A Birkin handbag is the most expensive handbag for collection
An article in the London Sunday Times on February 28th, 2021, was an interesting one.
It quoted Hermes handbags, made by the French company, Hermes International SA, went up by 17 per cent in price while the FTSE 100 index fell by 14.3 per cent. Aside from being a highly desirable fashion accessories, luxury handbags are becoming an investment class of their own rights.
It was the second year in a row that bags outstripped other luxury goods in an index including classic cars, coloured diamonds, watches, jewellery and wine.
In 2019 handbags increased 13 per cent and over ten years they went up by 108 per cent in value, according to the estate agency, Knight Frank.
Hermes bags start at £1,418, and the label’s Birkin bag range usually begins at £6,370. A rare Hermes Himalaya Kelly bag made of crocodile hide became the most expensive handbag sold at an auction when it was bought at a Christie’s sale in Hong Kong for US$437,330 (£309,561) in November 2020.
According to the website, cnaluxury.channelnewsasia.com, it is possible to create an index on handbags now because of the frequency which many iconic pieces are coming to auction today. Although bags made by other luxury brands like Chanel and Louis Vuitton are also highly collectible, it is those made by Hermes that attract the highest prices and are considered the most desirable. Chanel is the second most popular handmade for collection.
The rise in value of handbags is also a result of brands increasing their prices every year, culminating in an increase in value in the pre-loved market. Hermes bags are the most difficult to get hold of, so they are the most coveted of all.
According to Knight Frank luxury investment index, fine wine went up 13 per cent last year and 127 per cent over a decade, bolstered by older Tuscan wines which increased by 8 per cent and champagne, which went up 14 per cent.
Art values fell 11 per cent on average because of the collapse in public auctions, and coloured diamonds fell 1 per cent because of the difficulty of transporting diamonds in the pandemic.
The conclusion of the article is obvious: Investing in a Hermes bag, especially a Birkin, will give a good return. Most important, it will also please your wife enormously. The caveat is that whether you can afford it.
The share prices of EV start-ups have been rising sharply over recent months. Testa Inc., which produces 500,000 EVs per year is valued at more than US$800 billion. At one point, an EV start-up, Nikola, was worth US$40 billion, more than the market value of the 100-year old Ford Motor.
Investors have also taken notice of companies that develop batteries for these EVs. Start-ups that develop solid-state battery are attracting investors and existing car manufacturers as well as venture capital and SPACs.
A company that is developing solid-state battery is QuantumSpace Corporation Inc, which was a spin-off from Stanford University. The company is worth US$20.14 billion. The 10-K report, which the company submits to the SEC of the US, describes the state of the solid state battery and the major challenges that are facing companies to commercialize this new technology. The following is an extract of the 10-K report.
Corporate History and Background
On November 25, 2020, Kensington Capital Acquisition Corp., a SPAC merged with QuantumScape Battery, Inc. Later, Kensington Capital Acquisition Corp. changed its name to QuantumScape Corporation.
Overview
QuantumScape is developing next generation battery technology for electric vehicles (“EVs”) and other applications. We are at the beginning of a forecasted once-in-a-century shift in automotive powertrains, from internal combustion engines to clean EVs. While current battery technology has demonstrated the benefits of EVs, principally in the premium passenger car market, there are fundamental limitations inhibiting widespread adoption of battery technology. As a result, today, approximately 3% of global light-vehicles are electrified. We believe a new battery technology represents the most promising path to enable a mass market shift.
After 30 years of gradual improvements in conventional lithium-ion batteries we believe the market needs a step change in battery technology to make mass market EVs competitive with the fossil fuel alternative.
We have spent the last decade developing a proprietary solid-state battery technology to meet this challenge. We believe that our technology enables a new category of battery that meets the requirements for broader market adoption. The lithium-metal solid-state battery technology that we are developing is being designed to offer greater energy density, longer life, faster charging, and greater safety when compared to today’s conventional lithium-ion batteries.
Over the last eight years we have developed a strong partnership with Volkswagen Group of America Investments, LLC (“VGA”) and certain of its affiliates (together with VGA, “Volkswagen”). Volkswagen is one of the largest car companies in the world and intends to be a leader in EVs. Volkswagen has announced plans to launch more than 70 new EV models and build more than 25 million vehicles on electric platforms by the end of the decade. Over the last eight years Volkswagen has invested and committed to invest, subject, in certain cases, to certain closing conditions that have not yet been satisfied, a total of more than US$300 million in us and has established a 50-50 joint venture with us to enable an industrial level of production of our solid-state batteries. As 50-50 partners in the joint venture with Volkswagen, we expect to share equally in the revenue and profit from the joint venture. Over the course of our relationship, Volkswagen has successfully tested multiple generations of certain of our single-layer, laboratory cells at industry-accepted automotive rates of power (power is the rate at which a battery can be charged and discharged). We believe no other lithium-metal battery technology has demonstrated the capability of achieving automotive rates of power with acceptable battery life.
While we expect Volkswagen will be the first to commercialize vehicles using our battery technology, over the next few years as we build our initial pre-pilot manufacturing facility and our 1GWh pilot facility (the “Pilot Facility”), we intend to work closely with other automotive original equipment manufacturers (“OEMs”) to make our solid-state battery cells widely available over time. As part of our joint venture agreement we have agreed that the Pilot Facility will be the first commercial-scale facility to manufacture our battery technology for automotive applications, but, subject to the other terms of the joint venture arrangements, we are not limited from working in parallel with other automotive OEMs, or other non-automotive companies, to commercialize our technology. We recently have announced our plans to expand our manufacturing capability with the addition of a pre-pilot line facility in San Jose, CA (“QS-0”). QS-0 is intended to have a continuous flow, high automation line capable of building over 100,000 engineering cell samples per year. We expect to secure a long-term lease for QS-0 in the second half of this year and for QS-0 to be producing cells by 2023.
Our development uses earth-abundant materials and processes suitable for high volume production. Our processes use tools which are already used at scale in the battery or ceramics industries. Outside of the separator, our battery is being designed to use many of the materials and processes that are standard across today’s battery manufacturers. As a result, we expect to benefit from the projected industry-wide cost declines for these materials that result from process improvements and economies of scale. We believe that the manufacturing of our solid-state battery cells provides us with a structural cost advantage because our battery cells are manufactured without an anode.
Industry Background
Shift to EVs
We believe that evolving consumer preferences coupled with growing government incentives and regulations are driving a once-in-a-century shift to EVs.
Countries around the world are promoting EVs. The dependence on gasoline-powered internal combustion engine (“ICE”) vehicles has heightened environmental concerns, created reliance among industrialized and developing nations on large oil imports, and exposed consumers to unstable fuel prices and health concerns related to heightened emissions. Many national and regional regulatory bodies have adopted legislation to incentivize or require a shift to lower-emission and zero-emission vehicles. For example, countries such as the United Kingdom, the Netherlands, Sweden, Germany, and France have announced intentions to either increase applicable environmental targets or outright ban the sale of new ICE vehicles in the next two decades. More recently, California passed regulations requiring half of trucks sold in the state to be zero-emissions by 2035 and 100% by 2045.
This global push to transition from ICE vehicles, aided by favourable government incentives and regulations, is accelerating the growth in lower- and zero-emission vehicle markets.
Furthermore, consumers are increasingly considering EVs for a variety of reasons including better performance, growing EV charging infrastructure, significantly lighter environmental impact, and lower maintenance and operating costs. Automakers such as Tesla, Inc. have demonstrated that premium EVs can deliver a compelling alternative to fossil fuels. As EVs become more competitive and more affordable, we believe that they will continue to take market share from ICE vehicles. We believe that this shift will occur across vehicle types and market segments. However, some of the inherent limitations of lithium-ion battery technology remain an impediment to meaningful improvements in EV competitiveness and cost.
