Elon Musk, the high profile CEO of Tesla, and Joe Bartolacci, CEO of Pittsburgh-based Matthews International were making the same pitch, three years apart.
In 2020, during what Tesla called Battery Day, the maker of electric cars played a video of a spoon dumping black powder between two spinning rollers that pressed the powder into a thin sheet. That sheet would be pressed to a foil, and onto another layer, and, so on, until all of the layers were rolled up into a cylinder and called the 4680 battery.
This is not the way that lithium ion batteries — a key, and expensive, component in the growth of electric vehicles, not to mention a chokepoint in the manufacturing process — are made today, Andrew Baglino, a Tesla executive explained.
Today, the black, lithium-rich powder is mixed with an environmentally-problematic solvent to form a slurry. The slurry is spread onto a sheet of foil then baked in an oven the size of a football field to evaporate the solvent. The process is repeated for each layer of an electrode, which is the part of the battery that conducts current.
At that point in his pitch, Mr. Baglino showed a slide of a very long building, followed by another structure with a big silo, then another long building, and a few smaller ones. Then, with a flourish, he made them all disappear.
With dry battery electrodes, the cost of the buildings, and the land, and the energy to heat the ovens and the work to recapture the solvent goes away.
This March, at a decidedly lower-profile investor event, Matthews’ Mr. Bartolacci explained why dry battery electrodes are a growing focus of the North Shore-based firm whose name is more recognizable to funeral directors than the technorati.
By eliminating the slurry, “we can put nine machines in the space of one,” he said at New York securities research firm Sidoti’s Small-Cap Virtual March Conference.
That would increase the speed with which battery makers could churn out electrodes, he said, which in turn would drive down the cost of production.
“And finally, (it) has no environmental impact whatsoever, since we don't use solvents in the process to do that.”
Matthews doesn’t actually make batteries or electrodes.
It makes equipment that flattens and thin that black powder into sheets 10 microns thick — a fifth of the diameter or a human hair — then coats it onto metal foil.
Matthews, which employs about 850 workers in southwestern Pennsylvania and traces its roots to an engraving business launched in 1850, currently lists its main source of revenue as its death business, which means typical investor presentations have graphs comparing “casketed deaths” to “uncasketed deaths.”
But for about a decade, Matthews has been working on systems to make dry battery electrodes — beginning with its 2008 acquisition of German firm Saueressig.
Last year, Saueressig opened a service facility in San Antonio, Texas for the refurbishment of rollers used the production of lithium-ion batteries. The rollers are currently manufactured in Germany.
According to a project description from Amcref Community Capital, which provided financing for the service center, its “initial customer will be the new Tesla Gigafactory in Austin.”
Matthews declined to elaborate on its relationship with Tesla.
The closest the company came to acknowledging it is when Mr. Bartolacci mentioned Tesla’s efforts to shrink its battery costs during a call with analysts earlier this year and said, “We’re proud to be partners and moving forward with that.”
“I would say that we are working with almost every one of note that is in the battery manufacturing space,” said Greg Babe, Matthews’ chief technology officer. “Look at whoever is manufacturing lithium ion batteries and scaling that for EVs — we are working with them.”
In its annual report, Matthews wrote that it “currently delivers products to several major vehicle producers and is actively pursuing opportunities with several other electric vehicle and tier-one battery manufacturers.”
In 2020, when Matthews first broke out the revenue for its energy business as a separate item in public filings, it reported $20 million in sales. In 2021, it was $50 million.
Last year, it rose to $90 million. It would have been $100 million, Mr. Bartolacci said, were it not for “degradation of the euro as a result of the war over there.”
Earlier this year, Matthews announced it signed $200 million in orders for this year.
Tesla leads, others follow
In March, Tesla’s senior vice president Mr. Baglino gave an update on the progress of its dry battery electrode efforts.
“Let’s just say, there’s no spoon now,” he said.
The process is now fully automated and 20 times more productive than it was three years ago, he said.
But Mr. Musk said there is still work to be done before the process can be ramped up.
“We’ve been grinding hard, literally and figuratively on this for quite a while,” he said. “It seems likely that we’ll be able to scale it to full volume this year.”
If Tesla is able to decrease its battery production costs as dramatically as it expects, the breakthrough will reverberate throughout the electric vehicle space, and beyond, said Anil Achyuta, managing director at TDK Ventures, the investment arm of Japanese electronics giant TDK Corp.
“Battery cost is the biggest cost driver in electric vehicles,” he said.
He estimated that an average EV battery costs round $10,000. A Tesla model 3 retails for around $40,000.
“Imagine if you’re able to reduce that cost by 30%,” he said. “That’s a huge margin for EV makers.”
It would allow them to drop the price of the car, which would make it attractive to a different class of buyers, he said.
As if that weren’t compelling enough, Mr. Achyuta expects that the chemical used in electrode solvents today will be banned in the future — first in Europe, then in the U.S.
“So everybody’s looking to do the dry electrode thing,” he said. But, “nobody’s really cracked it.”
Still, “it’s good to assume that every battery manufacturer that has an R&D team … is trying this,” he said.
Following the same trends, and the same math, Matthews assumes the market for dry battery electrode equipment is more than $5 billion.
“And we're the only ones who have production machines out there,” Mr. Babe said.
Since Congress passed the Inflation Reduction Act last year with its hefty incentives for domestic battery manufacturing, Matthews’ focus has broadened and shifted to the U.S.
“All of a sudden because of the amount of money that's being made available by the federal government to invest in the United States, we have expansion from every one of our customers — whether they be Asian, European or American — to invest in America,” Mr. Bartolacci told investors in March.
Anya Litvak: alitvak@post-gazette.com
First Published: July 3, 2023, 9:30 a.m.
Updated: July 3, 2023, 10:03 a.m.
