that with the DC DC cabling and the the concrete pouring and the trenching and just like all the unsexy stuff of just going to be. You think that's sexy. I think it's super sexy. I had so much fun going into every step of digging a trench. Yeah. Anyway, the probably more than more detail than anyone had to go into. But that ultimately, yeah, again, if you had basically a half megawatt hour container that's 20 foot just just as a as a de facto standard, your your construction costs end up being several hundred dollars per kilowatt hour. Right. And and so that rules out it helps actually rule out chemistries. Yes.

SPEAKER_00 28:18

And as a technologist, and there are chemistries out there, non-lithium stationary storage chemistries that really don't don't make sense. They're they're not gonna hit the market ever.

SPEAKER_01 28:26

Yeah, unfortunately. But I actually think it's a it's a blessing as a technologist, or as someone who is thinking about what should I dedicate the next 10 years of my life to, yes, either be it your PhD thesis or a company in which you're starting, right? You gotta know.

SPEAKER_00 28:42

Yeah.

SPEAKER_01 28:42

Right. Because I mean having that answer is hyper liberating. Yeah. We call it. Being able to cross things off. Facing the brutal truth. Yeah. Crossing things off and taking options off the table is one of the most liberating things as a technologist or as anyone. I mean, even a even a an artist with a constraint is gonna be actually can leverage and capitalize on that constraint. So anyway, that was a was a very interesting takeaway. Uh and and the reason why this became so important is that we're also in a paradigm now where the cell level costs, which we are addicted to, tend we tend to get addicted to, is not the most important line item anymore. That's right. In LFP, we have cell costs that are less than $50 per kilowatt hour, but construction cost, EPC in general is 50 to 70. It depends on where you are. There's regionality to it. And again, it's it's inflationary. So now the cell is not the most important thing in terms of align it. So that's the reason why the that that was the impetus for really deep diving into that.

SPEAKER_00 29:46

Um and we the way we think about that is that three, four years ago, total project cost over its lifetime, including OpEx, which is a big piece, you know, was called $500 a kilowatt hour for total cost of the project. And more than half of that was sell cost. And then over the last five years, sell costs have come down so dramatically. Yeah. Certainly driven by LFP, but you know, other technologies like sodium, which are built on the same manufacturing platform, follow that curve kind of uh mostly. And so to your point, now the sellcast is actually not even in the top three or four cost buckets for the project. Number one is OpEx. Number two is, you know, construction and installation, right? And that's the thing that we as innovators should be working on.

SPEAKER_02 30:37

Yeah.

SPEAKER_00 30:38

And it I I think there's a hint there too for for the question that that I want to talk about at uh you know, towards the end of our chat here, which is how can we in the West American companies, we're both running American companies now, how can we compete against the juggernaut that has been built in China based on scale and making things at scale. And I think there's a hint there around the cost economics are l are no longer about the widget, the cell. It's around how do you implement and run these projects at home where the that's where the money is today. Yeah. And so attacking that is at least one answer to how do you compete against CADL.

SPEAKER_01 31:24

Yeah, yeah. I mean, you I mean you brought up operations uh operational uh uh um opex. Yeah. Um and that's a good segue into kind of the third dogmatic truth, right? So the first was material low-cost materials don't result in. Low cost necessarily. Yeah. Right. Energy density doesn't matter for the grid is false. Yep. The third is at the end of the day, we don't go, we don't go out and build stuff just because it's cheap. We build stuff because they make financial sense. And so cost is only half the equation, right? You gotta look at the revenue side, which is kind of what you're meet what you're what you're talking about. And okay, now that you've bought the thing, what is it gonna do? And that's really where we need to get into really understanding the the use case throughout the lifetime. And it's going to be application dependent. And so in certain things like EVs or grid storage, they're they're going to be very they're going to be different uh lenses in which you have to look at them. Um and ultimately it's the viability, economic viability that matters. And uh and something that I I really don't like as a metric that I think does us disservice to focus on is the so-called levelized cost of storage. Yeah. Which was borrowed from the the the levelized cost of energy uh metric, which is used for mostly in like thermal plants and for power generation. Batteries don't operate those don't operate the same. And the problem with it is that it's a cost-centric, again, it's it's obsessing about costs, not about value. And what we need to pivot ourselves into is really thinking about value-centric um metrics.

SPEAKER_00 33:04

Can you give a very specific example of that in the world of batteries that we're talking about here?

SPEAKER_01 33:10

Have you heard of sodium ion?

SPEAKER_00 33:12

So what I mean to say is, you know, there are very let's make it concrete. Like what are what are the costs you're talking about and what are the value metrics? Yeah.

