Third-Generation Battery Safety Will Make Current Battery Technology Obsolete

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Includes: EFLVF, F, GM, TSLA
by: Brian Morin

Summary

We all know lithium ion batteries can catch on fire.

Higher energy density of next-generation electrodes will make it more likely, unless something else changes.

Third-generation separators are going to allow these much higher energy density cells with better safety than the current cells.

Electrovaya and Mercedes are the first companies to take advantage of this in a grand scale.

Tesla and General Motors, and others, will follow, but it will be some time.

I recently hosted a forum on battery safety at The Battery Show, a conference focused on automotive batteries and electric vehicles in Detroit every fall, in which four battery separator companies compared and discussed their current and next generation technology. The four speakers, all CTO level executives at battery separator manufacturing companies, came to a pretty quick consensus on the next level of safety for battery separators. As you'll see in this article, the consensus we reached has far reaching effects for Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM) along with the rest of those trying to compete in the electric vehicle revolution. One company, Electrovaya (OTCQX:EFLVF) is the first to offer batteries built on this technology, but others will follow quickly, and a little known licensing deal may make General Motors the first to offer it broadly in a mainstream electric vehicle.

Fair warning - there is a technical section coming up, and then later a discussion of the companies. Also, here is a list of the four companies that presented at the conference, with links.

The Technical Section

Let's walk our way into this. Lithium ion batteries are made from four major components: an anode, a cathode, a separator and electrolyte. The anode and cathode hold the lithium during the charge/discharge cycle, and the electrolyte shuttles it back and forth. For those of us old enough to have had to refill our car batteries with water every few months, we know that early batteries did not have a separator. However, if you want to make a battery small, you want to push those electrodes up close to each other.

But here is the rub. When you put them close to each other, you can get a spark. And the electrolyte is flammable, like gasoline or lighter fluid flammable. A spark in a container full of electrolyte is not good. In comes the separator, a membrane, like a very, very thin sponge with very, very small holes, which holds the electrolyte, allows the ions to go back and forth, but keeps the electrodes from coming into electrical contact. The result is a high energy density cell without a spark, and the resulting fire.

Most of the time.

Separator technology began in the early 1990s, and even before, as one of these bare films made from materials that melt at a relatively low temperature, are stretched to give them strength. This combination - low melt temperatures and high stretch ratios - means that at temperatures even lower than the melt temperature, they can shrink dramatically.

In 2001, some scientists at Polypore developed a way to hold off the shrinkage for a while, closer to the melt temperature, and even a few degrees above it for a short period of time. They did this by coating the separators with a very thin layer of ceramic nanoparticles.

The bare films are first generation separators, and the coated films are second generation, as shown in the graph below.

The first-generation separators begin to shrink around 100 C and have shrunk catastrophically by 150 C. The second generation started around 150 C, and have shrunk catastrophically by 200 C. Third generation separators are stable to over 300 C, when other things begin to happen inside the cell.

One more piece of science, and then a discussion of what the various companies are doing.

When there is any kind of a manufacturing defect, or when the cell is stressed with heat, or large currents, it can result in a hot spot inside the cell. A first, or possibly second generation separator can shrink from this hot spot and open up a full-blown short, which can then generate more heat, more shrinkage, and a viscous cycle that ends in a fire or explosion. The separator is the weak link, and any breakdown can result in thermal runaway.

But with third generation separators, the separator is no longer the weak link. Instead, as a short is generated, the separator stays put, and the next weakest link degrades. In most cases, the next weakest link is the aluminum current collector (on which the cathode is coated), which oxidizes into alumina, an insulator. Its breakdown results in less conductivity, not more, as in the case of first and second generation separators. Which results in a virtuous cycle, in which more heat reduces the short, rather than increasing it. See the picture below from an autopsy after a nail penetration test (a common safety test for lithium ion batteries) in which the green aluminum current collector ends in 100 microns of alumina, breaking this artificially created short.

Some Company Discussions

Electrovaya: Electrovaya purchased from Evonik last year their third generation separator technology, as well as the lithium battery electrode plant that was using the technology to supply materials for Mercedes electric vehicles. They have produced batteries for 20,000 Mercedes Smart EVs, and they claim there is not a single battery incident. They are the only battery company that is fully commercial today with a third generation separator, though that won't last long. As a stock, you would be tempted to buy them on the great future of being a first mover with this technology, but with a current market cap of almost $300 million and TTM revenues of only $25 million, it is difficult to justify and they will have to have rock star execution to deliver returns.

LG Chem and General Motors: It is well known that LG Chem supplies the cells for the Volt, and will also be supplying the cells for the Bolt. They have also licensed a technology from Optodot to use boehmite, a ceramic, in lithium ion cells. What's unclear from the press release is whether this includes the technology that Optodot has developed for mostly ceramic separators or if it is limited to only coatings on traditional separators. Just prior to this license, LG had sold its internal battery separator production plant to Toray, another (second generation) lithium battery separator producer. As an outsider, this may indicate that LG will be moving forward with cells using third-generation separators based on the technology by Optodot. If so, we can expect to see world class safety when cells with those separators hit the market.

So Mercedes and General Motors are moving toward third generation. But what about the others. The first thing to note is that there are two more third generation producers, Freudenberg (private) and Mitsubishi Paper (TYO: 3864), making five in total.

What about the other leaders? Here is what I know:

BMW: Today likely uses a second generation separator with cells made by Samsung. There have not been any public announcements that I can find about Samsung and a third-generation separator, though I would be surprised if they were not evaluating all of them.

Ford (NYSE:F): The same as BMW, likely using a second generation separator, though the cells are made by Panasonic. BMW, Ford, Mercedes, Nissan and General Motors all use pouch cells.

Tesla: Tesla uses much smaller cylindrical cells, which individually have a much lower safety hazard, but since there are so many more of them, the aggregate...well, people argue over the aggregate. Their cells are produced by Panasonic and use an advanced second generation separator produced by Sumitomo. They may be best in class, but it is still this year's class. However, Panasonic will not let them drift behind, and their own battery technologists are among the best in the world.

Nissan: Nissan's first generation cell used a first generation separator. Their improved cells had better thermal stability, and likely this included an upgrade of the separator. Beyond that, nothing is public, or even rumored.

Summary

Mercedes has been using third-generation separators in their Smart EVs for years, and is the leader. Their Smart EV is without a battery incident on the road, unlike all of their competitors. LG Chem and General Motors are definitely moving in that direction with the license from Optodot. Ford, Nissan and BMW are likely moving in that direction, though there is no public information. With their large cells, they will have to in order to keep up. Tesla, with a cell, module and pack architecture all their own may not need to. Only they and Panasonic truly know the answer.

Last - one comment on the purpose of the technical articles like this. I'm not writing these so that investors can blindly follow some tip and either buy or sell Tesla, General Motors, Ford, Electrovaya or any of the other stocks mentioned. Instead, I'm trying to give those investors who want to make a fully informed decision about whether to increase or decrease their position some additional information that they likely would have trouble piecing together on their own.

Disclosure: I am/we are long TSLA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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