tyler crowe: diving deep into battery technologyand the future of energy, this is industry focus. hi, fools, it's thursday, which means we're talking with the energy show. this is interviewweek. we're doing a little bit of a special theme, kind of deviating from what we normallydo. for this week's show, we've brought in steve levine, a man of many talents. he wasa reporter out of newsweek in the late 80s, early 90s. spent some time also in the caucasusof the central asia area for the wall street journal and washington post, and now is acolumnist for quartz and has also written a book called "the powerhouse: inside theinvention of a battery to save the world." basically, it is the story of how we havebeen developing batteries over time. steve,
how are you doing today? steve levine: i'm great, thanks, tyler. crowe: so, just to get started, like i said,you've done a lot of things when it comes to energy, foreign reporting, things likethat. what brought you to batteries? what was the impetus to you that brought that conversationenough that you wanted to write a book about it? levine: geopolitics.crowe: okay. levine: i know, you're thinking ... when ifirst pitched this book and i described it to my agent, to my wife, to friends as "thegeopolitics of batteries," i would get this, "excuse me? did you just say the geopoliticsof batteries?" it's difficult to get your
arms around, or even to think that batteriescould be interesting. but, when i started researching this, which was a while ago, in2010, a bunch of countries, including the united states, president obama, but also presidenthu of china, the prime ministers of japan, u.k., south korea, a bunch of countries, allof them had decided that batteries, lithium ion batteries and electric cars, were thenext big thing in the global economy. and all of them decided, "we're going to dominatethat. we're going to grab electric cars, we're going to juice lithium ion batteries, we'regoing to create a super-battery, a very powerful battery, and we're going to build hundred-billiondollar industries around these technologies." so, when you look at that, when you're talkingin terms of those kinds of numbers, these
are numbers that drive economies. if you followhistory, you know that countries rise and fall based on their wealth. so, i could seeinfluence, wealth, power rising and falling, if they were right. crowe: it's also very interesting that thetwo largest countries you talked about, china and the united states, two countries at thetime, 2010, where we were enormously dependent on foreign sources of energy, most particularlyin the oil and gas space. there was a large impetus -- this was just pre-shale revolution.natural gas was just barely starting to take off as this, "hey, we might be able to makesomething happen with this." but, to see those countries basically looking at it and beingso reliant on somebody else's source of energy,
it kind of really plays well into that, "weneed to disrupt this and make ourselves a little bit more secure from an energy perspective." levine: it looked like that. there was a mantra,which we hear less of now, about getting off of oil, getting off of saudi arabian oil inparticular, becoming energy independent, that -- actually, i don't have to tell you, thatgoes all the way back to nixon, all the way back to the 70s. but, at the same time, wedon't like, or, we didn't like that we were under the thumb of opec. we haven't likedthat since the 70s. and we don't like putin, vladimir putin, very much, either. so, theidea, what were some of the geopolitical impacts. and at that time, you said it, this is pre-shaleoil. no one knew it was going on under the
radar. the idea was that a side benefit, apartfrom all these others wealth was that you would undermine opec and putin -- the samedynamics that we're watching in play right now because of shale oil. crowe: yeah. what was a great thing aboutthe book is, a lot of times, when people hear about the development of battery technologyor something like that, people are expecting they're going to get into this really technicalsort of story. but i think what you did a great job with this in the sense of a lotof development stories i've seen like this, like michael lewis' stories, or greg zuckerman's"the frackers," which is a book that we've talked about with him on the show before,is you took it and kind of personalized it
around the people who were actually makingit happen, most particularly two companies and the people who were involved in it, oneprivate startup by the name of envina, and the other one is the argonne national labjust outside of chicago. what was the major role of those two, and why were those twothe center of the story for you? levine: the first thing was that, althoughgeopolitics was my hook, that's what appeals to me, i didn't want to tell the story froma 50,000 foot view. and i personally was interested in, "okay, this is happening, it's going tohappen, where do i want to be? how do i want to tell this story?" so, i wanted to be withone group of scientists, i hoped the american team that was in this great battery race,and watch them as they attempted to make this
big breakthrough. so, i started looking around,"okay, if i was going to do that, who would that be?" and i very quickly came to argonnenational lab, the first national lab in the united states. and i went out there, i met jeff chamberlain,the lead character in the book, the other main characters in the book. their stuff isin the chevy volt. so, it's a lab where they're attempting to make this big breakthrough,but there also are the inventors of one of the lead chemistries that's already been commercialized.so, i knew that the characters were strong, they were accessible, and in addition, theyhad heft, they already had gravitas. they had the credibility so that i wasn't justtalking about some company, some lab, some
