Deal focus: Dayone champions lithium-ion alternative

Mileage anxiety is a familiar grip among electric vehicle (EV) users – is there enough juice left in the battery to reach the destination or at least get to a charging station?

Lithium-ion batteries, manufactured to prioritize energy density and resilience over time, but also known for questionable safety records, are the current go-to solution. However, solid-state batteries could prove to be a game-changer. It is claimed they can double mileage per charge, take just 10 minutes to reach full capacity, and are less likely to burst into flame.

“All solid-state-batteries (ASSBs) are the ultimate goal for the industry,” said Ning Yang, a partner at Dayone Capital, a consumer-focused Chinese VC firm. “It is one of few technological innovations in new energy in recent years. From a consumer perspective, this is very exciting. If ASSBs can be mass-produced, there would be an industrial revolution that would dramatically reshape our daily lives.”

Dayone and Sequoia Capital China recently led a Series A extension of USD 20m for China-based Enpower Greentech, which claims to be a pioneer in next-generation all-solid-state batteries (ASSBs). Guangzhou Automobile Group's GAC Capital, Borun Capital, and Tianqi Capital also took part.

It follows a Series A of more than CNY 100m (USD 14.8m) that closed in February. Investors included Welight Capital, Borun Capital, Yuan Capital, Scheme Capital, and Asia Green Fund Management, according to AVCJ Research.

The crucial difference between ASSBs and lithium-ion batteries is in the composition of the electrodes. When moving ions between the cathode and anode – triggering the chemical reaction that generates energy – lithium-ion batteries use a liquid to facilitate the transfer, while solid-state batteries use a solid electrolyte material.

“Liquid material has two fatal flaws. First, liquid is not efficient in energy transition. ASSBs can offer much higher energy conduction efficiency and density. Second, liquid electrolytes are flammable, but solid electrolytes are non-flammable, so there is a lower risk of fire,” said Yang.

Consequently, fewer safety systems are required in solid-state batteries, which means the module can have a higher energy density. While it is estimated that a lithium-ion battery begins to degrade after 1,000 charges, ASSBs maintain 90% capacity after 5,000 charges.

The key obstacle is cost: ASSBs are much more expensive to produce than lithium-ion batteries. However, Enpower claims ASSBs will ultimately be 20-30% cheaper than lithium-ion solutions as production craft and supply chains mature. Specifically, with no need for liquid injection, ASSBs can be produced more quickly and the process will consume much less energy.

Enpower’s entry point for commercialization is unmanned aerial vehicles (UAVs). It has been working with SoftBank Group on high-energy-density solid-state batteries for the latter’s ultra-high-altitude drones. To date, about 10 megawatts of capacity have been realised, generating tens of millions of renminbi in revenue, according to Yang.

With internal trial production of ASSBs already underway and test flights of UAVs carrying the sample B model set to begin this year, Enpower's next target is EVs. The company wants to build its own factories and cooperate with carmakers to achieve large-scale mass production. Negotiations with several carmakers are ongoing.

There are local rivals with competing solid-state propositions, ranging from established battery makers like CATL and BYD to assorted start-ups. Like Enpower, CATL and BYD use sulphides to create solid electrolytes. Most start-ups, however, use a hybrid electrolyte that includes liquid.

“Semi-solid solutions are just a transitional state because they don’t entirely remove the safety issue,” Yang said.

Dayone’s journey in the new energy space began with investments in EV maker Li Auto in 2020. The company completed a USD 1.1bn US IPO later that year. The VC went on to back HozonAuto in 2021 and then started looking for opportunities along the entire EV supply chain.

“Consumption is still our root. In essence, new energy vehicles are consumer goods. Improving supply chains and technology driven by consumption upgrades is the basic logic of our investment activity,” Yang explained.

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• Topics
• Greater China
• Early-stage
• Cleantech
• Industrials
• China
• Electric Vehicles
• energy storage
• Dayone Capital
• Sequoia Capital