As the world shifts to combat climate change, lithium-ion batteries are and will be a key component to deploy electric power, but most of the world’s production comes from Asia and domestic battery makers are in short supply.
One American company planning to produce these batteries is EnPower, a startup that was based in Phoenix until it quietly pulled up stakes recently and shifted its operations to Indiana.
EnPower has previously raised $19 million in outside financing and the company won recognition at Venture Madness and the Governor’s Celebration of Innovation, but CEO Annette Finsterbusch said the company could not scale quickly enough in Phoenix.
The primary reason EnPower left is because it wants to start producing batteries as soon as possible. Lithium-ion batteries are already a multibillion-dollar global market and demand is only expected to rise as more people buy electric cars and batteries replace fossil fuels.
EnPower found its solution in Indianapolis, where the company purchased a facility and equipment it will use to start producing batteries by the end of Q2, a feat it would not have been able to pull off if the company aimed to start full-scale production in the Valley. EnPower previously operated a small R&D assembly line in Phoenix, but the Indiana plant is ready to go now and much bigger, with an expected annual capacity of 800 megawatt hours of batteries.
“The window of opportunity is right now,” she said. “Our technology readiness enables us to start building cells and getting them out to customers.”
She said they moved into the facility back in January after purchasing it in December.
Finsterbusch said that by hopping on this Indiana factory the company saved $80 million and two years of building time, a span that would only allow other companies to claim market share.
Phoenix's battery market role
Though EnPower is just a single company, its experience offers a glimpse into the increasingly important lithium-ion battery space, which to date has been completely dominated by Asian producers.
The Biden Administration has been pushing to boost domestic battery production and a single dominant region has yet to emerge as the master of American battery-making, though carmakers are clustering their battery production alongside existing facilities in the South and Midwest.
The Valley too has some positive early signs that it can be a player in this burgeoning battery-making space; KORE Power, which plans to open a 1 million-square-foot factory in Buckeye, battery-recycler Li-Cycle and several EV startups have all chosen to set up shop locally.
South Korea-based LG Energy Solution, one of the biggest battery makers in the world, is also planning on building a factory in Queen Creek. The company spent $84 million to purchase 650 acres last week; the factory is expected to start production in 2024.
More coordination needed
Finsterbusch of EnPower said that some of the pieces are falling into place in Arizona, but she said she thinks there needs to be broader coordination.
“You're going to need a strategy, right? You're gonna need somebody who says, ‘I'm the czar of electrification strategy in Arizona,’ really, unless your technology is just so ridiculously good that you can come in and fund it all by yourself. And we did not find funding in Arizona.”
Finsterbusch said they had originally planned to keep research and development operations going here in Phoenix, but decided against it after finding it hard to retain employees. The company previously occupied a warehouse for production and an office space in Deer Valley.
EnPower is, at least for the time being, not focused on building batteries for electric cars and instead looking at batteries for military applications, mining equipment, drones and other electric vertical take-off and landing (eVTOL) vehicles.
America’s battery engineering talent pool is not very deep since the industry is relatively new here compared to Asian markets. Additionally, most of the engineering talent is focused on building batteries for EVs, leaving smaller companies like EnPower in a lurch when recruiting new hires.
“It is the number one most difficult thing I do every single day,” Finsterbusch said.
The lack of battery engineers is a challenge both in Indiana and Arizona, showing that the race to become a national hub for battery production is still somewhat open.
