Aspen Aerogels: insulation breakthrough?

Aspen Aerogels was founded in 2001 and went public in 2014, manufacturing aerogels at a plant in Rhode Island, with c300 employees, $100M revenues (in 2020) and an installed base of $1bn of materials.

Its products are aerogels, with thermal conductivities that are 30-80% below conventional insulators. Target markets include preventing thermal runaway in electric vehicle batteries and cryogenic industrial processes (e.g., LNG).

We have reviewed Aspen’s recent patents in this data-file. This data-file notes some challenges, using our usual patent review framework.

Mine trucks: transport economics?

There are around 50,000 giant mining trucks in operation globally. The largest examples are around 16m long, 10m wide, 8m high, can carry around 350-450 tons and reach top speeds of 40mph.

This data-file captures the economics of a mine haul truck. A 10% IRR requires a charge of $10/ton of material, if it is transported 100-miles from the mine to processing facility. Assumptions can be stress-tested overleaf.

Fuel consumption is large, around 40bpd, or 0.3mpg, comprising around 30% of total mine truck costs at c$1.5-2/gal diesel prices. Some lower carbon fuels are c5x more expensive, and would thus inflate mined commodity costs.

High utilization rates are also crucial to economics, to defray fixed costs, which are c50% of total costs, as our numbers assume each truck will cover an average of 500 miles per day for c20-25 years.

ChargePoint: electric vehicle charging edge?

ChargePoint went public via SPAC in March-2021, via a combination with Switchback Energy, valued at $2.4bn. This made it the first listed EV charging company in the US. It aims to be one of the world’s largest suppliers of charging services amidst the electrification of mobility and freight.

Our review finds a library of simple, clear, specific and easy-to-understand patents that are heavily focused on operational aspects of running EV charging networks, especially the customer and EVSE provider experience. Many also cover the look-and-feel of charging stations and their components. But whether there is a pure ‘technology edge’ is more debatable.

A controversy for the future is how aggressively ChargePoint and other EV charging companies will enforce against almost  inevitable patent infringements, especially if competition intensifies in this sector.

Vehicle mass: what opportunities to improve fuel economy?

This data-file breaks down the typical materials that contribute to the weight of a 2-ton car. We estimate that steel comprises c50% of the volume and c80% of the weight.

Replacing 10% of this steel with a lighter and stronger alternative, such as carbon fiber is likely to improve a vehicle’s overall weight and fuel economy by c16%. The carbon fiber emits more CO2 as it is produced, but this is repaid after around 20,000 miles of driving. Carbon fiber is also c50x more expensive than steel, but again this up-front cost is paid back after 30,000-70,000 miles of driving.

For comparison, adding a 10kWh battery to hybridise a vehicle likely pays back after 10,000-30,000 miles.

Underlying calculations can be stress-tested in the data-file.

Lithium: reactive?

Lithium demand is likely to rise 30x in the energy transition. So this 15-page note reviews the mined lithium supply chain, finding prices will rise too, by 10-50%. The main reason is moving into lower-grade ores. Second is energy intensity, as each ton of lithium emits 50 tons of CO2, c50% due to refining spodumene at 1,100◦C, mostly using coal in China. Low-cost lithium brine producers and battery recyclers may benefit from steepening cost curves.

Lithium producers: leading companies?

This data-file captures c20 lithium producers, their output (in kTpa), their size and their recent progress.

Our first conclusion is that the current lithium industry is heavily concentrated, as eight companies effectively control 90% of global supply.

While lithium demand is expected to grow 30x on our numbers (model here), there is intense competition to expand existing lithium assets and develop new production, across 10 earlier-stage development companies, many listed in Canada and Australia.

Three of the early-stage companies in our data-file underwent financial restructurings in 2020-21. To some, this might be a reminder for the high risks of early-stage, junior resource companies; while to others, weak industries conditions today might connote a future up-cycle.

Lithium production: the economics?

This data-file quantifies the economics of producing lithium carbonate from spodumene in mined pegmatites, via the usual process of comminution, flotation, calcination and then acid-leaching.

We estimate a price of $12,500/ton lithium carbonate price is likely needed for a 10% IRR in today’s China-heavy value chain, which emits 50kg of CO2 per kg of lithium.

The data-file allows you to quantify how rising energy and CO2 prices would likely flow through to increase lithium costs, as well as other variables such as ore grades, capex and opex. Mass balances, useful data-points and notes follow in subsequent tabs.

Battery recycling: long division?

Recycling lithium batteries could be worth $100bn per year by 2040 while supporting electric vehicles’ ascent. Hence new companies are emerging to recapture 95% of spent materials with environmentally sound methods. To be practical, the technology still needs to be proven at scale, battery chemistries must stabilize and cheaper alternatives must be banned. Our 15-page note explores what it would take for battery-recycling to get compelling.

Battery recycling: the economics?

This data-file models the economics of recycling spent lithium ion batteries, taking in waste cells at end-of-life, and recovering materials such as cobalt, nickel, manganese, copper, aluminium, lithium and steel.

It currently looks challenging to generate acceptable IRRs without charging a disposal fee in the range of $1,700-2,000/ton. Although this could change through improved chemistries and more highly automated processes.

Inputs are based on patents and technical papers. Please download the data-file to stress test costs and other economic variables.

Nio: EV-charging breakthrough?

Nio is a listed, electric vehicle manufacturer, headquartered in Shanghai, founded in 2014, that IPO-ed in New York in 2018. It has partnerships with CATL and Sinopec.

The company opened its first battery swap station in Shenzhen, in 2018, which has since expanded to 200 battery-swap stations. The 2-millionth battery swap was completed in March-2021.

The Power Swap station 2.0 is scheduled to be rolled out in mid-2021, lowering the swap time to under three minutes, and carrying 13 battery packs.

We have reviewed ten of the company’s patents. We conclude it has a genuine moat in swappable batteries, which could only have been built up by an auto-maker that controls the vehicle and battery designs, as well as the battery swapping stations.