Boston-Power, which has created a refined, high-energy version of the classic lithium-ion battery cell, has raised $60 million more in a fifth round of funding, bringing the total raised by the company to $185 million.
And even though that might sound like an astronomical amount of money, Boston-Power will likely need more. The company currently has the manufacturing capacity to produce 10 megawatt-hours' worth of batteries a month, CEO Christina Lampe-Onnerud said in a phone interview. But over the next four years, it wants to expand to 100 megawatt hours a month.
"If we can graduate to 100 megawatt-hours a month, then we will be a significant player," she explained.
The new funds will help the company expand capacity to some degree, but Boston-Power will also use the money to hire researchers to improve "the handshake between the battery and the application," she said.
Welcome to the world of hardware manufacturing. A number of startups like Boston-Power, A123 Systems and EnerDel have emerged over the last decade with batteries that they claim can provide better performance for notebooks and electric cars than those produced by conglomerates like Panasonic, Sony or LG Chem.
The incumbents, however, have size in their favor. The conglomerates have been producing lithium-ion batteries since the early 1990s and have large factory footprints and robust engineering staffs. Panasonic, for instance, supplies nickel batteries for the Toyota Prius and sells lithium batteries to Tesla Motors. As a result of their size and established reputations, incumbents like Dow Kokam and LG Chem won a substantial portion of the grants under the American Recovery and Reinvestment Act. (Boston-Power applied but did not get funds.)
Boston-Power has its share of premier clients, too. Hewlett-Packard, for instance, sells battery packs from the company as an upgrade to many business notebooks. HP also came out with a high-end consumer notebook for the European market late last year, which sold quite well. Still, "we don't have the production capacity yet to be their mainstream supplier," Lampe-Onnerud said.
"We have shipped 100 percent on time with zero returns. This is unheard of in this industry," she added. "Our sales volume is larger than we can handle."
Later this year, ASUS, a contract manufacturer-turned-name-brand-notebook-maker, will come out with a line of business notebooks sporting Boston-Power batteries.
Saab has also agreed to use Boston-Power's batteries in its electric car projects. Saab, which General Motors sold to Spyker earlier this year for $400 million, will come out with a prototype later this year.
If Saab moves forward with its car, it could soak up 30 million to 60 million megawatt hours' worth of batteries a month, she added.
How does Boston-Power, founded in 2005, compare to its startup peers? A123 Systems, which went public last year but continues to report financial losses, has landed deals to supply batteries to Fiat, as well as Fisker Automotive. (As part of the Fisker deal, A123 also invested $35 million in Fisker.) EnerDel invested in Think and will supply the Norwegian car company with batteries.
Imara, which had developed a novel cathode that grew out of research conducted by SRI earlier in the decade, received millions from VCs. It went out of business late last year, so Boston-Power is doing a lot better than them.
Boston-Power differs in many respects from some of the other lithium-ion battery startups that have emerged in recent years. Rather than develop batteries with new types of chemistries like lithium titanate or lithium phosphate, Boston concentrates on familiar lithium cobalt chemistry, the same sort of battery chemistry found in notebook cells. (The cobalt part refers to materials in the battery's electrodes.)
But don't notebooks blow up occasionally? Yes. The company's secret sauce is quality control: It has fine-tuned the casing, the anode, the cathode and other systems inside the battery. In the end, this results in a battery that can last three years, or 1,000 charging cycles, before the battery's capacity to hold power becomes substantially diminished. Conventional lithium-ion batteries might only go 300 cycles or fewer before performance begins to decline.
A car battery built around Boston-Power's cells will last eight to ten years, she said, which is much longer than normal.