SPEAKER_01 33:23

I mean, this is this is this is of course dovetails exactly into peak strategy, which is why I'm excited to see you guys um uh out here is basically every project, every every project has what's what we call accumulated present value curve or eventually a band. We'll we'll get into that later, but it's basically this Nike-shaped curve, right? The Nike shaped part, the the dip in the beginning is is basically a discounted cash flow, right? You're spending a bunch of capex and you're digging yourself into a spending trust. You're buying batteries, making construction sites. Go make it, right? And the depth of that, what I call CapEx well is obviously going to dependent on the seller costs, which are not the most important thing anymore. It's also gonna be dependent on your uh site level energy density, um, and yeah, the again the energy density of your containers, right? And so that will pull you down into your CapEx well. Now that you've built the thing and you turn it on, you have then the like longevity of that uh project to make back and dig yourself out of that hole. Right. And the breakeven line, the breakeven time, of course, is when you crisscross over the zero line. And that's the net present value equals zero line. Yep. Um and so every every technology and every project is going to have, and this is true not just for batteries, but also true for a nuclear plant. And it's true for anything you you put um put down as and think about in project finance terms, is you have again the Cap X well is one feature. You have the uh what we call the slope of the revenue recovery period. That's the portion of digging yourself out, this long tail of the Nike curve.

SPEAKER_00 35:07

How tilted is the swoosh? How tilted, yeah, how tilted tilted is a swoosh. And you want it to be on the top part of the swoosh, not the bottom part of the swoosh.

SPEAKER_01 35:14

Well, you're c'est you're gonna inevitably have to come out of that swoosh. And you want it that to be as steep as possible, right? And um, and and then of course you have the longevity of the asset that dictates when do you stop, and you can just call it an end. That final end point and its relationship to the zero line is your net present value, right? Your discounted uh, you know, present uh net present value. Um and and so, and of course, the crossover point to the zero line is your payback period. And if you change your interest, your your your weighted average cost of capital to whatever push that net present value down to zero at the end of the project, that's your internal rate of return, right? This is a good visual way to think. And I think every engineer going into grad school or anything should think like this.

SPEAKER_00 36:04

I was gonna I was gonna actually ask you about that because I know for me personally, and I, you know, I'm not a wet behind the ears undergrad anymore. It's been a long time. You can tell. And yeah, but I had not actually ever in my career up until now really um run into project economics and how to think about the economics of these things. Yeah. Is this something that we are teaching our next generation of technologists formally? Like going to be. Does Stanford or Jane Woodward's class at Stanford require, you know, have a module on project economics and we're gonna drill this into people's heads. Absolutely. Yes. I think that's so important. It is so important. And the energy space for sure.

SPEAKER_01 36:46

It's got it's just as important as physics one-on-one. You're right. It's the yeah, it's the physics of money. Because if you think about a technology, everything related to uh just take just take any any energy storage device as an example. Any you we spend a lot of time thinking about should I use nickel? How much nickel can I have? Um, they're expensive, they're they're they're it's a critical mineral, the price of what nickel is whatever. That's all on this first portion of that uh capex well. Yeah. And that dictates how deep you go. Yeah. But myopically focusing on that is not productive. Because if an additional percentage of said said additive that might pull you down deeper in the CapEx well gets you better operational efficiency, round trip efficiency, yeah. Then round trip efficiency is directly tied to the slope of your revenue recovery curve. Yep. And so there is a trade-off. There is a right amount to right size the material science that you're doing. And it's not to say that material science is not important, it's just that you have to right size your problem with the economics at the end of the day.

SPEAKER_00 37:55

Yeah. Yeah. And that's just one example, right? It's a great point. And it's something that has taken us some time to instill a culture around. So literally in our RD labs, when a scientist proposes they want to go work on this project, we force them, and now they just do it because they know that that's how the decisions get made. We for we force literally running the full IRR analysis of a project with like this new molecule and the electrolyte as an example. Like it literally is at that granular level. Okay, it's going to cost us two extra pennies per kilogram. Okay, what does that mean? How does it change the RTE of the cell? How does that affect the revenue that can be generated? And so we have a whole modeling exercise that um we've invested a lot into in order to help our scientists decide which way to steer the product. There you go. Um, based on you know, project level economics, which is not how we all any of us would think about it. I'm I'm so happy to hear that. Yeah. That is well, if you want to know how, go read my thesis.

SPEAKER_01 39:03

Go read my thesis. All right.

SPEAKER_00 39:04

You hear that? Go read the thesis, guys.

