Friday, February 10, 2017

Start-Up "Romeo Power" Attempts to Break into Market for Electric Vehicle Batteries

As discussed in a previous post, several electric car companies (Tesla/ Solar City being the most notable example) have been pushing to create the perfect combination of technology for their energy-conscious consumer. The first company to come out with the technology (some combination of electric vehicles, personal solar panels/ wind turbines, and a high-efficiency battery to store the collected energy) to match that growing need is bound to hugely benefit their productivity in the future.  Although Tesla Motors has made itself a household name in the electric vehicle market, Russ Mitchell, in his L.A. Times article, describes a start-up called Romeo Power that may be able to stand in the way of Tesla's dominance of the high-efficiency battery market.

Not only is Romeo Power a new competitor in a market with high barriers to entry, but the people behind the company seem very confident that their product is better than any sold by the competition. The battery packs are innocuous looking, long and thin to fit underneath a car. Inside the battery pack is what stores all the electricity: thousands of battery cell cylinders slightly larger than a AA battery. Those cylinders have the ability to accelerate a car from zero to 60 in just a few seconds and can allow the vehicle to drive for hundreds of miles without stopping, so packing them all together like that can be a tricky endeavor.

Not only do customers want a battery that stores as much energy as possible and charges quickly, they also want to know that they are safe, that their car won't explode when it hits the slightest bump. Those are all the aspects that design teams have to take into account. They need to ensure their customers' safety while still improving the product's performance. While that may seem unrealistic, Romeo has claimed that its battery packs can achieve a 25% higher energy density than any of its competitors, an unbelievable improvement to most analysts. However, if Romeo succeeds in breaking into the industry with such high-efficiency batteries, they could easily find themselves on the path toward leading market share.

While it seems impossible to many that the start-up will ever take significant market share away from the leaders in the industry like Tesla, some analysts are unsurprised by the company's quick growth. The executives of the company all come from backgrounds involving battery production, and most of them worked for a while at SpaceX, Faraday Future, and Tesla, where they learned a lot about their competition. Sure, mid-level electric vehicles won't need their battery packs, because their manufacturers make their own in house. However, if their battery packs truly have an increased efficiency of 25%, then even the high-end companies will want to use their battery packs. It's simple business: if you don't use the best parts in your product, most customers will choose to go with a company that does.

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