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Electric vehicle shortage will drive carmakers to invest – Volta Energy CEO

➤ Automakers and battery manufacturers will not be able to keep up with the pace of electric vehicle demand at first, but that will only encourage legacy automakers to double down on making necessary investments in new technology.

➤ U.S. venture capital firm Volta Energy Technologies LLC is identifying new energy and battery breakthroughs and investing private capital to help research projects take the leap from the lab to market.

➤ Private investors have a growing appetite for energy and battery research projects backed by federal dollars.

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Volta Energy Technologies CEO Jeff Chamberlain.
Source: Volta Energy Technologies LLC

Founder and CEO Jeff Chamberlain launched the U.S. venture capital firm Volta Energy Technologies LLC in 2016 in part to help federally funded battery technology research projects obtain the private capital they needed to achieve commercial-scale operations. The company aims to bridge the gap between research and deployment, ultimately giving new clean energy technologies the funding to deploy at scale.

In May 2021, Volta Energy joined automakers Ford Motor Co. and Bayerische Motoren Werke AG, or BMW, in leading a $130 million, series B investment in battery developer Solid Power Inc. Volta Energy also backed Solid Power's series A-1 investment round in 2018 and has funded battery startups Ionic Materials, Inc. and Nanoscale Components Inc., among others. The following conversation has been edited for length and clarity.

S&P Global Market Intelligence: Of all the sectors to invest in, why focus on the battery and energy technology sectors?

Jeff Chamberlain: There is no better opportunity in the investment landscape than electric vehicles, batteries and the grid right now. This revolution is happening; it's not going to stop. It's an enormous opportunity, but buyer beware because there are going to be a lot of snake oil salesmen out there. Part of the reason we launched Volta was because we saw investors making mistakes and it was usually inadvertent.

You have worked in both the private and public sectors, including the Argonne National Laboratory, a U.S. Department of Energy research center. Tell me more about why you started Volta Energy.

Several of us that came from the industry ended up at Argonne National Laboratory, Lawrence Berkeley National Laboratory or Oak Ridge National Laboratory, and we saw this opportunity: There was going to be a massive explosion in market demand for electric vehicles and renewables on the grid. And whether electric vehicles or renewables on the grid would succeed depended on our batteries and storage technology.

We had oversight of a great deal of battery research across the country. We started explaining to the Bush administration and then the Obama administration that it was really good that the government was seeding research projects. But it usually took about a decade for those research projects to become companies. In China, the government can just decide to deploy tens of billions of dollars of battery factories, and China has done that. It is doing that. But the U.S. does not operate that way.

What we proposed was to export technical skills out of the national lab and hire in financial expertise. The research projects that look like they will become companies, or that are deploying impactful technology, we can invest private capital. The government does not have to be responsible then. We are filling that gap, but we're a drop in the bucket as to what's required from the private sector. We believe there is an appetite among private capital investors to back the research projects the government has invested in.

What are the most notable changes you have observed in the energy landscape since launching Volta in 2016?

The most important thing that has happened since 2016, in my view, is the automotive industry has woken up from its slumber. I would argue that the rest of the automotive industry gave [U.S.-based EV maker] Tesla Inc. a 15-year head start. But over the last six years, the industry across the globe has become deadly serious about moving to electricity.

Are there gaps along the battery supply chain that need more investment?

The big-name investors are focused, as they should, on the really, really big deals, like the automakers Tesla and Rivian Automotive Inc. They are also investing hundreds of millions of dollars of capital into battery Gigafactories. But there is just an enormous opportunity, practically infinite I would argue, in a number of innovations — from new ways to manufacture batteries, new battery chemistries, new materials to replace the old materials, new ways to design a battery pack to get twice as much energy using the same materials and others. There is also a rising supply-versus-demand crunch for EVs and batteries and then, further down the chain, the minerals themselves.

Will EV makers and battery manufacturers be able to keep up with the pace of demand we're seeing for electric vehicles?

So far, it appears the answer is 'no,' but I'm not certain of that. Markets in general are slow to adopt new technology. For electric vehicles, I believe we're past the early-stage adoption. There are a lot of people who have electric vehicles. But I'll give you a weird, counterintuitive argument — it is good if the consumer demand outstrips the ability to supply because what it will do is encourage the suppliers to increase their investment.

Ultimately, there will be a little catch-up. I think we are in a period where it's going to be hit or miss, and consumer demand may outstrip the supply. But again, I view that as a good thing because it means the stodgy 100-year-old original equipment manufacturers are taking notice that there's a lot of money to be made. That's good because they will double down on their investments.

Do you anticipate potential shortages of raw materials like lithium? Do you see that as a problem that could slow down the rollout of electric vehicles?

I think people worry a lot about lithium, and we've done a lot of studies back at the Argonne National Laboratory. It's not a question of whether there is enough mineral. It's a question of whether there will be enough plants to beneficiate the mineral. For a while, there might not be. We do need to build more capacity to extract minerals from the U.S. However, recycling is going to play a huge role.

It will be the same exact thing as lead. This is already happening, not so much yet in the U.S., but policymakers will require the automotive OEMs to incorporate recycling of the batteries into their sales price or at least they will make them responsible for recycling. The OEMs will drive responsibility down to the battery-makers, and the battery-makers will happily accept it because it gives them a chance to compete. I don't know how long it will take, but it will head there.

What's the appropriate role for the U.S. federal government during the energy transition?

In my view, the public sector and the government are doing the right things. They are thinking about enacting policy. And if you put the right policies in place, it will drive manufacturers and even consumers today in a certain way. They're also deploying both loans and grants, alongside private capital, to help build plants. There's a return for the taxpayers because it's job creation. The government is also a customer.

If there's any message I leave you with, it is that the good news about mankind's desire to be more sustainable and get off of carbon is that we are now to the point where the technology is real enough and inexpensive enough where people can make money off the transition. That's the turning point.

Many people think the government leads. I guess they do. But really what they're doing is fast-following. They've led in funding all the research. But once the markets begin to take notice, like they have, then the government can essentially support the market transition as opposed to drive it.

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