SPEAKER_01 39:06

Yeah. But um, but the also I think what's what's super valuable for technologists and engineers and so forth uh is that you you can actually put a dollar metric on what you're chasing. Right. Yep. Because again, we we are so focused on CapEx, but every percentage of RT uh roundship efficiency improvement because of either electrochemical behavior, uh hysteresis, um, conductive additives. I mean, we can get real deep here in terms of like, okay, how should I be optimizing my formulation for low DCIR? That has a cost. And you can quantify in a net present value term in a dollar per kilowatt hour, end of the day, not in a capex term, but a net present value term. And so then there's a delta percentage RTE, delta NPV. And you can quantify. Is that more worth my time than to extend delta or improve delta cycle life, delta NPV? Yep. And now you can really surgically go address these problems that, yeah, it might seem less sexy, but ultimately it's not. I mean, my goal is to you want to work on things that really matter. They they matter. And what matters is what's sexy, and you got to use economics to make it sexy. Right, right.

SPEAKER_00 40:23

And you know, there are certain applications where that gets even magnified, right? So one of the reasons why we're so excited about data centers and you know, big uh energy storage installations behind the meter with a data center, and why we think sodium is a great way to go there is because that efficiency advantage, which partially comes from like, you know, no, you don't have to run air conditioners and the actual RTE of the cell, all that stuff, um directly correlates then into value and revenue that a data center can produce. Yeah. Because data center is limited on what? Energy. Yeah. And so every electron that is not going into producing, you know, a token because it's running something on your system or because it's getting wasted in the round trip efficiency in the cell is an electron that doesn't get turned into revenue through a token. And that magnifies that, you know, additive to the electro to the electrolyte by a factor of a thousand or something like that, right?

SPEAKER_01 41:28

Yeah. Yeah. Exactly. And and and this is a world in which industrial use cases of batteries do care about the total cost of ownership or the lifetime economics. And and I'm sure we'll talk about later. I mean, that is also the direction which um I'm manufacturing for, right? The industrial robotics and those chemistries or the things that we go after um are are going to be the applications where you're not necessarily in some cases you are um buying just for CapEx, but you have to think you have to be technically savvy to figure out what market to go after. And I think if those that are technically savvy can grab a large part of the market. And I think this comes back to your point about um how to compete with China, is you have to be technically savvy and and economically. Yeah, economic economically savvy in the context of the region in which you're in.

SPEAKER_00 42:25

Exactly right. And I I think that's one of the key things that we're trying to work on is in the market we happen to be in, highly complicated set of multiple utilities with challenges and costs that are quite different than what they are in China, right? Labor costs are totally different. Like, APC costs, how much does it cost to do a truck roll, right? Like and um, and so being close to the market and using those insights by just living here and and having to to work on projects here, those are the things that ultimately give, I think, American companies an advantage. Whereas just competing head to head with CATL on scale and and and cost of making the sales that are coming out of the factories is really hard to do. So you don't say yeah, so let's transition then a bit. Thank you, thank you for um all the work you've been doing as tier. We're we're a giant fan of of that and hope to see it continue long beyond you know your tenure there. Yeah. So you get your PhD and instantaneously you instead of going off and doing something totally different, you're back at M Power. Why? And I don't mean that in a derogatory way. I'm like really interested in your journey of how almost all of us, you know, we we we go out into the world and then you know, to find ourselves back at home. So um tell us the story. Yeah. Um I'm super pumped.

SPEAKER_01 43:54

Um and so yeah, uh let me step back. I think being at Steer, and this is how I like to paint it. It's a, it's a, it's an image I have in my head that might make sense.

SPEAKER_00 44:07

Yeah.

SPEAKER_01 44:08

Coming from spending, you know, close to a decade in industry as a founder, and I'm sure you're in this right now, and been in this kind of position in the past, is when you're in your company, you got your horse blind blinders on. Right. Yes. You all you care about is payroll.

SPEAKER_00 44:27

Let's be seriously. Yeah, we gotta go. One day I'll tell you a story about how we almost put the payroll of one of my companies on our credit card. We got saved by a customer. That'll be a good story to tell.

SPEAKER_01 44:39

Nice.

SPEAKER_00 44:40

Yeah.

SPEAKER_01 44:40

Um, but yeah, uh, and and and that is a uh mental shift that I think I was very cognizant about is the the split second you go from I'm considering to no, I'm doing this, that this is now my company and I'm gonna go do it. Yeah, your world, your, your, your mental shift is massive. It could be two seconds apart, but your world view has changed in that you just care about execution. And that's good. That's what you need. You need this crazy mental this crazy focus mentality. And this is why I think there's a real good uh sim symbioticism between an entity like Steer and the industry, because you can be the unbiased, objective, uh third-party neutral kind of validator. And you can think more broadly. And you can think more broadly and and really try to prevent and pull people out of no that that path is is maybe a little fraught, um, or that you gotta think those through. And this is what you have to believe, the set of beliefs in which need to be true for your thing, whatever widget you're doing, to be to come to life. Um so anyway, the the thing I like to anyway, when you're in that founder mentality, you're kind of like a fish in swimming upstream, right? You're like a salmon trying to get to the whatever, what whatever they do. Uh uh I should think this through a little bit.

