Stealthy Battery Startup Envia Systems Dishes On Its Cathode Tech

envia-logoFor the founding team of startup Envia Systems, working at battery companies before starting their own helped them realize a gaping hole in the battery industry: They saw an absence of quality batteries designed specifically for plug-in vehicles, with the right amount of power and as little weight as possible. According to Envia co-founder and director Michael Sinkula (previously an executive at lithium-ion battery developer Nanoexa), innovative companies in the plug-in vehicle space seemed to be either taking batteries designed for laptops (as Tesla has done) or power tools (where A123Systems got its start) and trying to force them into vehicle applications.

Starting with cathode materials that the company says are developed specifically for vehicle batteries (Sinkula wouldn’t give more details on the materials themselves), optimizing other components around the cathode, and working to pack more energy into each lithium-ion cell, Sinkula told us in a recent interview that Envia aims to significantly cut the cost of batteries for electric vehicles.

Why focus on the cathode? It represents a big chunk of the total battery cost — as much as 60 percent, by some estimates.

“More energy in a cell means less cells in a car, and that’s the only way to lower the cost,” Sinkula said. “It’s a domino effect” — lowering costs for the battery pack, safety controls and interconnections surrounding the cells — that could be a key to making plug-in vehicles much more competitive on the mass market.

But these are early days for Envia, which raised $3.2 million in Series A funding in October 2008 from venture capital firms Bay Partners and Redpoint Ventures. Founded in 2007 shortly after Sinkula and Envia CEO Sujeet Kumar left Nanoexa (Kumar was director of technology there), the startup has assembled a team of less than 50 people (Sinkula declined to give a more precise figure).

The company hopes to ramp up fast, however. By the end of 2010 or possibly early 2011, Sinkula says Envia estimates it will reach high-volume production — at least a ton of cathode material per month.

The secret sauce is what Sinkula describes as “a new class of cathode materials.” While Sinkula said the company “prides itself” on the material science for the cathode, he said Envia doesn’t actually want manufacturing to be its main business. Rather, the idea is to work with other companies, possibly licensing technology to firms with large-scale manufacturing capacity and a strong foothold in the battery business, and eventually expand beyond the cathode to materials for other parts of batteries for plug-in vehicles.

Standing between Envia and its market however, are significant hurdles. It’s hardly the only startup racing to lower battery costs for vehicles, and continued development and commercialization will require additional capital. According to Sinkula, Envia will seek both public funding and venture capital. The company applied for stimulus grants as a member of NAATBatt (National Alliance for Advanced Transportation Batteries), a consortium of U.S. businesses that lost out in the round of awards from the popular $2.4 billion DOE battery program announced last week. Sinkula said the financing wasn’t “an integral part” of the company’s plans, and it’s still pursuing DOE funds separately from NAATBatt under other stimulus programs.

Envia already has a relationship with the DOE through the Argonne National Lab, which developed the “fundamental basic science” for the startup’s materials and shared an award with Envia last month for joint R&D of an advanced electrode material. While Envia has developed proprietary technology based on the Argonne innovation in a commercial battery application, it’s possible that another company could use the basic tech for other batteries. If that happened Sinkula says he’s not worried about the company losing its edge.

On the other hand, larger, more established companies — the breed that snagged most of those DOE funds — could represent a threat, “even if we have better technology,” he said, because they hold more sway over the industry and direction of government incentives.