Current Battery Technology Will Not Meet the Requirements for Broad Adoption of EVs
Despite the significant progress in the shift to EVs, the market remains dominated by ICE vehicles. According to the International Energy Association, approximately 3% of light vehicles are EVs. For EVs to be adopted at scale across market segments batteries need to improve. In particular, we believe there are five key requirements to drive broad adoption of EVs:
• Battery capacity (energy density). EVs need to be able to drive over 300 miles on a single charge to achieve broad market adoption. The volume required for conventional lithium-ion battery technology limits the range of many EVs. Higher energy density will enable automotive OEMs to increase battery pack energy without increasing the size and weight of the vehicle’s battery pack.
• Fast charging capability. EV batteries need to be fast-charging to replicate the speed and ease with which a gasoline car can be re-fueled. We believe this objective is achieved with the ability to charge to at least 80% capacity in under 15 minutes, without materially degrading battery life.
• Safety (nonflammable). EV batteries need to replace as many of the flammable components in the battery as possible with non-flammable equivalents to reduce the extent of damage caused by a fire. With current batteries, many abuse conditions, including malfunctions that can result in overcharges and battery damage from accidents, can result in fires.
• Cost. Mass market adoption of EVs requires a battery that is capable of delivering long range while remaining cost competitive with a vehicle price point of around US$30,000.
• Battery life. Batteries need to be usable for the life of the vehicle, typically 12 years or 150,000 miles. If the battery fades prematurely, EVs will not be an economically practical alternative.
Since these requirements have complex interlinkages, most manufacturers of conventional lithium-ion batteries used in today’s cars are forced to make tradeoffs. For example, conventional batteries can be fast-charged, but at the cost of significantly limiting their battery life.
We believe that a battery technology that can meet these requirements will enable an EV solution that is much more broadly competitive with internal combustion engines. With more than 90 million ICE vehicles produced in 2019 across the auto industry, there is significant untapped demand for a battery that meets these goals – a potential market opportunity in excess of US$450 billion annually.
Limitations of Conventional Lithium-ion Battery Technologies
The last significant development in battery technology was the commercialization of lithium-ion batteries in the early 1990s which created a new class of batteries with higher energy density. Lithium-ion batteries have enabled a new generation of mobile electronics, efficient renewable energy storage, and the start of the transition to electrified mobility.
Since the 1990s, conventional lithium-ion batteries have seen a gradual improvement in energy density. Most increases in cell energy density have come from improved cell design and incremental improvements in cathode and anode technology.
However, there is no Moore’s law in batteries – it has taken conventional lithium-ion batteries at least 10 years to double in energy density and it has been approximately 30 years since the introduction of a major new chemistry. As the industry approaches the theoretical limit of achievable energy density for lithium-ion batteries involving carbon, we believe a new architecture is required to deliver meaningful gains in energy density.
Batteries have a cathode (the positive electrode), an anode (the negative electrode), a separator which prevents contact between the anode and cathode, and an electrolyte which transports ions but not electrons. A conventional lithium-ion battery uses a liquid electrolyte, a polymer separator, and an anode made principally of carbon (graphite) or a carbon/silicon composite. Lithium ions move from the cathode to the anode when the battery is charged and vice versa during discharge.
Conventional Lithium-Ion Battery Design
The energy density of conventional lithium-ion batteries is fundamentally limited by the anode, which provides a host material to hold the lithium ions, preventing them from binding together into pure metallic lithium. Metallic lithium, when used with conventional liquid electrolytes and porous separators, can form needlelike crystals of lithium known as dendrites, which can penetrate through the separator and short-circuit the cell.
While using a host material is an effective way to prevent dendrites, this host material adds volume and mass to the cell, it adds cost to the battery, and it limits the battery life due to side reactions at the interface with the liquid electrolyte. The rate at which lithium diffuses through the anode also limits the maximum cell power.
The addition of silicon to a carbon anode provides a modest boost to energy density relative to a pure carbon anode. However, silicon is also a host material that not only suffers from the limitations of carbon as discussed above, but also introduces cycle life challenges as a result of the repeated expansion and contraction of the silicon particles, since silicon undergoes significantly more expansion than carbon when hosting lithium ions. Furthermore, the voltage of the lithium-silicon reaction subtracts from the overall cell voltage, reducing cell energy.
Lithium-Metal Anode Required to Unlock Highest Energy Density
We believe that a lithium-metal anode is the most promising approach that can break out of the current constraints inherent in conventional lithium-ion batteries and enable significant improvements in energy density.
In a lithium-metal battery, the anode is made of metallic lithium; there is no host material. Eliminating the host material reduces the size and weight of the battery cell and eliminates the associated materials and manufacturing costs. This results in the highest theoretical gravimetric energy density for a lithium-based battery system. Lithium-ion batteries currently used in the auto industry have energy densities of less than 300 Wh/kg. We believe lithium-metal batteries have the potential to significantly increase this energy density.
Lithium-metal anodes are compatible with conventional cathode materials, and lithium-metal batteries will derive some benefit from continued improvement in conventional cathodes. Moreover, lithium-metal anodes may enable future generations of higher energy cathodes that cannot achieve energy density gains when used with lithium-ion anodes,.
Although the industry has understood for 40 years the potential benefits of lithium-metal anodes, the industry has not been able to develop a separator that makes a lithium-metal anode practical for automotive use.
Solid-State Separator Required to Enable Lithium-Metal Anode
We believe that a lithium-metal battery requires that the porous separators used in current lithium-ion batteries be replaced with a solid-state separator capable of conducting lithium ions between the cathode and anode at rates comparable to conventional liquid electrolyte while also suppressing the formation of lithium dendrites. While various solid-state separators have been shown to operate at low power densities, such low power densities are not useful for most practical applications. To our knowledge, we are the only company that has been able to demonstrate a solid-state separator for lithium-metal batteries that reliably prevents dendrite formation at higher power densities, such as those required for automotive applications and fast-charging.
We believe that our ability to develop this proprietary solid-state separator will enable the shift from lithium-ion to lithium-metal batteries.
Our Technology
Our proprietary solid-state lithium-metal cell represents the next-generation of battery technology.
Our battery cells have none of the host materials used in conventional anodes. In fact, when our cells are manufactured there is no anode; lithium is present only in the cathode. When the cell is first charged, lithium moves out of the cathode, diffuses through our solid-state separator and plates in a thin metallic layer directly on the anode current collector, forming an anode. When the battery cell is discharged, the lithium diffuses back into the cathode.
Eliminating the anode host material found in conventional lithium-ion cells substantially increases the volumetric energy density. A pure lithium-metal anode also enables the theoretically highest gravimetric energy density for a lithium battery system.
Our proprietary solid-state separator is the core technology breakthrough that enables reliable cycling of the lithium-metal anode battery. Without a working solid-state separator, the lithium would form dendrites which would grow through a traditional porous separator and short circuit the cell.
An effective solid-state separator requires a solid material that is as conductive as a liquid electrolyte, chemically stable next to lithium–one of the most reactive elements–and able to prevent the formation of dendrites. Our team worked over ten years to develop a composition that meets these requirements and to develop the techniques necessary to manufacture the separator material at scale using a continuous process. We have a number of patents covering both the composition of this material and key steps of the manufacturing process.
Our solid-state separator is a dense, entirely inorganic ceramic. It is made into a film that is thinner than a human hair and then cut into pieces about the length and width of a playing card. Our solid-state separator is flexible because it has a low defect density and is thin. In contrast, typical household ceramics are brittle and can break due to millions of microscopic defects which reduce structural integrity.
The separator is placed between a cathode and anode current collector to form a single battery cell layer. These single layers will be stacked together into a multilayer cell, about the size of a deck of cards, that will be the commercial form factor for EV batteries.
Our cathodes use a combination of conventional cathode active materials (NMC) with an organic gel made of an organic polymer and organic liquid catholyte. In the future, we may use other compositions of cathode active materials, including cobalt-free compositions. We have an ongoing research and development investigation into inorganic catholyte that could replace the organic gel made of an organic polymer and organic liquid catholyte currently used.