SPEAKER_00 46:12

This is a family show. We don't want to really get into that. Uh what the what the fa what the salmon do when they're spawning.

SPEAKER_01 46:19

Yeah. So you're swimming, you're swimming upstream and uh and you're fighting the good fight. I think the the value of being in an entity or in a position that's steer is that yeah, you're not a fish. You're standing on the bank of the river, and you can see there's a fork in the river or there's a bear there, so don't jump because they'll snatch you. Um you can you have that kind of bird's eye view from the side of the uh side of the river. You're not a practitioner, but you're a you're an observer and you can help steer um the the pathway, right? And I think operating or occupying both of this, what I call the builder's um world, as well as the intelligence were uh strategic world, um, is real real luxury to have. And um, and as a builder at heart, there's always this desire to go back to being a fish and um maybe having been enlightened by some of what you've seen on the side of the river is like, hey, no, I know, I kind of know which direction to swim now. Yep. And um, every time as a board director, going back to see my company, I also have that itch of just man, I miss this equipment. I love I love the manufacturing and the people and just like the just overall. Fighting the good fight is fighting. Yeah, the overall effort to just go build. Um, so anyway, come time after I finish my PhD and I look at the market context. I mean, there it also there is a world in which I mean the world has shifted completely underneath our feet in the battery world. Um, and certain stars have aligned that have kind of been 12 plus years in the making. Um, and so looking at where we are, I I really do see few companies in the cell making space, domestic lithium-ion cell making space, as well positioned as we are. And right now we are one of the only end-to-end powder to sell, cellmakers that are that is right sized for the markets, um, and which uh define the next generation of um uh uh of autonomy uh and the next wave of critical technologies. Um and there's what I call a missing middle uh strategy in which we're going after. Um and basically that is we gotta focus we we have to be able to focus and serve the markets that are currently too small for the commodity giants and the incumbents to to purpose build anything for, but also too big for the niche specialists to make at cost because cost still matters. Yeah, yeah. Um and mechanistically, this is what I call building the ATL of America for those in the battery space. ATL is what preceded CATL. And I think part of the hubris, if I may, in the West over the last decade is that we've so often tried to chase this. Can we we're gonna build the CATL of America or of the European right? And you just have to understand that that doesn't come from nowhere. CATL, even CATL didn't come from nothing. 100% didn't spawn from thin air, it came from ATL, which really learned through making the stuff that nobody else wanted to make. And if you kind of dial back the clock, it was in 2003 when a new category of products came, and that was the iPod. Yep. And that's a world in which commodity cells at the time, 1865s, which remarkably we still have today, just didn't cut it, right? Because Apple had a very different vision for how the products should look.

SPEAKER_00 50:03

Yeah.

SPEAKER_01 50:04

And so it really took a hungry startup at the time to kind of raise their hands and say, no, no, we'll do it. We're gonna eat the pain to go figure out how to make the stuff in which you want to fit your product vision and enable this. And of course, they made a huge correct bet. The market took off. It obliterated, you know, digital cameras, smartphones topped 100 million devices per year and in a really rapid time. And that's how a star was born. And so today I see a very similar story. It's not the iPod today, but it is autonomous systems and critical infrastructure from drones to industrial robotics, the unsexy kind to the sexy kind, like the humanoids and quadrupeds that we're all talking about, and of course, data centers. And there's both a play inside the white space and inside the black space, right? Um, and where you want to play is strategic. And again, this is a world in which commodity cells just don't cut it because of size, because of weight, because of power, because of safety, but also very importantly, supply chain. And that has never been as remarkable, remarkably sovereign of a demand in in in kind of my journey and my career. That's really the opportunity in which we're we're taking. And so it does take a hungry upstart. Yeah. And I see us and power as that hungry upstart.

SPEAKER_00 51:28

That's great. Um, and congratulations on you know positioning the company, I think, correctly. Um, a lot to unpack there. You you talked a bit about how to get big, you got to be small first. Yeah. It going from zero to big doesn't really happen. Even CATL started small. Yeah. Right. Um the the introduction of new applications create space for new companies doing things better around that particular and I and I would argue even energy storage is true. That's true. And it's part of our thesis that you know grid storage was really not even a thing three or four years ago, which was a shock to me because I, you know, in batteries, we've been talking about grid storage for decades. But look I think the statistics were something like when we started the company, less than two percent of what was going to be installed on the grid in the next, you know, seven years had actually been installed on the grid. And even today, the you know, the vast majority of LFP systems on the grid today um have been operating for less than 18 months. It's like 60% of the entire fleet. Yeah. And so it really is quite the beginning of a new industry, really. Totally. And that's what leads to the opening of a technology or a company that is focused on that that can maybe do it a little bit better.

