Porsche joins $400 million lithium-silicon battery bet to inject vitality into future EVs

With sales of its first electric car outstripping those of its traditional 911 sports car, German automaker Porsche is responding by upping its bet on electric vehicles, in part through a big investment in lithium-silicon battery developer Group14 Technologies.

Porsche injected $100 million into Group14 as part of a larger $400 million Series C round. Other investors joining included Canadian pension fund OMERS, Decarbonization Partners, private equity firm Riverstone, Vsquared Ventures and Moore Strategic Ventures.

Group14's key technology is a silicon-carbon powder that can replace or enhance graphite anodes. Graphite is used in most lithium-ion batteries today and is a reasonable anode because it is very stable and can store reasonable amounts of energy.

Yet as automakers pursue ever-higher energy density, graphite is being pushed beyond its limits. Silicon is an attractive alternative because it can store more lithium—theoretically, 10 times as much. But that same benefit is also silicon's Achilles' heel. Because silicon absorbs so much lithium, molecular-scale expansion and contraction can degrade the anode's structure, leading to premature failure.

Group14 is one of many startups racing to develop silicon-based anodes that can be charged and discharged repeatedly without breaking down. To do this, the company injects silicon-containing gases into a porous carbon scaffold. The end result is a carbon compound studded with nanoscale silicon particles. The particles serve to grab lithium ions, while the carbon scaffold acts as a stabilizing structure so that the anode does not break down during use.

Group14 said its carbon-silicon material could also be mixed with graphite anodes and could be put into existing battery production lines with only minor modifications.

The startup claims its SCC55 material can store 50% more energy than traditional graphite anodes. It currently has one battery material factory in operation and two more under construction - one is a joint venture with SK Group that will start production later this year and the other will start production in 2023. Group14 aims to produce battery packs for Porsche in 2024.

For an automaker like Porsche, whose foundation is built on lightweight, high-performance sports cars, the prospect of smaller, more powerful batteries must be very attractive.

Advancing battery technology is key to decarbonizing the auto industry, which accounted for 9% of global greenhouse gas emissions in 2018, according to Greenpeace. Yet the potentially lucrative deal can’t erase the sordid records of some of Group14’s investors, several of whom are prolific fossil fuel backers.

Like BlackRock and Temasek's joint venture, Decarbonization Partners, which has backed some sustainability-focused companies, such as mushroom leather startup MycoWorks, BlackRock has also recently pledged to continue investing in and supporting fossil fuel companies. The $97.3 billion investment giant has a tendency to say both sides. OMERS' portfolio also includes some oil and gas companies, although the pension fund has pledged to achieve net zero emissions for its investments by the distant 2050.

The new deal represents a big step up for Group14 — almost a 10x improvement. Prior to this funding, the Woodinville, Washington-based startup had reportedly raised around $41.5 million in venture capital and government grants.