As communicated in our solid-state battery showcase event on December 8, 2020, our single-layer solid-state cells have been extensively tested for power density, cycle life, and temperature performance. This is the only solid-state cell we are aware of that has been validated to run at automotive power densities by a leading automotive OEM. In addition, we believe our battery technology may provide significant improvements in energy density compared to today’s conventional lithium-ion batteries.
Benefits of Our Technology
We believe our battery technology will enable significant benefits across battery capacity, life, safety, and fast charging while minimizing cost. We believe these benefits will provide significant value to automotive OEMs by enabling greater customer adoption of their EVs. By solving key pain-points such as 15-minute fast charging, we believe our battery echnology will enable the delivery of an EV experience that is significantly more competitive with fossil fuel vehicles than what today’s EVs can achieve with conventional batteries.
Our battery technology is intended to meet the five key requirements we believe will enable mass market adoption of EVs:
• Energy density. Our battery design is intended to significantly increase volumetric and gravimetric energy density by eliminating the carbon/silicon anode host material found in conventional lithium-ion cells. This increased energy density will enable EV manufacturers to increase range without increasing the size and weight of the battery pack, or to reduce the size and weight of the battery pack which will reduce the cost of the battery pack and
other parts of the vehicle. For example, we estimate that our solid-state battery cells will enable a car maker to increase the range of a luxury performance EV—with 350 litres of available battery space—from 250 miles (400 km) to 450 miles (730 km) without increasing the size and weight of the battery pack. In the same example, our battery would enable the car maker to increase the maximum power output of such a vehicle from 420 kW to 650 kW without increasing the size of the battery pack. Alternatively, we believe that our solid-state battery cells will enable a car maker to increase the range of a mass market sedan—with 160 litres of available battery space—from 123 miles (200km) to 233 miles (375km) without increasing the size and weight of the battery pack. Similarly, our battery would enable the car maker to increase the maximum power output of such vehicle from 100 kW to 150 kW without increasing the size of the battery pack.
• Battery life. Our technology is expected to enable increased battery life relative to conventional lithium-ion batteries. In a conventional cell, battery life is limited by the gradual irreversible loss of lithium due to side reactions between the liquid electrolyte and the anode. By eliminating the anode host material, we expect to eliminate the side reaction and enable longer battery life. Our latest single-layer prototype cells have been tested to over 1000
cycles (under stringent test conditions, including 100% depth-of-discharge cycles at one-hour charge and discharge rates at 30 degrees Celsius with commercial-loading cathodes) while still retaining over 80% of the cells’ discharge capacity. This performance exceeds the cycle life and capacity retention in many EV battery warranties today, which may be to 150k miles to 70% of the cells’ discharge capacity.
• Fast charging capability. Our battery technology, and specifically our solid-state separator material, has been tested to demonstrate the ability to charge to approximately 80% in 15 minutes, significantly faster than commonly used high-energy EV batteries on the market. In these conventional EV batteries, the limiting factor for charge rate is the rate of diffusion of lithium ions into the anode. If a conventional battery is charged beyond these limits, lithium can start plating on carbon particles of the anode rather than diffuse into the carbon particles. This causes a reaction between the plated lithium and liquid electrolyte which reduces cell capacity and increases the risk of dendrites that can short circuit the cell. With a lithium-metal anode, using our solid-state separator, we expect the lithium can be plated as fast as the cathode can deliver it.
• Increased safety. Our solid-state battery cell uses a ceramic separator which is not combustible and is therefore safer than conventional polymer separators. This ceramic separator is also capable of withstanding temperatures considerably higher than those that would melt conventional polymer separators, providing an additional measure of safety. In high temperature tests of our solid-state separator material with lithium, the separator material remained stable in direct contact with molten lithium without releasing heat externally, even when heated up to 250 degrees, higher than the 180-degree melting point of lithium.
• Cost. Our battery technology eliminates the anode host material and the associated manufacturing costs, providing a structural cost advantage compared to traditional lithium-ion batteries. When comparing manufacturing facilities of similar scale, we estimate that eliminating these costs will provide a savings of approximately 17% compared to the costs of building traditional lithium-ion batteries at leading manufacturers.
Our Competitive Strengths
Only proven lithium-metal battery technology for automotive applications to our knowledge. We have built and tested over one hundred thousand single-layer solid-state cells and have demonstrated that our technology meets automotive requirements for power, cycle life, and temperature range. In 2018, Volkswagen announced it had successfully tested certain of our single-layer, laboratory battery cells at automotive rates of power.
Partnership with one of the world’s largest automotive OEMs. We are partnered with Volkswagen, one of the largest automakers in the world. Volkswagen has been a collaboration partner and major investor since 2012 and has invested or committed to invest, subject, in certain cases, to certain closing conditions that have not yet been satisfied, a total of more than $300 million. In addition, Volkswagen has committed additional capital to fund our joint venture. Volkswagen plans to launch more than 70 new electric models and build more than 25 million vehicles on electric platforms by the end of the decade. Together with Volkswagen, we have established a joint venture to enable an industrial level of production of our solid-state batteries for use in Volkswagen vehicles. As 50-50 partners in the joint venture with Volkswagen, we expect to share equally in the revenue and profit from the joint venture.
High barriers to entry with extensive patent and intellectual property portfolio. Over the course of 10 years, we have generated more than 200 U.S. and foreign patents and patent applications – including broad fundamental patents around our core technology. Our proprietary solid-state separator uses the only material we know of that can cycle lithium at automotive current densities without forming dendrites. Our battery technology is protected by a range of patents, including patents that cover:
• Composition of matter, including the optimal composition as well as wide-ranging coverage of a number of variations;
• Enabling battery technology covering compositions and methods required to incorporate a solid-state separator into a battery;
• Manufacturing technology, protecting the way to make the separator at scale using roll-to-roll processes, without semiconductor style production or batch processes used in traditional ceramics; and
• Material dimensions, including our proprietary solid-state separator, covering any separator with commercially practical thicknesses for a solid-state battery.
Significant development focused on next-gen technology for automotive applications. We have spent over ten years and over $300 million developing our battery technology. We have run over 2.6 million tests on over 700,000 cells and cell components. Our technical team comprises more than 250 employees, many of whom have worked at large battery manufacturers and automotive OEMs. Through its experience, our team has significant technical know-how and is supported by extensive facilities and equipment, development infrastructure, and data analytics.
Designed for volume production. Our technology is designed to use earth-abundant materials and processes suitable for high volume production. Our processes use tools which are already used at scale in the battery or ceramics industries. While preparing for scale production, we have purchased or tested production-intent tools from the world’s leading vendors. In particular, we expect to produce our proprietary separator using scalable continuous processing. Although our separator material is proprietary, the inputs are readily available and can be sourced from multiple suppliers across geographies.
Structural cost advantage leveraging industry cost trends. Aside from the separator, our battery is being designed to use many of the materials and processes that are standard across today’s battery manufacturers. As a result, we expect to benefit from the projected industry-wide cost declines for these materials that result from process improvements and economies of scale. We believe that the manufacturing of our solid-state battery cells provides us with a structural cost advantage because our battery cells are manufactured without an anode.