place. i asked them, "what would you thinkabout an author hanging around your lab for one year?" and it was kind of like that, thispause, "did you just say one year?" it ended up being two years. and they said yes in principleright away. it took me a year to negotiate that. and then, i'll just finish this one pointbecause you asked about the other company too. so, envia, the startup, licensed thenmc. so, it was natural to then segue from argonne to a small company, silicon valley,a wiry, full-of-themselves, want-to-make-a-billion-dollars company, using the same material. crowe: yeah. just, for a quick brief of thetechnology, mnc is, would you say, the current,
most popularly used technology out there today?i believe it's a lithium battery that uses nickel, manganese, and cobalt, hence the mncname. it seems to be the most popular thing that people have been tweaking for quite sometime. one of the things, i think, for our readership, that's most fascinating aboutthis book, and something that if me as an investor is really looking at is, the coretheme for me that made it interesting to me is the concept of the valley of death. whenyou have a major developing technology, like something like a major energy storage breakthroughwith batteries, there is always that initial excitement, that idea that we're going toride this great wave of battery technology to upend the oil markets, and everybody getsreally excited, and money just gets poured into it.
and then there's this long, long slog of justtrying to figure it out and start-up companies going bankrupt, and that initial excitementwearing off until the real development takes place. and i think envia is actually a greatexample of that. maybe you could kind of give a quick detail a little bit? you don't haveto give away the whole thing, because obviously, we want people to read the book about it.but just an idea, what were some of the challenges that envia faced? levine: sure, that's a good question. thisperiod, the bubble period, the frenzy period, was about 2009 to about 2012, 2013. and thiswas, all you had to do was to say, "i can work on batteries," or "i've got an idea abouta battery," and literally, in silicon valley,
the vcs would throw money at you. there area ton of stories of just having an idea on paper and getting $2 million, $3 million,almost no questions asked. crowe: i'm sure it helped that, right aroundthat time, we were just coming off the peak oil theory of 2008 when we were seeing pricesin the $140, $150 per barrel range, that kind of thing. if anybody can say something wasgoing to disrupt oil in any way, anybody's going to get money at that sort of price. levine: that's one of the dynamics working.the other one was, it's right after the financial crash. and there was kind of a hope out there,a deep yearning, to find a real economic, a real technology, a real business, a realindustry. so, you had the one thing, this
desire for clean energy, and then you hadthis second thing, what's the next new thing? and batteries just slid right into that. so,envia, it's an immigrant from india, sujeet kumar, a very, very talented electric engineer,who had worked through a bunch of startups. and looking through the catalogs that areout there of patents, he came across the argonne patent for the mnc. just, amazingly, no one-- i mean that, no one, no one commercially had come across that patent and realized howvaluable it was. so, he knocked on the doors of argonne. he persuaded them to give themthe license for really a throwaway fee, $100,000. crowe: and that's the technology that we'repretty much using today. levine: right. and, then, he went, with thistechnology, created a bunch of slides, and
started knocking on doors with vcs. the veryfirst vc whose door he knocked on, it was actually someone he kind of knew, becausethis man went to school with his wife, and he went to him for some advice, "how shouldi try to sell this?" and the guy says, "what do you mean, how should you try to sell this?i'll buy it." and he laid on him $3.2 million. crowe: i've got to imagine that there area lot of startups in silicon valley who wish that they had that sort of success rate. (laughs) levine: oh, yeah. i mean, it's amazing, whenyou think about that. and the idea was, the conceit, and really, the next stage in this,you had that mnc in the bold, but what you're really looking for is the superbattery. youneed to get from 38 miles on a single charge,
which is not enough -- it's not enough tolift electric cars from a green niche in to the mainstream. you need a superbattery sothat a car will go 200 miles, 300 miles on a charge. and that's the quest that enviais after, and that's also the quest that you're following in argonne. crowe: and, in your two years that you werethere -- we don't need to get into the super detail-y nuances of the chemistry or anythinglike that -- but like you said, it's a niche product. we're starting to see some emergenceof a commercial aspect, like you said, the chevy volt will be coming out, tesla's comingout with their model 3 pretty soon, toyota's making their own push with -- sorry, actually,i believe toyota's actually doing hydrogen fuel cells.