SPEAKER_01 52:55

And purpose build for it just as you are just as you are purpose building something specifically for you know passive cooling and or passive, yeah, passive cooling for a grid asset that needs the last 20 years and you're you're thinking about it as a dedicated 20-year asset or 25. I don't know. Um I mean that that that depends on the customer. Um that purpose built is the risk that you can take as a small company initially, when now you guys are pretty big.

SPEAKER_00 53:23

And you try to be the best in the world at that specific niche that you're going after. This is back to like good old Jeffrey Moore and crossing the chasm, right? Yeah. Um I'm I'm interested also then to dive in a little bit more on the target markets that you mentioned, particularly around autonomy. Uh, a lot of really uh amazing things coming out of Silicon Valley and really all over the world. Uh talk about your strategy, if you can, a little bit about what that means for the type of battery product that you are making and how you think you can differentiate yourself uh through focus on those markets.

SPEAKER_01 54:02

Yeah. So people that know me know that I hate the term holy grail for batteries. I just think it is let's just all, if we could, delete that from our lexicon. Um there's no such thing, right? There you're gonna measure every battery on a multi-dimensional spider chart, 12, 13 axes. You can you can pick your own kind of metrics. And they're just different shapes of spider charts. LFP is one in which occupies extremely low cost, uh, great cycle life. Obviously, energy density is not there and can't compete with you know NMC type products and so forth. Um, so on and so forth. I mean, basically it's a it's it has a shape, and that shape certainly has a lot of things in which it can serve. Um, but it's not for all. And similarly, in the the fascination of the West for a long time now, which I think has been largely uh largely misplaced, is solid state. And and really exactly what even that means is is is very blurry because there's no isn't it's not again, it's an umbrella term that doesn't really have a clear definition of what exactly it is. Yeah. And ultimately it doesn't, nobody cares is it solid or not? And nobody nobody's running that PRED test. Um ultimately what you need to serve is a shape of an envelope that serves a need. Um and so today, that is going to be in the autonomous space, high energy, high power, and sometimes, in some cases, ultra high energy, uh ultra high power. Um, and it's and you're okay sacrificing energy um if something, for example, is repeatedly charged and and has multiple cycles per day, like warehouse robotics. And yeah, um, that's a world that is has a different spec than uh a drone that needs um high energy density. It doesn't need to be fast charge, but it does need high discharge rates. And it might not need to last that many times, right? The average cycle life of drones is is quite low, depending on, of course, which application you're in. If it's might be one. Might be one. Um or two, yeah, exactly. Yeah. Um whereas, you know, you know, intelligence surveillance and robot uh and reconnaissance type robots uh or uh uh drones uh might be more in the 300 to 500 cycle range, but certainly not 10,000.

SPEAKER_00 56:28

Yeah.

SPEAKER_01 56:28

Um and then gravimetric versus volumetric. So anyway, all of that is is a space in which the incumbents that are mass manufacturing LFP and and uh even the EV batteries don't necessarily don't necessarily serve.

SPEAKER_00 56:43

Um and so it's still a one product fits all mentality.

SPEAKER_01 56:48

It is, yeah. And so again, taking this uh approach of what is a moderate volume, moderate mix player that's addressing this missing middle strategy that as empower is, what can we do that is purpose-built for this application space that doesn't require you to give up on cost nor performance?

SPEAKER_00 57:12

Um, those both is is the is the strategy really to pick a handful of applications, which you know, when you talk about autonomy, it's feels like it was a relatively compact vertical. But then as you explain it more, you realize actually there are vastly different sets of requirements for even kind of related, you know, looking things, whether it's a robot doing this or it's one that's flying there. Yeah, exactly. A drone is uh with massive differences of energy density requirements, psycho life, power, you know, et cetera. Um and so that the idea is to like pick a handful of these smaller markets, build cells that are the best set of trade-offs for that particular okay.

SPEAKER_01 58:05

And and that that is that is a moderate mix, so to speak. Yeah, by mix, I mean product mix, right? Moderate volume, moderate product mix. And your ability to be flexible, yeah. So again, the ATL strategy is what gets you the ability to also, I mean, it's like a VC, you're making multiple bets.