Our Growth Strategy
Continue to develop our commercial battery technology. We will continue developing our battery technology with the goal of enabling commercial production in 2024. We have validated capabilities of our solid-state separator and battery technology in single-layer solid-state cells at the commercially required size (70x85mm) and four-layer solid-state battery cells at a smaller size (30x30mm). We must now develop multi-layer cells with commercial dimensions and many more layers, to continue improving yield and performance and to optimize all components of the cell for high volume manufacturing. We will continue to work to further develop and validate the volume manufacturing processes to enable high volume manufacturing and minimize manufacturing costs. We will continue to work on increasing the yield of our separators to reduce scrappage and to increase utilization of manufacturing tools. Our current funds will enable us to expand and accelerate research and development activities and undertake additional initiatives. Finally, we will continue to use our engineering line in San Jose, California to prepare for high volume manufacturing and plan our first commercial production Pilot Facility through our joint venture partnership with Volkswagen. In addition, we expect that our recently announced QS-0 facility will help provide the additional capacity we need for our development work and will enable us to accelerate work on the next-generation of manufacturing tools. QS-0 is also intended to provide capacity to make enough batteries for hundreds of long-range battery electric test vehicles per year. This will allow us to provide early cells to Volkswagen, as well as other automotive partners, explore non-automotive applications, and help de-risk subsequent commercial scale-up. We expect to secure a long-term lease for QS-0 in the second half of this year and for QS-0 to be producing cells by 2023.
Meet Volkswagen battery demand. The Pilot Facility to be built and run by QSV Operations LLC (“QSV”) and the subsequent 20GWh expansion of the Pilot Facility (the “20GWh Expansion Facility”) would represent a small fraction of Volkswagen’s demand for batteries and implies vehicle volumes under 2% of Volkswagen’s total production in 2019, assuming a 100KWh pack size. Our goal is to significantly expand the production capacity of the joint venture, in partnership with Volkswagen, to meet more of their projected demand.
Expand partnerships with other automotive OEMs. While we expect Volkswagen will be the first to commercialize vehicles using our battery technology, over the next few years as we build our Pilot Facility, we intend to work closely with other automotive OEMs to make our solid-state battery cells widely available over time. As part of our joint venture agreement we have agreed that the Pilot Facility will be the first commercial-scale facility to manufacture our battery technology for automotive applications, but, subject to the other terms of the joint venture arrangements, we are not limited from working in parallel with other automotive OEMs to commercialize our technology. We expect that QS-0 will allow us to provide early cells to Volkswagen, as well as other automotive partners, explore non-automotive applications, and help de-risk subsequent commercial scale-up.
Expand target markets. We are currently focused on automotive EV applications, which have the most stringent set of requirements for batteries. However, we recognize that our solid-state battery technology has applicability in other large and growing markets including stationary storage and consumer electronics such as smartphones and wearables.
Expand commercialization models. Our technology is being designed to enable a variety of business models. In addition to joint ventures, such as the one with Volkswagen, we may operate solely-owned manufacturing facilities or license technology to other manufacturers, such as our recently announced QS-0 facility that is planned for the San Jose area. Where appropriate, we may build and sell separators rather than complete battery cells.
Continued investment in next-gen battery innovation. We intend to continue to invest in research and development to improve battery cell performance, improve manufacturing processes, and reduce cost.
Manufacturing and Supply
Our battery manufacturing process is being designed to be very similar to that of conventional lithium-ion battery manufacturing, with a few exceptions:
• We use a proprietary separator material instead of the polypropylene separator used in lithium-ion cells.
• Our architecture eliminates the need for anode manufacturing, reducing capital investment and lowering operating costs.
• We will build our multi-layer cells by sequentially stacking separators, cathodes and current collectors rather than winding these materials together.
• Our cell design allows us to greatly shorten the weeks-long aging process required for conventional lithium-ion cells, thus decreasing manufacturing cycle time and reducing working capital needs.
Our architecture depends on our proprietary separator, which we will manufacture ourselves. Though our separator design is unique, its manufacturing relies on well-established, high-volume production processes currently deployed globally in other industries.
We plan to source our input materials from industry leading suppliers to the lithium-ion battery industry, and we already have strategic relationships in place with the industry’s leading vendors of cathode material, the most critical purchased input to our cell, along with leading vendors of other less critical inputs. Our separator is made from abundant materials produced at industrial scale in multiple geographies. We do not anticipate any unique supply constraints that would impede the commercialization of our product for the foreseeable future.
Research and Development
We conduct research and development at our headquarters facility in San Jose, California. Research and development activities concentrate on making further improvements to our battery technology, including improvements to battery performance and cost.
Our research and development currently includes programs for the following areas:
• Multi-layering. To date, we have only produced single-layer solid-state cells at the commercially required size (70x85mm) and four-layer solid-state cells at a smaller size (30x30mm). In order to produce commercially-viable solid-state battery cells for automotive applications, we must produce multilayer battery cells which may range from several dozen to over one hundred layers, depending on our customers’ requirements, and to do so in the commercially required size. We will need substantial development and to overcome the challenges in creating these cells and implement the appropriate cell design for our solid-state battery cell.
• Improved yields. We are focused on improving the yields (useful output) of both our solid-state separators and our battery cells. We are automating our manufacturing process and purchasing larger-scale manufacturing equipment. We will need to significantly increase our yield before we can manufacture our solid-state battery cells in volume.
• Continued improvement in the solid-state separator. We are working to improve the reliability and performance of our solid-state separator, including decreasing the thickness. We have selected a method of continuous processing found at scale in both the battery and ceramic industries and are working on continuous improvement of this process. In addition, we are investigating alternative processing methods that may further increase the capital efficiency of the process.
• Continued improvement of the cathode. Our cathodes use a combination of conventional cathode active materials (NMC) along with an organic gel made of an organic polymer and organic liquid catholyte. In the future, we may use other cathode active materials, including cobalt-free compositions. We have an ongoing research and development investigation into inorganic catholyte that could replace the organic gel made of an organic polymer and organic liquid currently used.
• Integration of advanced cathode materials. We plan to benefit from industry cathode chemistry improvements and/or cost reduction. Our solid-state separator platform is being designed to enable some of the most promising next-generation cathode technologies, including high voltage or high capacity cathode active materials, which when combined with a lithium-metal anode, may further increase cell energy densities.
Intellectual Property
The success of our business and technology leadership is supported by our proprietary battery technology. We rely upon a combination of patent, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights in our proprietary technologies. In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties. We regularly file applications for patents and have a significant number of patents in the United States and other countries where we expect to do business. Our patent portfolio is deepest in the area of solid-state separators with additional areas of strength in anodes, next-generation cathode materials, and cell, module, and pack design specific to lithium-metal batteries. Our trade secrets primarily cover manufacturing methods.
As of December 31, 2020, we owned or licensed, on an exclusive basis, 80 issued U.S. patents and 40 pending or allowed U.S. patent applications, and 103 granted foreign patents and patent applications. We have 1 registered U.S. trademark and 6 pending U.S. trademark applications. Our issued patents start expiring in 2033.
Competition
The EV market, and the battery segment in particular, is evolving and highly competitive. With the introduction of new technologies and the potential entry of new competitors into the market, we expect competition to increase in the future, which could harm our business, results of operations, or financial condition.
Our prospective competitors include major manufacturers currently supplying the industry, automotive OEMs and potential new entrants to the industry. Major companies now supplying batteries for the EV industry include Panasonic Corporation, Samsung SDI, Contemporary Amperex Technology Co. Limited, and LGChem Ltd. They supply conventional lithium-ion batteries and in many cases are seeking to develop solid-state batteries, including potentially lithium-metal batteries. In addition, because of the importance of electrification, most automotive OEMs are researching and investing in solid-state battery efforts and, in some cases, in battery development and production. For example, Tesla, Inc. is building multiple battery gigafactories and potentially could supply batteries to other automotive OEMs, and Toyota Motors and a Japanese consortium have a multi-year initiative pursuing solid-state batteries.
A number of development-stage companies are also seeking to improve conventional lithium-ion batteries or to develop new technologies for solid-state batteries, including lithium-metal batteries. Potential new entrants are seeking to develop new technologies for cathodes, anodes, electrolytes and additives. Some of these companies have established relationships with automotive OEMs and are in varying stages of development.
We believe our ability to compete successfully with lithium-ion battery manufacturers and with other companies seeking to develop solid-state batteries will depend on a number of factors including battery price, safety, energy density, charge rate and cycle life, and on non-technical factors such as brand, established customer relationships and financial and manufacturing resources.