levine: fuel cells. crowe: little bit different. but, in yourtwo years you were there, observing and seeing, what are the biggest challenges to batteriesright now, that takes them from going from that niche product to being that mass-marketproduct that is going to be competitive with traditional internal combustion engines? levine: they're running up against physics.the challenge is to pack more energy in a small space at a very low price. and theyneed to take these batteries -- the volt and the model 3 go a long ways. they'll go 200miles on a single charge. and that car they're going to produce, which, we'll see the voltby the end of the year, and tesla is going to unveil the model 3 on march 31st. thosewill go on sale 2019. but, the challenge is
that the current pathways to getting there,to that superbattery, is electrochemical pandemonium. that everything goes haywire in the battery,how do you arrest that? or, there's another pathway that catches fire. this is a red line,no one is going to drive an electric car if they think it's going to catch fire. crowe: it's a weird stigma, though, because,i mean, we've been driving around with giant fuels of gasoline under our tanks for years,that could catch on fire. but for some reason, that doesn't seem to be as much of an issue. levine: you're right, you're right. crowe: perhaps it's something we're just usedto now, i guess.
levine: yeah. and then, this other pathwaythat's out there that people talk about, silicon, putting silicone into the battery. swells.when you put silicon into the electrode of the battery, it swells to four times its size,it shatters the battery, it short-circuits. anyways, all of this is to say, in a veryshort sentence, that nothing currently works to get to the real superbattery. but, thesenew cars that are coming onto the market this year in 2016 are the beginning of the secondstage. we are in the valley of death. however, sort of the other side is within sight. crowe: okay. and, actually, on that, as somebodywho’s seen it quite a bit as of late, studying it for those couple years, and watching howthe industry is going, if argonne national
lab or another start-up were to make an announcementin regards to a change, what would be ... so, say you were to explain it to a layman, "thisis something you should watch." if this were to happen, some breakthrough, where you wouldbe like, "wow, this is really worth talking about or writing about or writing about?" levine: yeah. so, somebody is going to becomeas rich as bill gates, and the way that they're going to do that is they're going to figureout how to do one of two things: they're going to figure out how to make silicon work ina battery. if you come across an announcement where a start-up, a lab or whatever, has reallyfigured out how to put a silicon anode into the battery. or, the second pathway: how touse pure, metallic lithium. this is a holy
grail. these are what will make an electriccar side-by-side competitive with the internal combustion engine. and whoever does that -- and,incidentally, there are a lot of battery liars out there. the field is full of exaggeratorsand hypesters and hucksters. when that happens, whoever does that is just ... it is, it'sgoing to be like microsoft. crowe: mm-hmm. it's really fascinating tothink about that, because, like you said, in the book, there are so many challengeson things like, the battery degrades over time, how do they fix that sort of thing.and that's kind of going along the lines of, if they can effectively use silicon or puremetallic lithium versus some of the, i guess you could say oxides that they've been workingwith over the past couple of years.
