Enovix was established in 2007 with the goal of improving the fundamental aspects of lithium-ion battery designs. The business claims that it was able to take use of silicon’s energy-rich nature by using a 3D stacking design, hence building stronger batteries.
An unconventional start in a “new” architecture.
According to Rust, Enovix was founded by people who “were not battery people” at the time. Rather, the founders’ expertise was in the fabrication of three-dimensional architectures. They chose the battery industry because they wanted to apply their knowledge in a new field.
Sony was the first company to commercialize lithium-ion batteries for handheld camcorders in 1991. In the years and decades since, chemists and companies have investigated ways to improve battery metrics such as storage and size, but much of this has been focused on changing the raw materials inside the battery. The battery’s basic architecture has not been fundamentally altered.
“We were either too stupid or too smart to say, well, maybe there’s another way to make it,” Rust explained.
Enovix manufactures batteries with laser-patterned electrodes and separators that are stacked into a 3D cell architecture, as opposed to the traditional structure that uses wound electrodes.
Because of the altered structure, the anode — one of two electrodes in a battery — can be entirely silicon, as opposed to standard anodes, which are predominantly graphite.
Silicon is a desirable material because it consumes less energy than graphite. However, it has its own set of issues, such as swell, which causes pressure in the battery and can lead to cracks.
Enovix claims that its proprietary design manages silicon swelling, resulting in batteries with up to 110 percent higher energy density. The modified structure also results in a long cycle life, which is the number of charge and discharge cycles a battery can complete before losing efficiency.
The act of putting silicon in a battery is not revolutionary in and of itself, and many companies already use some silicon in their anodes. However, Enovix claims that its proprietary design, which allows for an all-silicon anode, distinguishes it.
Of course, new designs can bring their own set of issues, and billions of dollars are currently being poured into improving the existing winding structure.
Enovix is currently focused on the consumer electronics market. These are high-value items that, according to Rust, are “dying” for an upgrade. The consumer electronics market is expected to be worth $13 billion by 2025, despite being nowhere near the size of the electric vehicle market. Because energy density is a limiting factor in many devices, companies are willing to pay more for higher performance batteries. Consumer electronics certification is also much faster than car batteries.
“We’re using that as a stepping stone to grow the business while also working on some of these much, much larger markets like EVs,” Rust explained.
The company is currently constructing its first factory in Fremont, California, with plans to begin volume production in early 2022. The company intends to make its first revenue in the second quarter of 2022, but it does not expect to make a profit until at least 2023. Enovix plans to build a second factory by 2023, while also retrofitting existing ones, allowing it to capitalize on capital that is already in place.
More than 20 customers have successfully tested the company’s battery in a variety of products including laptops, wearables, augmented reality, and virtual reality.
“Our approach, even from the start, was to start in consumer electronics, where they really value energy… then work on the technology for the larger EV cells in parallel, and then use our success in the consumer space, both technologically and manufacturing-wise, to then move into the EV space. And so you can be a company that is profitable years ahead of where you would be if you just jumped into EVs right away,” Rust explained.
Selecting a SPAC
Initially, the company intended to grow organically before going public via a traditional IPO. But then came the special purpose acquisition company, or SPAC, craze, and Enovix chose a reverse merger.
“I saw it as an opportunity to accelerate the company’s growth rate, and not just organically grow and become profitable and build a factory, but actually kind of move forward with things more in parallel,” Rust explained. “In our case, you know, technical risk was kind of behind us, and so it now makes complete sense to kind of grow as fast as you can.”
Was also appealing. T.J. Rodgers is the fund’s chairman and CEO, as well as a member of Enovix’s board of directors.
The stock, which trades under the symbol RSVA, reached a high of $28.50 on the day the deal was announced, but has since fallen to around $12.40. The pullback is consistent with recent weakness in the broader SPAC market, where new issuances have slowed following a flurry of activity in 2020 and the first quarter of 2021. The CNBC SPAC Post Deal Index, which tracks large SPACs that have announced targets or completed mergers in the last two years, has dropped more than 16% this year. In 2020, the index increased by 31%.
Enovix is not the only company working on battery innovations or attempting to maximize silicon’s energy-rich properties.
Given the importance of batteries in our daily lives, as well as the critical role they play in the larger energy transition, some have labeled the United States′ reliance on foreign nations as a national security concern. President Joe Biden has advocated for relocating some production and manufacturing to the United States, including $174 billion for electric vehicle development in his recently unveiled infrastructure bill.
“Batteries are so critical for so many industries in so many markets in the United States and around the world that having an advantage and innovation in that space in the United States is extremely valuable,” Rust said.
“I actually think we’re kind of a poster child for what the Biden administration would like to do — you know, sponsor innovation that restores our country’s technological prowess and manufacturing prowess.”