Many of the incumbents have, and future entrants may have, greater resources than we have and may also be able to devote greater resources to the development of their current and future technologies. They may also have greater access to larger potential customer bases and have and may continue to establish cooperative or strategic relationships amongst themselves or with third parties (including automotive OEMs) that may further enhance their resources and offerings.
Government Regulation and Compliance
There are government regulations pertaining to battery safety, transportation of batteries, use of batteries in cars, factory safety, and disposal of hazardous materials. We will ultimately have to comply with these regulations to sell our batteries into the market. The license and sale of our batteries abroad is likely to be subject to export controls in the future.
On February 13th, 2021, the headline of the Times London online was “Britons are at the back of a year-long queue for new Tesla model. Another headline in the Barron’s online reads “Electric vehicles were a non-starter until Tesla comes along.
There were a few starts for electric vehicles in the last 100 years. The Barron’s article highlighted several interesting facts. In 1959 there were a half-dozen companies racing to bring out the first electric automobile in a half-century. Leading the way was the Nu-Klea Starlite, a new electric model being billed as an “economy car”. At that point pint, Barron’s noted: “Simply by plugging the car into an electric outlet each night, thereby recharging the batteries, the owner can drive about 80 miles the next day at a cost of about US20 cents.”
The Nu-Klea Starlite failed and no other successful EVs emerged from this period. It continued for the rest of the 20th century-high hopes dashed by lack of vision, willpower, and funding. It took an new century, the 21st century, for EVs to be embraced by car-buying consumers.
Short history of the EV
The first exciting age of the EVs happened in the first decade of the 20th century. According to Barron’s the stately, battery-powered sedans of the pre-World Wat 1 era were purchased by well-to-do urbanites. President Woodrow Wilson drove around the White House in his Milburn Electric. Unlike gasoline-powered cars, EVs rode clean and silent, with little effort or maintenance needed. But they lacked speed (about 40 km per hour) and range of about 97 to 112 km per charge, largely because the batteries were so heavy.
The first electric age effectively ended in 1915, after Henry Ford and Thomas Edison teamed up to take a crack at EVs. The EVs produced were too slow, too heavy and too costly. The EV project was dropped by the two “giant men” of the period.
That was pretty much where things still stood in 1959, when Klea Starlite made its disappointing debut. EVs were not abandoned. They were produced as golf carts, and “British milk floats”.
Fast-forward to 1968, when Barron’s reported that GM. Ford and Chrysler were boasting about their research on smogless vehicles. The big hope this time was a Union Carbide electric motorcycle, which achieved 40 km per hour . The motorcycle was “strictly experimental”, and the big the American automobile companies has nothing of their own to offer except vague promises of electric passenger vehicles that might be ready for commercial production in 10 to 15 years.
Barron’s wrote another decade passed. Then, on June 13th, 1977, Barron’s cited “renewed interest in EVs,” this time because of concerns about the oil embargo and air pollution. Yet the only producer of EVs was Sebring-Vanguard, whose Citicar two-seater “boast a top speed of 61 km per hour and can go about 60 km per charge. “The Citicar was flimsy, Barron’s wrote, “it is not allowed on major highways.”
Some 13 years later, in 1990, then GM CEO Roger Smith, “desperate for a piece of good news on which to end his career,“ as Barron’s puts, introduced a new EV programme with great fanfare. But the effort didn’t yield a car until 1996—the General Motors EV1, a two-seater with an initial range of just about 97 km. GM pulled the plug on production in 1999., sparking controversy in the documentary, Who Killed the Electric Car?
By 2002, the big car makers knew that the gasoline engine was “rumbling into end of its product cycle,” with Ford, GM and the then DaimlerChrysler “well spending over US$1 billion a year on new-engine technologies, “ including hybrids, Barron’s wrote. Led by Toyota’s Prius, there were 50,000 hybrids on US roads.
Enter Tesla
The modern EV era begins with Tesla and CEO Elon Musk, a visionary like Ford or Edison. Musk’s goal was is “an electric-car revolution,“ and instead of building another niche economy EV, Musk shot for the moon with a high-end sports car, the Tesla Roadster. Barron’s admitted that it underestimated the power of Musk’s revolution. A 2013 cover story panned the stock, Tesla Inc., suggesting that Tesla’s fans “are viewing its prospects through 3-D glasses.” Today, the company is worth more than US$800 million, producing about 500,00 vehicles per year.
Planned Entry of Apple Inc.
Many traditional car companies and new EV start-ups have joined Tesla to produce EVs in the US, Europe, China and Japan. New eco-system of EV has emerged including large battery production and sophirtai9cted software to provide various features which are not available in today’s gasoline-powered cars.
More interesting is the planned entry of Apple Inc. into the automobile industry. The Times on London Times on February 16th, 2021, noted this development. Apple, which has overhauled the personal, music and mobiles market, has remained silent over its plans for vehicles. Its car plan, known internally as Project Titan, have been in the works for some years. It was reported that the company intended to produce a passenger vehicle in 2024. An analyst at Morgan Stanley, Katy Huberty, noted the smartphone market is worth US$500 billion each year. “The mobility market is worth US$10 trillion, so Apple would only need a 2 per cent market share of this market to be the size of their phone business,” she told clients.
In smartphones Apple uses a major contract manufacturer, Foxconn Technology Group, to produce all its smart phones. Apple its efforts on designing, software development and marketing. Major car companies have been making announcements that they are interested to partner Apple to produce tis vehicle.
The Times London quoted the CEO of Volkswagen, the largest car company in the world, that it was not afraid of Apple’s plan to enter the automotive industry. He said the global car market would not be transformed overnight. He has to be careful!
Apple has led to the failure of Nokia, then the market leader of mobile phone. We believe the business model of the mobility industry is ripe for major disruption after 100 years. CEOs of major car companies have to take note that Apple has a cash in hand of US$191.83 billion, meaning they has substantial ammunition to compete in the new autonomous electric vehicle industry.
Occasionally small rats entered our kitchen to sniff out for leftover foods. If they are not lucky, they are caught by my cats, Salina Boy or Charlie. Instead of being considered a pest, a species of rat, the African giant pouched rat, is being trained to detect a disease that is devastating livestock and threatening the livelihoods of farmers in the world’s poorest countries, as quoted by the Times of London on January 29th, 2021.
Brucellosis is a highly contagious bacterial infection that causes infertility and low milk yields in cows, sheep, goats and pigs. Detection is hard and expensive.
Glasgow University is working with researchers at Sokoine University in Tanzania on using sniffer rats to tackle the problem. The African giant pouched rats, which can grow to 91 cm in length, have already been trained to detect landmines and tuberculosis.
Dan Haydon, director of the institute of biodiversity, animal health and comparative medicine at Glasgow University, said that the idea developed after he discovered how sniffer dogs were being used to detect brucellosis in Yellowstone National Park, in the United States, where there is a brucella problem with elk, bison and cattle. “Professor Rudovick Kazwala, who is lead researcher at Sokoine, said, ‘Aha, well, we already have this facility where rats are being specially trained to sniff landmines and tuberculosis’”, Professor Haydon said.“So, we figured if they can smell landmines and smell TB then surely we can get them to smell brucellosis. It turns out you can.”
The scientists received a grant to conduct the research through the British Foreign, Commonwealth and Development Office. Testing has delivered encouraging results so far.
The African giant pouched rat is used rather than the standard lab rat because they are easier to source in sub-Saharan Africa and live longer.
It takes nine months and costs about £5,000 to train a rat, which can then speed through 100 samples in 20 minutes.
Magawa, the most famous African pouched rat
Magawa has been awarded a prestigious gold medal for his work deteting land mine, according to the website, www.bbc.com on September 24th, 2020. Magawa has sniffed out 39 landmines and 28 unexploded munitions in his career. The UK veterinary charity PDSA has presented him with its Gold Medal for “life -saving devotion to duty, in the location and clearance of deadly landmines in Cambodia”.