so, like you said, we're on the precipice.we're still in that valley of death, but you could almost say we're seeing the light alittle bit at the end of the tunnel. and there's been a lot of themes popping up lately inyour work, some stuff been going on at bloomberg and other media outlets that have been toutingthe rate of adoption of electric vehicles, and their ability to completely upend theoil market. in your book, you talk a little bit about that valley of death and how batteriesfor automotives are in the valley of death. but, are we coming to the end of it? and whendo you foresee that rate of adoption of electric vehicles really starting to take off? levine: this is actually the uncertain thing.we know that all the major car makers, over
the next five years -- so, starting now, startingjanuary 2016, the beginning of this year, and running until the middle or the end of2019 -- so, this period of years -- every major car maker starting with gm is marketinga mainstream electric car. the question is, will they be bought? will people be willingto pay $30,000 for the chevy volt? and will they be willing to do it in large numbers?when elon musk comes out with his model 3, he also says his car is going to cost $35,000,and after the subsidies, into the $20,000s. i have my doubts about that, but this is whathe says. will that be bought? and when we say large numbers, we mean hundreds of thousandsof units. that's the end of the valley of death. crowe: that's one of the things i think isreally underestimated when we talk about the
adoption rate of electric vehicles. we seenumbers like, "oh, they sold ... " what was it, the nissan leaf is probably doing in the30,000-40,000 a year range, compared to something like the f-150 pickup truck from ford, whichi think is doing well over 100,000 a month. levine: yeah. crowe: so, these rates of adoption that we'retalking about, these are much, much larger scales than we are really kind of talkingabout on days like today. levine: well, they are. i think, tyler, thatanother signal that we're heading out of the valley of death is when we see electric orplug-in hybrid suvs, large suvs and pickup trucks. the car makers are all going to haveto go into that market, because cafe standards,
mileage standards, we're right on the cuspin 2018, they start zooming up. and in 2025, they have to be double what they are now.americans prefer suvs and pickup trucks. therefore, if the car makers are going to comply withthe regulations, they have to manufacture plug-in hybrid, electric pickups, and suvs. i've done anecdotal ... i know on twitter,when i floated this idea, i got, "no way, that's never going to happen, you don't understandpickup truck drivers." well, i went to college in fresno, california. this is a pickup-drivingplace. i was just there two weeks ago, speaking at the college, i was asked to come back tospeak. and i road-tested this idea. and they sort of looked at me quizzically, "why wouldn'twe drive an electric pickup truck?" so, i
kind of think that ford -- ford is going tolead the way, by the way. ford has said publicly, "by the end of the decade, we will have electricpickup trucks." i don't know if it's going to be the f-150, but they say they're goingto do it. crowe: we shall see.levine: yeah. crowe: and we kind of brushed on it at thebeginning here, on the idea of it completely upending the geopolitical ... i guess youcould say, the current structure of energy and the geopolitical interaction that happensbecause of energy. as you see battery tech, it seems like it's going to be that game-changerin these sorts of things. when you are looking at the geopolitical forces that are involvedwith this, how do you forsee the battery story
playing out on the world stage? levine: when you look at technologies, thebiggest technologies of our days, so the transistor, of course, micro-processors, smartphones,laptops, tablets -- they seem like they burst onto the market immediately. like, the iphonecame out in 2007. all of these technologies had about 20-year runways. the iphone is notthe first smartphone. that came out 20 years ago. and by runway, i mean, until they wereadopted by more than 50% of the population. so, if you used 2009 as the start of thisnew battery age, this new electric car age, then we're talking 2029 is sort of that line after which you have mass adoption on some level. crowe: on some scale.
levine: right. so, is it 30%? is it 40%? ofnew car sales. because there are already a billion cars on the road, 250 million in theunited states. so, i think people are going to buy these cars. the car makers have tosell electric and plug-in hybrids. they're going to make vehicles that people will wantto buy. elon musk is going to lead the way. i think the runway begins about 2019, wherethey start to take off slowly, start to get picked up. but, as we're getting into themid-2020s and towards the end, they're all over the place. and consumer taste will change.the people who are now 16 years old, or, my daughters, who are, my eldest daughter is13. when she buys her first car, i have a feeling she's going to reject any vehiclethat doesn't have some form of battery in
it. young people will not be comfortable beingin a car that's just pure combustion. but i think, as a window into what we're goingto be looking at geopolitically, look at how the plunge of oil prices has ricocheted throughthe economy. yes, it's affected all of the oil economies, opec, russia, venezuela maycollapse. but it's caused emerging markets to go into recession. it's caused europe,europe is going to go into recession. it's ricocheted through the economy in ways wedidn't expect. this is what's going to happen with batteries, too. so, yes, you will havethose same kind of impacts on opec, on russia. oil companies, suddenly demand for oil willdrop. they will have a lot of trouble. but also car makers. the same way that we've seenoil companies, the fact that they're having
so much trouble, really cause problems foreconomies on a large scale, what is it going to mean when google, apple, and tesla arethe new car companies of the world? when apple is producing the titan? when google--crowe: supposedly. levine: yeah, supposedly. tim cook, just byhappenstance, hired a thousand new engineers to work on this car.crowe: just a coincidence. levine: yeah, "we're just messing around withtechnologies, you know, we just do that." google has got its autonomous driving technology.what happens when silicon valley meets detroit? i think, this, again, will be something thatricochets through the global economy. it's going to hit car makers hard.