SPEAKER_00 58:23

How do you think about the timeline and the ability to customize the product in a time frame that can make money? Because I think certainly 10 or 20 years ago, we as an industry probably didn't know enough to know how to just a priori dial in this combination of factors. And then there was a lot of trial and error. It would take a long, long time to actually have it hit all its specs. Psycho life, of course, is always a very long process just by its nature. Yeah. Do you think that we are at the point now in terms of the tools we have at our disposal, digital AI and otherwise, rapid testing, all this good stuff, simulation, that we can in a reasonable time frame design custom cells and make money doing it?

SPEAKER_01 59:18

I think my answer is I think so. But actually, I think the more important answer to that is not technical. It's commercial. Um the markets that we're talking about, and this is part of this aligning of multiple stars, is for example, when you're when you're looking at drones as a launch point, pun intended, I guess. Um the the cycle the cycle life being less than one to 300 or 500 is part of that success story, right? Because you're no longer needing to prove five plus years of cycle life for an automotive application, or even more for a uh grid scale energy storage application. Your your iteration cycles are very fast. Um, the Ukrainian drone development cycle is about a week. Um and we have to be able to week is crazy fast for uh insanely fast for batteries, and it's not like we have to meet that, but you do need to be accelerated. And these are markets and the commercial opportunities that does have the flavor of um of being able to address quickly and allows you to fail fast. Yeah. And so that is that is a feature, right? Of uh not a bug of this commercial strategy. So on a commercial and also understanding who really is the right, who has power because in the EV space, I think there's a recognition, or I think a lot of the domestic players, uh either be on materials um which I think we've overinvested in, have uh catered to OEMs. Um but ultimately who has the power to actually integrate it is not necessarily the OEM. Because we are living in a world of an oligopoly of very big cellmakers that can actually do the thing. Um so they have control and really understanding who has power in the value chain is not always at the end of the value chain. Yeah, you need to know who has power.

SPEAKER_00 1:01:42

Do you think that um your model over time becomes more product-centric in the sense that you'll offer pick a number, half a dozen, a dozen different types of cells where people will just mostly be trying to buy that thing? Or do you see do you see um yourselves as as being very much customer-oriented? We're gonna build a purpose-built cell for your application. It's more project-oriented.

SPEAKER_01 1:02:15

Not that. I think that is where you begin to get into more of the realm of niche specialists and custom custom cells and and bespoke products. And that's certainly an area where we don't want to occupy. Okay. Um, so it's a very it's it's actually a very interesting question because the hardest thing for us to change, or for cellmakers in general to change, is not the chemistry. It's the footprint. Are you making a cylindrical, right? Prismatic, or pouch cell? That's a $30 million investment. Yeah. Uh just to do one of these things.

SPEAKER_00 1:02:50

And what do you do today in your factory? We make pouch cells. Pouch cells, yeah.

SPEAKER_01 1:02:53

And specifically to make sure that, you know, of course, cylindrical cells have the benefit of having uh a couple of different standards from 18650s to 2170s or 4680s and 46 class of 100.

SPEAKER_00 1:03:05

So will there be the 18650 standard of a pouch?

SPEAKER_01 1:03:08

That is the that is a conundrum. And that is actually, if you look real hard into terms of how China really got off the ground, is to be able to pouch cells, you know, famously have no standard. And the pouch cell and your iPhone one, two, three, four, five, six, uh, all the way to number what in which we're now, all have a different product and different shape and different, you know, size. And that makes it incredibly hard to automate. And so, what is China coming in back in the day, realizing that the cylindrical game is dominated by the Japanese and the Koreans? Where should they play? If pouch cells and the flexibility of form factor requires you to have semi-automation and labor was relatively cheap back then in China. Interesting. Yeah. That's where you play. Interesting. And so you're, you, you really flex your flexibility muscle as a strategic entry point.

SPEAKER_00 1:04:02

And that's why And of course driven by the end market, you know, and a customer like Apple. Yeah, exactly. And I think it's to optimize the form factors to the millimeter, even to the tenth of a millimeter.

SPEAKER_01 1:04:12

Actually, a good thought uh thought experiment. And I was talking to someone about this the other day. If you really look hard about where we are today in terms of the battery world in which we live, a lot of credit can go to Apple.

SPEAKER_00 1:04:26

But the challenges that we face also are Apple's fault.

SPEAKER_01 1:04:30

But I mean, you need a forcing function.

SPEAKER_00 1:04:31

You need someone you need a vision. For sure. Yeah. Anyway, that's it's just who do you think is going to be the forcing function in the autonomy world? I can't say. I'm not gonna I'm not gonna say that out loud.

SPEAKER_01 1:04:42

But certainly there's gonna be I mean, those are the partners in which we want to grow with. Right. Yeah.

SPEAKER_00 1:04:47

How do you think about the flexibility of your manufacturing footprint? So that coming to different cell designs.