PDSA’s Gold Medal is inscribed with the words “For animal gallantry or devotion to duty”. Of the 30 animals recipients of the award, Magawa is the first rat. The seven-year-old Magawa was trained by the Belgium-registered charity Apopo (www.apopo.org), which is based in Tanzania and has been raising the animals,-known as HeroRats-to detect landmines and tuberculosis since 1990s. The animals are certified after a year of training.
According to Apopo, Magawa was born and raised in Tanzania-weighs 1.2 kg and is 70 cm long. While that is far larger than many other socies, Magawa is still small enough and light enough that he does not trigger mines if he walks over them.
The rats are trained to detect a chemical compound within the explosives, meaning they ignore scrap metal and can search for mines more quickly. Once they find an explosive, they scratch the top to alert their human co-workers.
Magawa is capable of searching a field the size of a tennis court in just 20 minutes-something Apopo says would take a person with a metal detector between one and four days. Magawa works for just an hour a day in the mornings and is nearing retirement age, but PDSA director, Jan McLoughlin, said his work with Apopo was “truly unique and outstanding”. “Magawa’s work directly saves and changes the lives of men, women and children who are impacted by these landmines, says PDSA. “Every discovery he makes reduces the risk of injury or death for local Cambodians.”
The training of African giant pouched rat
African giant pouched rats can live between 6 to 8 years. This long lifespan for a rat makes training a worthwhile investment. They are food motivated and willing to work with just about any handler for a proper reward.
From now on, I will tell my cats not to kill the rats around our house as their species are saving human lives in countries which have the problem of landmines and unexploded munitions.
Tenebrio molitor’s larvae is popular as insect-food
When I was small, living in a village with many rivers and natural ponds, a favourite hobby was fishing for fresh water fish. We would find larvae of beetles in fallen sago palms and used it as a fish bait. In remote parts of Sarawak in East Malaysia, locals eat these live larvae as delicacies as they are considered nutritious and as aphrodisiacs. Fallen sago palms are favourite places to find the larvae.
The larvae of beetles is no longer only for locals in remote regions of Asia. It was reported in the Guardian, dated January 13th, 2021, these larvae could soon be mass produced across Europe after the insect became the first to be found safe for human consumption by the European Union (EU) Food Safety Agency. The larvae of the beetle Tenebrio molitor could be eaten in powder form as part of a recipe or as crunchy smacks.
The conclusion of scientists at the EU Food Safety Agency, following application by the French insect-for-food production company, Agronutris, is expected to lead to EU-wide approval within months of yellow mealworm as a product fit for supermarket shelves and kitchen pantries across the continent.
Mealworms are the larval stage of the beetle, Tenebrio molitor, a species of darkling beetle. Like all holometabolic insects, they go through four life stages: eggs, larvae, pupa, and adult. Larvae typically measures about 2,5 cm or more, whereas adults are generally between 1.25 and 1.8 cm in length.
A bunch of mealworms
Interesting Facts
According to Wikipedia.org, the mealworm beetle breeds prolifically. Mating is a three-step process: the male chasing the female, mounting her and inserting his aedeagus, and injecting a sperm packet. Within a few days the female burrows into soft ground and lays eggs. Over a lifespan, a female, on average, lay about 500 eggs.
After four to 19 days the eggs hatch. Many predators target the eggs, including reptiles. During the larval stage, the mealworm feeds on vegetation and dead insects and molts between each larval stage., or instar (9 to 20 instar). After the final molt it becomes a pupa. The new pupa is whitish, and it turns brown over time. After 3 to 30 days, depending on environmental conditions such as temperature, it emerges as an adult beetle.
Mealworms have historically been consumed in many Asian countries, particularly in Southeast Asia. They are commonly found in food markets, and sold as street food alongside other edible insects. Baked or fried mealworms have been marketed as a healthy snack food in recent history, though the consumption of mealworms goes back centuries. They may be easily reared on fresh oats, wheat bran, with slices of potato, carrot, or apple as a moisture source. The small amount of space required to raise mealworms has made them popular in many parts of Southeast Asia.
The insect’s main components are protein, fat and fibre, offering a potentially sustainable and low carbon-emission source of food for the future. When dried, larvae is said to taste a lot like peanuts.
Insects-for-food Industry
The leading players in the insects-as-food industry have been held-back by a lack of EU-wide approval. The products are prohibited from sale in France, Germany, Italy and Spain, among other European countries. Without approval from the Food Safety Agency, they faced being banned elsewhere on the continent too. The UK, Netherlands, Belgium, Denmark and Finland, have previously take a permissive approach to an EU law that requires food not eaten before 1997 to obtain novel food authorisation from Brussels. British, Dutch, Belgian and Finnish regulators had decided the EU directive did not pertain to animals products used for food. But in 2018 a new EU law sought to bring some clarity. It stipulated that insect-based dishes would require novel food authorisation, putting the nascent insect-food industry on a weak footing.
Cricket is a popular insect-food
The products have remained available in those countries as a result of a transition period to allow companies already producing food from insects to operate until they receive the final judgement.
Insect-based food has long been seen as a part of the solution to cutting the emission of greenhouse gases in food production. Guardian quoted Mario Mazzocchi, professor at the University of Bologna: “ There are clean environmental and economic benefits if you substitute traditional sources of proteins with those that require less feed, produce less waste and result in fewer greenhouse gas emission. Lower costs and prices could enhance food security and new demand will open economic opportunities too, but these could also affect existing sectors.”
Giovanai Sogari, a social and consumer researcher at the University of Parma, said the squearmishness of many consumers towards insect-originated food product may eventually fall away. “There are cognitive reasons derived from our social and cultural experiences-the so-called ‘yuck factor’ – that make the thought of eating insects repellent to many Europeans,” he said. “With time and exposure, such attitudes can change.”
Insect-As- Food Companies
Our research shows there are a number of insect-as-food companies based in Europe and in other countries. They include:
No.
Company
Country
Insect
Products
1
Micronutris
France
Yellow mealworms and crickets
Snacks
2
Agronutris
France
Crickets, yellow mealworms and black soldier fly
Animal feeds
3
Protifarm
Netherlands
Buffalo beetles
Food ingredients
4
Essento
Switzerland
Yellow mealworms, grasshoppers and crickets
Snacks and protein bars
5
Entogourmet
Spain
Crickets
Power, dried and frozen
6
Agriprotein
UK
Black soldier fly
Animal feeds
A long list of insect-as-food companies and entrepreneurs is found on www.bugburger.se. Thailand has the most established insect-as-food industry. It covers insect farms, insect processing companies, and substantial market of insect-eating consumers. In my country Malaysia, the insect-as-food industry has a small potential due to a large population of Muslims in the country. Insects are considered as non-permissible foods.
Virgin Galactic, owned by Sir Richard Branson, merged with SPAC Social Capital Hesdosophia
We begin 2021 with an article on a new alternative source of capital for innovators.
The first topic of the new year is on SPAC, special-vehicle acquisition company. In the US innovators have taken their companies public by merging with SPACs.
Through SPAC owners of start-ups have a different, perfectly legal approach to promoting their companies to investors. The approach includes interviews with obscure YouTube channels which are frequented by individual traders, appearance on cable news, and projections that call for billions of revenue.
Publicity and forecasts of rapid growth have become routine of an Initial Public Offering (IPO) of going public through SPACs. The use of what are called blank-cheque companies, which go public with assets and then merge with private companies increased in 2020. SPACs have raised a record US$62.1 billion as compared to US$$13.5 billion in 2019, according to Wall Street Journal on January 3rd, 2021.
Companies that went public through SPACs, including many nascent firms with no revenue, have said that they were attracted to the relative speed and certainty of the process, which can be completed months faster than some traditional IPOs.
