Enovix: A Speculation On The Future Of Battery Technology
Why Enovix Could Be A Massive Winner Over The Next Decade
Summary
Enovix is an early stage battery company with a market capitalization of $2.7B.
Their battery technology has the potential to be used in a wide range of products and could be a significant improvement over existing battery technology.
They are working on building out their manufacturing base and they are still years away from profitability.
The recent announcement of an a wearable battery order from the US Army sent shares up 25% on Tuesday, and shares have continued to grind higher through Thursday.
I own shares and calls, and I will be looking to add more shares in my regular account on a pullback in coming weeks.
What is Enovix?
Enovix ENVX 0.00%↑ is probably a company that most readers have never heard of before. Enovix is a battery company with a market cap of $2.7B. They have a battery technology that has many investors very bullish on the future of the company, and I think it is worth a closer look. This definitely falls in the speculative bucket that I talked about in a recent post, but I think the potential upside is worth a small position.
I’m not here to blow smoke and tell you I understand the minute details of the battery technology, but Enovix’s battery technology has a ton of potential if it lives up to the hype. Instead of blathering on about technology, which isn’t my strong suit, I figured it would be better to include a section from Enovix’s annual report below on their battery technology.
Silicon has long been heralded as the next important anode material. Silicon anodes can theoretically store more than twice as much lithium than the graphite anode that is used in nearly all Li-ion batteries today (1800mAh/cm3 vs. 800mAh/ cm3). Once successfully integrated into a battery, silicon anodes are theoretically capable of increasing a Li-ion battery’s capacity by about 36% and a corresponding increase in energy density.
Silicon’s high energy density, however, creates four significant technical problems that must be solved:
•Formation expansion. “Formation” is the term for the first charging of the battery, when lithium moves from the cathode, through the separator, to the anode. When fully charged, a silicon anode can more than double in thickness, resulting in significant swelling that can physically damage the battery, causing failure.
•Formation efficiency. When first charged, a silicon anode can absorb and permanently trap as much as roughly 40% to 50% of the original lithium in the battery, reducing the battery’s capacity by about 50% to 60%.
•Cycle swelling. A silicon anode will swell and shrink when the battery is charged and discharged, respectively, causing damage to both the package and the silicon particles in the anode, which can crack, and further trap lithium on the fresh silicon surfaces exposed by the crack.
•Cycle life. Silicon particles can become electrically disconnected from the electrode when the silicon anode is in its shrunken state and can crack when the silicon anode is swollen, both of which can lower cycle life. In addition, when silicon particles become disconnected from the electrode, they are no longer able to accept lithium and neighboring particles must absorb the excess, causing over charging and further opportunities for physical damage.
Left unaddressed, these four problems have limited the practical application of silicon anodes in conventional lithium-ion battery cells. Our 3D cell architecture uniquely solves these four technical problems to enable 100% active silicon anodes.
- Enovix 10-K
Basically, with Enovix’s battery design, their batteries will have more energy density and capacity, improved cycle life and temperature performance, and faster charging. It’s not a sure thing by any stretch of the imagination, but I think the recent announcement of the US Army wearable battery order should boost confidence in the technological advantage that Enovix has. They are in the process of scaling up their manufacturing base, which should allow them grow rapidly over the next couple years, especially if their battery technology proves to be superior like many investors think it is.
Now I’m very skeptical of any company that isn’t profitable, but the company does have large insider ownership and an impressive roster of executives and board members. I want to mention that these slides are from an April investor presentation, and the company recently announced that Farhan Ahmad will be taking over as CFO in a couple weeks.
Based on the proxy statement from a couple weeks ago, the largest shareholder is TJ Rodgers, chairman of the board. He has a long track record of success and owns 16% of the company. He was buying aggressively in March when shares were around $10, and CEO Raj Telluri was buying as well. While the insider ownership and buying is a green flag, the reason I found Enovix was through investors I follow on Twitter.
Keep reading with a 7-day free trial
Subscribe to Kontrarian Korner to keep reading this post and get 7 days of free access to the full post archives.