SPEAKER_01 1:04:53

Coming back to that, there's it's no secret that we live in a high labor cost environment. And to really make manufacturing in the United States work, playing the strategy isn't isn't prudent, right? Of, well, we'll do this form factor for you, we'll do that form factory for you. That's hard. Um other people in the defense sector have tried that. And and you you do get relegated to a very small market footprint. Um we just need to be able to play and uh strategically choose the types of form factors that we make, uh, and then really uh uh iterate around chemistry uh and flavors. Um so it's really not the recipe of this sandwich analogy that I I use maybe too much, um, of you know, the the bread and the lettuce and the uh other pieces of bread inside of a lithium ion battery. It it's not so much the chemistry, uh, whether you use rye or sourdough or whatever, it's really the shape of that zip bag.

SPEAKER_00 1:05:54

It's a ziploc bag. It's a ziploc bag. You're standardized standardized the ziploc, yeah, and then different different. Different uh sandwiches inside.

SPEAKER_01 1:06:01

And so in the drone space, um, and I'm very uh excited and uh that SAE just came out with a new standard um for uh group one, uh which is a smaller form factor or a lighter uh drone, uh S UAS, small unmanned aerial system. Um a standard for a pouch cell that is designed to be occupying the footprint of a series of 2170s. So it's 63 millimeters width by 140 millimeters in height. And that is obviously, I mean, it's no coincidence. It's 63 is 21 times three, and 140 is 70 times two. And we are part of that SAE committee, right? Um, and very excited to have really launched that as a new new standard, the SAE JA 1016 footprint. And that's what we're tooling for. Right. And we'll that allows us with our six PPM right now and a lot more to come, um, part per minute uh manufacturing, that allows us to make two and a half million cells of that form factor by the middle of next year. And whether we put in whether whether we do we change the electric coating to be thicker for higher energy, so you can have 340 plus watts per kg, or you make it ultra high power with thinner coatings for um, you know, 8C or 10 C discharge capability, or even change out the chemistry altogether. Uh, novel chemistries that the big behemoths don't want to touch because it's it's it's it's purpose-built for these markets. Um think LTO and and and niobium, even uh those things that come after LTO, uh for 30 C discharge capability, which is relevant not just for kind of fast-charging industrial warehouse robotics, but also for data centers and certain applications.

SPEAKER_00 1:07:47

Yeah, I was I was curious your point, your your percent uh your perspective on the Titanates and things like that, which you know have found a niche in warehouse robotics. Is it is that you think gonna continue? Yeah. That'll be lithium ion standard lithium-ion flavors.

SPEAKER_01 1:08:01

I think there is a strong play for lithium ion. Um now, which flavor ultimately is gonna be a technical um selling point. Um and I think we have a good strategy for that. Um, but it is your ability to handle multiple form multiple form factors, a select few, but be very adaptive on the chemistry that goes in. Not just the not just the design of the electrodes, but also the actual chemistry. And and and I think by virtue of that, you also accidentally become a company that has a tremendous wealth of know-how. And that is a value proposition I'm super excited for the feature of NPower. Is we'll be sitting on so much IP and know-how of how to actually do all this integration. Yeah. And uh and the last kind of value add for us is you know, again, we've I think we've overinvested in the material space in in the West so far. That is a benefit to us now, right? Because uh there are few, there are actual actually very few cell integrators at the end of the day that can benefit from all this. And so there's stranded IP, there's stranded innovation, um, and we are establishing partnerships as you'll and more will be coming, um, as we actually find a home for these innovations that are good. And American ingenuity and the Western ingenuity is there, but you have to have a commercial vehicle to actually have it serve an application at the end of the day. Yeah. And it might not be EVs or B ESS in the beginning for some of these applications. Yeah. Um, and we are a uh a pull-through for that.

SPEAKER_00 1:09:44

Very cool, very cool. Yeah, I'm excited for what uh where you guys are going. Um, what what do you think about or are you seeing the policy side of things, and maybe it's not even policy, but it's the the interest that the US government has on a geopolitical basis um playing a helpful role here?

SPEAKER_01 1:10:07

I mean, I commend what the the some of the policy movements so far have been. Um that is yet another, perhaps one of the brightest stars that has has aligned that caused me to jump back in. Um this includes the NDAA National Defense Authorization Act, section 842 of F FY26. Go read it if you're not if you're a geek. Um but that says that batteries procured by the military starting January 2028 um not only cannot be manufactured in a foreign entity of concern, but also 95% of the bill of materials inside that cell also need to be sourced outside of a foreign entity of concern. And the technology itself cannot originate from a foreign entity of concern. Um now, foreign entities of concern, of course, we all we don't, the the forish. Um but China's the only one that is relevant in this case for for batteries. Um and certain areas like the drone dominance program are a year uh ahead of schedule by a year. And that's great because that is really the catalyst that allows domestic um companies to stand up and actually have a fair shot at actually being able to um uh serve these markets. And it is a strategic, it is a critical, it is a national security risk of sure of a pipeline that is very easily with a tap that can be turned off. And so that is something that I'm I'm really um eager to serve at the awesome responsibility of building a domestic cell supply chain. Um and I think the DOW specifically have been very smart about right sizing that policy, right? They're saying 95% of the bill of materials are going into the cell. Um that's at CAM level, or the catheter active material level or the powder level. Going too far is also detrimental.