In the case of IPOs, the US Securities and Exchange Commission (SEC) requires company executives to stay in a quiet period during weeks around public listing. Regulators don’t want companies to be marketing their stocks to unsophisticated investors outside of a regimented process. Similarly, companies don’t include projections in the IPO documents because of regulations that put them at high risk for litigation if they miss these plans.
Companies that go public through SPACs face fewer constraints because the deals are considered mergers. The Wall Street Journal article quoted an example, Fisker Inc. The company, an electric-vehicle start-up in July 2020 announced to go public by merging with a SPAC. Fisker has ambitious plans but little in terms of product or revenue to show investors. While it had about 50 employees, it disclosed projections to investors that called for it to hit US$13 billion in revenue in 2025, up from zero in 2020. The founder, Henrik Fisker, went on cable television repeatedly and remained prolific on social media. After the deal’s announcement-but before the merger was completed in late October 2020- Mr Fisker wrote on twitter about how the company was sold out of reservations for the SUV it plans to build in 2022 and hinted about coming news before a deal with a manufacturer was announced.
The Fisker spokesman said that Mr Fisker was not marketing to individuals investors and that his interviews were included in regulatory filings to investors.
SPACs offer a new avenue for start-ups to promote themselves as well as raise money in the US.. A SPAC’s most valuable asset, besides all the cash from investors, is arguably is its stock market listing. The company it invests in instantaneously becomes a public one, without many hassles that go along with a traditional IPO.
SPACs offer businesses and start-ups a surer deal-just take this money that had been raised by the sponsor of SPAC. In a world of low interest rate and high valuation on other stocks in the US, investors see SPACs as a reasonable place to park money for a while. A SPAC in the US is typically structured so that an investor can get his/her money out if he/she doesn’t like the deal a SPAC makes, and there us the chance that he/she will be getting early in next hot, growth company.
SPACs in the US have a time limit of 18 to 24 months to acquire businesses. According to BTIC.com, an investment advisory company, there are more than 210 SPACs seeking acquisition in the US. Stockmarket.com provides a list more than 200 SPACs on its website. The major SPACs include :
Draft Holdings
Fisker Inc.
Virgin Galactic
Workhorse Group, and
Repay Holdings
Note: Readers should be aware that the article is not a recommendation to buy a particular SPAC. It only highlights a new avenue for businesses to raise capital by merging with a SPAC.
The first bespoke electric car forecourt was opened on December 7th, 2020, by Gridserve at Braintree, Essex, England. The capital of the county is Southend On Sea at which I studied at a local college in the 1970s. Designed by its CEO, Toddington Harper, the forecourt (which is categorically not a service station) is spacious and simple to negotiate both inside and out. There are 36 individual charge points, ranging in output from 7kW to 350 kW, which can all be used simultaneously with no drop in output.
Electricity is generated by solar panels-mounted on the forecourt roof and a array of partners solar farms s-and stored in a 6 mWh (6,000 kWh, or roughly enough for 26,000 miles EV range) on-site battery, which can balance the grid in peak hours, helping to keep charging costs down.
Users just pay just 24p per kWh to charge at the site, making it cheaper than any other “ultra-high-speed” charging provider in England. In term of market competitors, Gridserve’s charging facilities essentially sit in class one-for now, at least. Other energy providers operate banks of chargers at busy locations but usually as part of a larger service or fuel station designed for ICE cars.
The forecourt offers super-fast wifi, and stands alongside of a range of retail outlets including WH Smith, and Booths, as well as Costa Coffee, and the Post office. Future forecourts will offer business meeting pods, a children’s play centre and a “wellbeing area” with exercise bikes that generate electricity. .
The standard rate of 24p per kWh, which beats the current lowest ultra-high charging rates in England. This mean a typical charge for an average electric vehicle-from 20 per cent charged to 80 per cent-would costs £10.
If the concept of the forecourt is copied in Malaysia, Malaysians will charge their electric vehicles while having “roti canai”, a favourite pancake, or “nasi lemak” , a meal of rice with other condiments. The combinations of meals and coffee are many. And no more smell of nauseating gasoline.
As a new chemical engineer, I joined ESSO (now EXXON MOBIL) because the oil industry was the largest industry in the 1980s, and ESSO was the largest company in the world. Today, these oil companies are laggards as compared to the FAANG. Who could predict this in the 1980s when I joined the oil industry.
Catalytic converter of Toyota Prius is popular with UK thieves
The London Time s article on 21st November 2020 reported that the thefts of catalytic converters have increased significantly recently. The police had logged in 14,690 incidents across Britain this year, a rise from 2,484 a year earlier and 985 the year before. The rise is believed t have ben driven by a steep rise in the use of precious metals in catalytic converters. It has also been linked to the growth in popularity of hybrid cars, which tend to contain higher concentration of the precious of the precious metals, and 4 x 4s, whose higher chassis make is make easier for thieves. Criminals can remove the catalytic converter of car in less than a minute using an electric saw.
Precious metals in catalytic converters
A catalytic converter is a device used to convert toxic vehicle emissions to less toxic harmful substances by way of catalyzed, or accelerated chemical reactions. Most present-day vehicles that run on gasoline, including automobiles, trucks, trains, motorcycles and planes, have exhaust systems employing catalytic converters. The catalyst component of a catalytic converter is usually platinum (Pt), along with palladium (Pd), and rhodium (Rh). All the three platinum group metal or PMG are extremely rare but have a broad range of applications. In addition, to catalytic converter Platinum, for example, is used in laboratory and dental equipment, electrical contacts and electrodes, and jewellery, while Palladium plays a key role in fuel cell technology. With numerous applications, and limited supply these valuable metals are an attractive target for recovery and reuse from spent catalytic converters.
The amounts and proportions of PGMs depends on the age and type of vehicles.
Car, light trucks, and motorcycles average total 2-6 grammes.
Larger -engine SUVs and trucks average total can range anywhere from 6 -30 grammes.
Gasoline-powered -vehicle catalytic converters use all three of the rare-earth metals. Diesel-powered -vehicle catalytic converters use only platinum and rhodium.
The average concentration of and the ratio of Pt and Rh were more or less constant 20 years ago, so a simple weighting was sufficient to arrive at a good estimation of the precious metals content. However, the price of these three precious metals has fluctuated strongly over the last twenty years, depending on the supply, demand and speculation.
The Times London article noted that scrap metal dealers can pay up to BP200 per catalytic converter. The table below the value of the precious metals compared to other metals such as gold and gold.
Metal
BP in gramme
BP in kilogramme
Gold
45.44
45,440
Silver
0.50
500
Platinum
23.36
26,360
Palladium
56.94
56,940
Rhodium
363
363,000
Note: BP means British Pound
Source: beleyerbullion.co.uk.
The supply and demand for PMGs
Johnson Matthey, which produces a third of all catalytic converters in the world publishes the Pmg report annually. The latest report published in February 2020 shows the supply and demand situation in 2017, 2018 and 2919, respectively.
The prices of precious metals used in catalytic converters are likely to increase with the popularity of hybrid cars and newer efficient gasoline-cars. Their owners would have to be aware that the exhaust systems would be an open invitation to thieves, as their scrap values are high with every increase in the price of platinum, palladium and rhodium.
In the history of marketing, in 1940, Pepsi was credited with an advertising campaign called “twice as Much for a Nickel”. It was based on the fact that Coca Cola was sold in 6-ounce bottles and the new Pepsi bottles were 12 ounces.
An article in Wall Street Journal, online edition, on October 27th, 2020, noted that nickel is becoming important to the production of electric-cars. Most of the raw materials required are the same as those used in conventional ones, but the metals that make up lithium-ion batteries are exceptions. Until recently, procurement worries and market speculation in the metal market tended to focus on lithium and cobalt. Now nickel has attracted the attention of senior executives of mining companies and Mr. Elon Musk, the CEO of the largest electric-car company.