crowe: that also brings up a fascinating question.like you said, when we look at some of the silicon valley early entrance into this, like2009-10 times, one thing that silicon valley hasn't exactly been over years is been themost patient when it comes to vcs trying to get their money back and things like that.when it comes to developing a battery, or developing a major industrial product likea car, it's not like an app. it's not like a smartphone. and one of the things that'salways been a weird question for myself has been, do the people in silicon valley havethe patience to have something like this actually develop? because, like you said in the book,there is an immense, immense opportunity, greater than bill gates sort of opportunityhere. but does anybody have the patience to
ever go all the way through it? levine: yes and no. the vcs don't. but that'sbecause they're driven by these fast profits. they would like to be in and out within five years.crowe: right. levine: so, generally speaking, they don't.but the folks at google, the folks at apple, they think a little bit differently. so, yes,they're out for the almighty dollar and all that. but they're also mission-driven. so,these are folks, especially google, that would like to change the world. and this is a world-changer.it's a game-changer. it fits right into their mental framework. "what can i do," for example,"to solve climate change?" and, this is the way they see it. so, because of that, i thinkthey do have the patience. and i think we
are going to see an electric car out of apple. crowe: alright. well, i do want to shift gearsa little bit. the book is "the powerhouse." anybody who's interested at all in the batterytechnology should check it out. but, as i also said, you are a reporter for quartz,among various other things, and one of the big topics that you're always talking about-- i read your stuff a lot -- is the geopolitics of oil, energy, and the machinations of thatright now. and so, i wanted to shift gears and get your opinions on that as well. oneof the first questions that came to me was, in the world of oil, what to you is the mostfascinating story right now that has the potential for long-term change? aside from electrics,of course.
levine: we're watching it before our eyes,and that's the impact of shale. but not just shale, oil around the world. and this prospectthat we're in a very long period -- and by very long, certainly the rest of this decade,maybe the next half-decade -- in which oil prices may rise no higher than $70. and whenyou look at the fiscal break-evens of almost all of the middle east oil producing countriesand russia, that's too low. that's too low for them. crowe: right. provided that they don't makeany significant changes to the way that they're currently structured. levine: right. all things being equal, it'stoo low for them. so, putin especially, but
also the leaders gcc saudi arabia, kuwaitand qatar, and also khomeini in iran, they're kind of putting on this brave face, of, "we'reprepared to wait this out, we're going to stick with the strategy, we have the lowest-costoil in the world, it's going to the other players, the shales of the world and the brazil'sand the canadians, they're going to have to blink, they're going to have to cry uncleand shut down their wells, we're going to keep our market share. and we're going totinker around the edges, but by and large, we're going to be just fine." especially putinis this way. this, to me, is just so much theater. so,i don't know when, but, as long as relatively low oil prices are sustained, the harder itis for these places. there is some point at
which putin, russia can go no longer. everyoneknows their own comfort zone, their own breaking point. they don't telegraph what it is, butreally, the most interesting thing for me to watch is how low oil prices could shiftgeopolitics, and i mean power in russia and how countries are governed in the middle east,relatively soon. is it next year? is it the year after that? is it 2019? it will, it'svery interesting. what is the hard and fast rule of politicians everywhere all aroundthe world? they want to stay in power. crowe: right. levine: it doesn't matter if you're the dogcatcher or if you're the president of russia. so, at some point, putin is going to understand-- his people aren't going to give up on him.