SPEAKER_02 1:12:06

Yeah.

SPEAKER_01 1:12:07

If you said the lithium, yeah, even the lithium carbonate inside the cell can have never touched China, for example. If you said that, then you know, yeah, we might as well pack up and just go home. Yeah, because you have to be prudent uh and and practical. And of course, we're obviously going to be bleeding upstream as well as downstream um the policy and and right-sizing it for the moment. Um, and also I also commend the DOW for not making it domestic, but making and forcing companies like myself to compete on a fair playing field with those in Korea, in Japan, in Taiwan. Um that makes sure that we are not just isolating ourselves in this pat ourselves on the back, kind of we are we can make sales down. That's a great point. You have to be still competitive on the global stage. Yeah. It's good. And and that's a good, you know, litmus test for us to say we are still world-class.

SPEAKER_00 1:13:04

Yeah, yeah. Yeah. Interesting um environment we're in. You know, maybe to wrap up, I wanted to just rewind a bit to a statement that you made as you were talking about your decision process to go back to M Power. You said the world had changed in so many ways from the time you left Empower to go to Stanford to the now coming back to M Power. That was part of your decision. Well, I never left, but yes. You never left. I left as an operating basis. Yeah, as on an operating basis. Could could you sum up how you view the world then versus the world today and what you think that means in terms of the opportunities for not only we've talked a lot about empower, but just like the industry at large.

SPEAKER_01 1:13:49

Yeah, I mean, I think I think just as fashion trends do, technology trends also overswing. Um, and I think that was a moment when I stepped away from being uh um an operating role um in 2022, where we I think we all recognize we did overswing a little bit um towards towards the full electrification of everything. I think that is eventually gonna come, but there's a pace at which is right. Um and we're we're naturally gonna be over-eager. Um and that was just the kind of beginnings of of you know going too far and then sucking back in. And and I think the timing for me, you know, personally, transitioning out um temporarily, uh if even, um was was the right decision to make. Uh obviously I'm very thankful to my entire team for fighting the good fight and you know and riding through the choppy waves um uh as I pursue this intermediate journey. Um But we are in a world now where uh sovereignty of supply chain has been is more important than ever because it is not just a preference, it is a it is a threat, it's a threat environment. Which makes it a requirement. Which makes it a requirement. There is a new wave of critical technologies from you know, back in 2022, that was the war in Ukraine just has just started, right? And of course, we've seen what drones can do and reinvent the modern theater of war. Yeah. Um and but that was we were just I mean, that was we were just getting a flavor of that. Yeah. Um but now that is fact. Um, and that is just the start of robotics, of flying robots. But um, we're we're now also seeing this new wave of critical technologies, physical AI, human, physical AI. And of course, all this dare say data centers, of course, that is driving a tremendous amount of growth. Um and that is gonna, I mean the dust is gonna settle.

SPEAKER_00 1:15:51

Um it is it it is a great point you make, though, that um I haven't really thought about it to the level of depth that you have, but in that time period, which that's 26 now, right? And so from 2022, 2023, in the last three or four years, you've seen the emergence and the you know, 10x of importance of multiple verticals that were nascent before for batteries, before it was basically consumer electronics, mobile electronics and cars. It's basically it, really. Yeah. And then you've seen in this time frame, we talked about grid storage, wasn't really a thing, not sexy back then. Data centers, drones, and now, you know, let's call it ubiquitous autonomy. Yeah. These are all giant industries or will be on their own, each one of which is critically dependent on a specific battery technology.

SPEAKER_01 1:16:47

So there's no better time. No better time than to build it. So I'm now a fish in the stream alongside you. Yeah. Um good luck.

SPEAKER_00 1:17:00

Yeah, to you as well. Hey, I I very much enjoyed the conversation, AJ. Thank you for taking so much time to spend with us and uh uh definitely appreciate the work and uh the continuing work that that your team is doing at Steer. And I I wish you all the best with Empower. And uh we as a country and as a world need companies like like that to succeed.

SPEAKER_01 1:17:22

Right. Likewise uh thanks again. Thank you.