Nickel is used to improve vehicle range. As a result, Nickel has become crucial in the chemistry of cathodes. One standard form of cathode – the most valuable part of an automotive –grade lithium-ion battery – used to contain equal parts of nickel, cobalt and manganese. Now, it has eight parts of nickel to each one of the two metals. This trend, together with the growth of electric-car sales, promises to increase nickel demand.
However, the article noted that investors should not rush to pile up on nickel stocks yet.
Batteries still do not consume a lot of nickel. It is mostly used in the making of stainless steel. Depending on the future sales of electric-cars, a step-change in the demand of nickel will likely occur in the late 2020s. Until then, the kind of supply constraint once expected in the much smaller markets for cobalt and lithium—which don’t have major alternative uses-is hard to imagine.
Meanwhile, the nickel market has become oversupplied as growth in China, the big stainless steel market, has slowed. The experiences of cobalt and lithium offer warnings too. Speculation about demand from electric-cars pushed their prices in 2017. However, the prices of these two metals have collapsed.
Stainless steel uses a lot of nickel
The article noted that nickel will be harder for battery chemists to work around than cobalt if they need to, but perhaps not impossible. Battery technology is still developing. Tesla is turning to lithium iron phosphates, which don’t contain nickel, as a solution for cheaper electric cars in China.
According to evergen.com.au, lithium-ion has a higher energy density at 150/200 Wh/kg versus lithium iron phosphates at 90/120 Wh/kg. So, lithium-ion is normally the go-to-source for power hungry electronics that drain batteries at a high rate. On the other hand, the discharge rate for lithium iron phosphates outmatches lithium-ion.
An eventual nickel shortage can’t be rule out. Once batteries are cheaper than engines-UBS, the investment bank, expects the turning point in 2024—demand for electric vehicles could accelerate fast. Producing the kind of high-purity nickel required for batteries to high environmental standards is complex and projects take years to take off the ground.
Then, nickel would be worth more than a dime, US 10 cents.
The Covid-19 pandemic is changing the way Governments in many countries, especially developed countries, run their economies. They have adopted the so-called modern monetary theory or MMT. A clear explanation on MMT has been written by David Smith in the Times London on August 14th, 2020. The following is the extract of the article.
Today, something is slightly different. This is in the nature of an economic version of a request show. I have had many requests to write about what is known as modern monetary theory (MMT) and this is my response. MMT has been around for some time — decades, or even centuries, according to its advocates — but it is relevant now.
My reluctance to write about it has been in part because its true believers can get very exercised when faced with criticism, even if it is constructive.
The reason for writing about MMT now is the book by Stephanie Kelton, professor of economics and public policy at America’s Stony Brook University, and one of MMT’s leading advocates. She advised Bernie Sanders, who ran Joe Biden close for the nomination as Democratic challenger for the US presidency. Her book, The Deficit Myth: Modern Monetary Theory and How To Build a Better Economy, is published by John Murray.
Professor Kelton is a leading advocate of MMT
It is proving popular, for good reason. Not only are plenty of people interested in MMT, but it is written in a non-technical, accessible, even folksy style. It is being read by non-economists, as all the emails I have received urging me to write about it attest, as well as being on the summer reading lists for many economics students. Last time I looked, it was Amazon’s bestseller in macroeconomics and inside the online retailer’s top 1,000 among all titles.
It is arranged as a series of myth-busting chapters, although people who are aware of conventional economics do not believe many of these myths. The first “myth” is that the government’s budget is not the same as a household budget; something I thought had been buried many years ago. The same goes for most of the other myths.
The central idea of MMT is simple. It distinguishes between currency issuers and currency users. The only currency issuer in America is the US Treasury, with the Federal Reserve acting as its agent. Everybody else is a currency user.
As a currency issuer, the government has the ability to print as much money as it needs. The budget deficit itself is not a constraint, and neither is government debt. Some claim — wrongly, I think — that MMT has already been adopted in response to the Covid-19 crisis in the form of quantitative easing (QE).
In the world of MMT, the government can print enough money to cover a deficit of any size and, in extremis, to pay off all the accumulated debt of the past. The only tests of whether a budget deficit is too large or too small are inflation and unemployment. If inflation is low, the budget deficit cannot be too high, and if there is unemployment, the budget deficit must be too low.
Many people will catch their breath at this point, not least because Kelton claims that this is not just a theory but an explanation of how the world works. However, that requires us to be taken down a rabbit hole of implausibility.
If deficits can be costlessly funded and managed by the simple device of issuing currency, why do governments need to levy taxes? In perhaps the least plausible explanation of how incentives work, people apparently need to work to meet their tax obligations. If they did not have to pay tax, they would not need to work. I rather think they would, to satisfy their wants. Another reason for taxing — to redistribute wealth and income — does not wash either: you can redistribute wealth and income within the tax system without raising any net revenues by taking from the rich and giving it to the poor in tax credits.
Taxation exists in the real world to raise revenue. And borrowing by governments also plainly exists. Kelton says this is not to raise money, because governments don’t need to, but “to offer people a different kind of government money, one that pays a bit of interest”. Try telling that to US and British governments in the past, which have paid a lot of interest to fund borrowing and sometimes struggled to do so.
There is plenty more in the book. Some of it, like the policy of a job guarantee for everybody, is not so much part of MMT but an add-on to it, although at a time of high unemployment possibly a popular one.
MMT is misnamed because it is not monetary at all but almost entirely fiscal. As Kelton puts it: “MMT requires us to demote monetary policy and elevate fiscal policy as the primary tool for macroeconomic stabilisation.”
So what should we think of this? MMT has drawn robust criticism from some eminent economists. Kenneth Rogoff, a former chief economist at the International Monetary Fund, writing last year under the headline “Modern Monetary Nonsense”, described its central idea as “just nuts”. An exasperated Paul Krugman, the Nobel Prize-winning economist, described debating with MMT advocates as like playing Calvinball, a game where players make up the rules as they go along.
Larry Summers, economist and former US treasury secretary, attacked “ludicrous claims” by “fringe economists . . . offering the proverbial free lunch: the ability of the government to spend more without imposing any burden on anyone”.
I am going to be polite. We always need new, fresh thinking and nobody wants to kill off ideas clearly in a state of gestation and in no way workable in their present form. Some, like the economists above, might say it is necessary to kill off MMT because it is dangerous. There is, however, little chance of it being adopted as real-world policy. Not even Jeremy Corbyn and John McDonnell embraced MMT, despite being urged to by some supporters.
They were wise not to do so, because there are fundamental problems with MMT. It would take another book to address them fully. Kelton has fun with Margaret Thatcher’s “backward dictum” because Thatcher described a government’s finances in the way you would describe a household’s finances.
However, Kelton has more in common with Thatcher than she thinks. In the early 1980s, when the Tories launched their monetarist experiment, Thatcher thought the key driver of inflation was the budget deficit. The deficit had to be cut to reduce money supply growth and inflation. It is why people associated monetarism with “cuts”. Kelton looks at it from the other end of the telescope but applying the same principle.
The causes of inflation are many and varied, particularly when you do not use the simplifying assumption of a closed economy. Dylan Grice, whose review of Kelton’s book was republished by Albert Edwards of Société Générale, is not unsympathetic but points to the “preposterous” idea that getting the Congressional Budget Office in America, or equivalents elsewhere, to predict inflation will take care of the inflation risk from large budget deficits. Given the forecasting record on inflation, it plainly will not. As Grice puts it: “In short, MMT is a recommendation that policymakers press harcelerator without knowing where the brake is.”
He is right and, while advocates of MMT see it as a two-way street in which spending would be reined in if inflation took off, politicians may see it differently. Would it be a recipe for huge instability in the provision of public services, with public spending cut in response to rising inflation in a way that would make George Osborne’s austerity look like a tea party? Or would the government decide it could live with a lot more inflation? Either way, it would not be pretty.
