Building North America's Next Primary Cobalt Mine

June 6, 2016

Lithium-ion battery testing: a technical nightmare

Publisher: Investor Intel

Author: John Petersen


InvestorIntel - Monday, June 6, 2016
Lithium-ion battery testing: a technical nightmare

Excerpt from the article:

"What matters to me is that right now everything that is to be rolled out in the next 10 years in the fast growing future market of EVs must be based on cobalt-containing chemistries. (John Peterson).

Most of today's lithium-ion research news is irrelevant to investors for one simple reason: it takes a decade or more to complete development and testing, and transition from research to product.

I know this from experience.

In late 2003 I controlled a public shell that was actively searching for a suitable acquisition. I ended up selecting an R&D-stage battery company that had impressive results from laboratory bench tests on a novel lead-carbon electrochemistry and "only" needed to complete product development and testing prior to a commercial launch. Our initial Securities and Exchange Commission ("SEC") reports on the merger explained that the company would start alpha testing in 30 to 60 days, spend 30 months on a two-stage beta testing program and then roll into a commercial launch.

In 20/20 hindsight our timing expectations were nothing short of delusional. Instead of the three years my business partners expected it to take to complete product development and testing, it took six. While I breathed a huge sigh of relief in late 2008 when BMW's tests of pre-commercial prototypes yielded fantastic results, my sigh was premature because we didn't understand the additional testing, validation, production planning, and cost-benefit analysis and new vehicle certification procedures that stood between the preliminary test results and real sales. Eight years later that company is still struggling to finish battery boot camp and the current value of my seven figure investment wouldn't pay for a weekend in Galveston.

The point is that battery development, testing, validation and commercialization is an excruciatingly long, complex and expensive process. In most cases, the time lag between a laboratory researcher's "Eureka!" moment and a commercial product launch is 10 to 15 years while the time lag between a commercial product launch and a cost-optimized battery is another 10 to 20 years. To make things worse, batteries aren't consumer products and, until the manufacturer of a device like a smartphone, portable computer or EV decides to pull the trigger on his own product launch, there's nothing a battery manufacturer can do to accelerate the process.

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