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Japanese conglomerate Panasonic has signed a deal to buy silicon from a start-up US company for use in electric vehicle batteries, a boost for Washington’s multibillion-dollar push to rival China in the EV industry.
Panasonic, a Tesla supplier and the largest battery manufacturer in North America, will buy silicon anodes from US start-up Sila, to use in its global factories, the companies said on Monday.
The agreement comes as EV and battery makers race to reorient their supply chains to qualify their products for subsidies in the landmark US climate law that passed last year. Silicon has gained ground as a potential alternative to graphite, a battery material which is overwhelmingly produced in China.
“[Silicon anode] really is an opportunity for the US to take the lead in manufacturing next-generation battery technology rather than playing catch-up and trying to make graphite as cheap as China can, which is a fool’s errand,” said Gene Berdichevsky, Sila chief executive.
Allan Swan, president of Panasonic Energy of North America, said the company was committed to building out a North American supply chain to “maintain stable sourcing” and “manage ongoing global logistics and human rights challenges”.
Panasonic’s battery plants include two in the US and one in Mexico, and the company plans to add two more in North America before 2031, according to a May interview with Reuters.
Silicon is mixed in small quantities with graphite, the main material in battery anodes. Beijing has repeatedly taken advantage of its dominance in graphite production, recently tightening exports in retaliation to US-led restrictions on technology sales to Chinese companies.
A handful of start-ups, backed by deals with carmakers, are betting on anodes made completely of silicon to curb reliance on China. Sila is building a factory in the town of Moses Lake in Washington state.
The Inflation Reduction Act climate law signed by US President Joe Biden included a $7,500 consumer tax credit for EVs that contain North America-made parts and minerals produced domestically or from countries with US free trade agreements. Vehicles are ineligible for the credits if they have parts or minerals from China.
“It’s sort of a double incentive now to be able to take advantage of silicon batteries, not just for the performance, but also because of the benefits from the IRA,” said Rick Luebbe, chief executive of Group14, a Porsche-backed silicon anode manufacturer also building factories in Moses Lake worth $500mn.
For years, silicon has been heralded as an alternative or enhancer to graphite because it is easier to procure and its greater energy density could give vehicles wider driving range and faster charging times. Barriers, including silicon’s propensity for swelling, have prevented the technology from reaching commercial production in portable electronics until recently.
The US Department of Energy has invested in silicon batteries, providing $250mn in grants to companies including Sila and Group14 last year.
Sceptics caution that batteries using graphite will continue to be the dominant model in the near term given the long process to audit new parts for vehicles and the need for silicon anodes to achieve mass production cheaply. Battery entrants are also facing tough times raising financing amid higher interest rates.
“What is proven at lab scale often fails to meet expectations in initial commercialisation,” said Matt Stock, product director of new technology at Benchmark Mineral Intelligence.
Additional reporting by Harry Dempsey in London
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