of course, they'll stay. but the country isjust, the finances are going to go to hell. so, he's going to have to institute reforms.and the kind of reforms he would institute would be positive. and i think they'd be positivefor everyone. crowe: well, certainly, there's a lot of americanoil companies that are very excited to get involved with russia again. in your previousbook, "the oil and the glory," it's kind of highlighting the caspian sea oil boom thatwent on back in the mid-90s, early 2000s, and the development up to that, trying toget involved with that. and it's had some mixed results. we have projects like the kashaganproject in kazakhstan that has not quite turned out for the players like exxonmobil. but,certainly, with the potential that is available
left in russia, i can certainly think thatthere's a lot of companies who are still really itching to get involved there. and, last two questions to wrap up here -- you'vewritten books, like i said, "the oil and the glory," the gold rush or oil rush of the caspiansea. you also wrote a story of basically life in putin's russia, highlighted by variouspeople in the country, and now batteries. so, with that rather diverse swath, what isreally peaking your interest right now for the next big story? levine: of course, i'm following the americanpresidential election. it's incredible. but, just in my own space. i'm very interestedin -- you've heard, we've all heard and read
about how geography impacts geopolitics. whereyou are geographically and the seas around you and so on. i've become very, very interestedin how geology affects geopolitics. it's a long story, it's too long to explain in afew minutes. i wrote a little bit about it last year, but the fukushima earthquake, theoil story that we're watching right now, is frameable as a geology story, that saudi arabiahas declared war on american geology. it's a war between saudi geology and american geology.and, by the way, saudi arabia has pivoted, and its pitted its geology against iraniangeology. it's sort of a very deep-seated framework, where you can kind of understand what's thestrength of a country, and what's the weakness of a country, too.
crowe: that does sound very interesting, andhopefully, maybe sometime, when we have another book on it, we'll have you back in here forthat. last question, this is actually pulling from a famous investor, peter lynch, one ofthe things he always did when he talked with management and things like that, he alwaysasked, who were some management people that they really look forward to? but since we'rein the journalist, writer, author realm, i'll shift it. when you're reading or developingstories here, or maybe just trying to better understand what's going on in your own world,who are some of your favorite authors, journalists, maybe publications that you're really lookingat? levine: as you might suspect, i read the majorsevery day. i read the financial times, the
wall street journal, and the new york times.they're so superb and just thick with stuff. and i think some of the writers at those publications-- ed crooks from the financial times, for example; izabella kaminska, who writes onthe ft alphaville blog, is very good. and, i use twitter, i go through my feed and ... iget completely caught up by going through there. i think the new yorker is very, verygood. authors, robert caro, in my opinion, is hands-down the best nonfiction author thatwe have. i read everything that michael lewis reads. crowe: definitely a motley fool fan here,michael lewis. he's been actually been in the office a couple times. levine: yeah. and you know where i'm gettinga big kick right now? science fiction. i read
this story about how, in silicon valley, thatthe technologists out there, generally, regard themselves as world-beaters when it comesto engineering and all of that, but, creatively, zeros. so, they've started to hire sciencefiction writers to be on their staffs. crowe: whoa! levine: and they provide them a framework,sort of a way to think, about the future. "in your imagination, what are you thinking,where is technology going? where should it go?" and it kind of gives them a piece thatthey're missing, and the added advantage in that very, very competitive environment. andi'm finding that this genre of fiction is inspirational, in terms of writing, but alsojust in terms of loosening yourself, myself
up, in terms of understanding what i'm lookingat, and being willing to be a little bit more risk-taking in terms of where i think thingsare going. crowe: awesome! well, steve, thank you verymuch for your time today. that was steve levine, he's the author of "the powerhouse: insidethe invention of a battery to save the world." i always get titles messed up when i say thingslike that. thanks very much for being in here today. levine: thank you. crowe: if you have any questions for the motleyfool, you can always contact us at focus.fool.com. just like always, we love your questions.and, as in every other podcast, the motley fool may or may not have formal recommendationsfor or against any companies that were mentioned
on this, although there weren't many today.thanks for listening, we'll see you next week.
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