Welcome to the 124th edition of Deep Tech Catalyst, the educational channel from The Scenarionist where science meets venture!
This week, I sat down with Anil Achyuta, Partner at Energy Impact Partners, for a practical look at the battery sector from the perspective of founders building across the value chain — from materials, cells, manufacturing processes, and packs to grid storage, EVs, and robotics.
We explore why battery startups are difficult to build in a capital-efficient way, how demand is shifting across end markets, what makes cell manufacturing so industrially demanding, and why a promising material is rarely enough unless it can survive scale-up, qualification, and real customer adoption.
Key takeaways from the episode:
⚡ Grid Storage Is Becoming Central to Battery Demand
The growth of renewables, and AI-related electricity demand are making storage increasingly central. Renewables without storage remain an incomplete equation, which creates a market pull for batteries.
🏭 A Gigafactory Is Not Just a Bigger Lab
Moving from bench-scale performance to cell manufacturing changes the nature of the company. Founders must confront capex, opex, manufacturing lines, repeatable processes, and the ability to produce the same cell reliably at industrial scale.
🧩 A Better Material Still Has to Work Inside the Full System
A new anode, or cathode cannot be judged in isolation. It has to fit into a full cell architecture, work with the rest of the stack, and prove that performance survives cell manufacturing, repeated cycling, and OEM qualification.
⏳ Qualification Cycles Shape the Adoption Timeline
Even strong battery technologies can face long adoption timelines, especially with automotive OEMs. The issue is not only whether the technology works, but whether the company can generate credible technical and manufacturing proof while waiting for industrial qualification.
🎯 Founders Should Think Scale First
For battery startups, small-format success is only the beginning. Investors and customers want to see evidence that the technology can move toward meaningful cell sizes, credible manufacturing pathways, and markets with real demand pull.
BEYOND THE CONVERSATION — STRATEGIC INSIGHTS FROM THE EPISODE
The Battery Market Is Being Rewritten by Demand, Not Chemistry Alone
The battery market is shaped by chemistry, materials science, manufacturing capability, and electrochemical performance. But before any of those dimensions can become investable, there has to be a strong enough market pull. Without demand, even a strong technical breakthrough can remain trapped at the level of promising experimentation.
Batteries sit inside larger industrial systems. They are an input into electric vehicles, grid storage, robotics, consumer electronics, defense systems, and many other applications.
This matters because different markets move at different speeds.
They have different qualification requirements, different cost sensitivities, different safety expectations, and different levels of tolerance for new technology. A breakthrough that looks compelling in one application may be irrelevant, too expensive, or too difficult to qualify in another.
Grid storage
One of the clearest sources of demand today is grid storage.
The reason is structural. Power systems are under pressure. AI-related energy demand is growing. Grid upgrades are becoming more important.
Countries and regions around the world are building large amounts of renewable energy, and renewables create a basic systems problem: generation does not always arrive when demand needs it.
Batteries become part of the infrastructure that makes renewable power more useful, and more compatible with the needs of a modern electricity system.
For founders, this creates a different kind of market environment.
However, utilities and grid operators can be slow-moving customers. They care deeply about reliability, safety, and long-term performance. But the underlying demand is real, and that matters.
The EV market has become more complex
Electric vehicles remain one of the largest battery demand pools in the world.
The reason is obvious but important: cars require a lot of battery mass. A vehicle can carry hundreds of kilograms of batteries, which means automotive demand creates enormous volume.
When the EV market accelerates, it can pull the entire battery value chain with it, from raw materials to cells, packs, battery management systems, and manufacturing equipment.
But the EV market has also become more complex. Many automakers have explored verticalizing battery manufacturing by bringing it in-house, with the goal of reducing costs and making EVs more affordable at scale. However, a changing policy context and market environment have made some automotive players more cautious.
Robotics is growing fast
Robotics is one of the most exciting emerging demand areas for batteries.
The category is expanding across many forms: delivery robots, sidewalk robots, autonomous systems, lawnmower robots, cleaning robots, specialized industrial robots, and humanoid robots.
That makes robotics interesting, but it’s not yet the same as automotive in volume.
Every Battery Market Has Its Own Performance Logic
In batteries, the right performance profile depends on the application. A consumer device, an electric car, a grid storage system, a drone, and a humanoid robot do not need the same thing from a battery.
Founders often think in terms of superior chemistry or superior materials. Customers think in terms of systems performance.
A founder may believe the company has a better anode, a safer electrolyte, a more energy-dense cell, or a lower-cost manufacturing process.
But the customer wants to know what that improvement means inside the actual product.
Does the car get more range?
Does the grid asset cycle longer?
Does the robot work for more hours?
Does the cost fall enough to change adoption?
Technical improvement has to translate into a use-case advantage.
Energy density, cycles, safety, and cost
When it comes to performance, electric vehicles offer a useful example.
One of the most important metrics is energy density.
At the simplest level, energy density determines how much energy can be stored per unit of weight or volume. In a car, this connects directly to range. The more usable energy a vehicle can carry without adding too much weight, the more attractive the vehicle can become.
But energy density is only one part of the equation.
Cyclability matters because batteries degrade. Founders and customers need to understand how many times a battery can be charged and discharged over its useful life.
Safety is another core requirement.
Batteries need to operate safely across different conditions, including high and low temperatures. A battery that offers strong performance but cannot meet safety expectations will struggle to earn adoption.
Power density adds another layer.
Some applications need to discharge power quickly, while others may prioritize different performance characteristics. Temperature performance matters as well, especially for systems operating in demanding environments.
Then there is cost.
Cost is not a secondary metric. It is one of the constraints that shapes whether a battery technology can become commercially relevant.
A battery can be technically impressive and still commercially weak if it cannot reach the cost structure required by the market.
In cars, for example, battery cost can represent thousands of dollars per vehicle. The broader vehicle cost then builds on top of that foundation. This is why battery cost has strategic consequences far beyond the cell itself.
Cell Manufacturing Is Where the Value Chain Becomes Industrial
The battery value chain begins with raw materials and extends through processing, active materials, electrodes, cells, modules, packs, battery management systems, and final integration into vehicles, grids, robots, or devices.
Each layer has its own technical requirements and commercial constraints.
This is important for founders because a startup may enter the value chain at one narrow point, but the market will eventually judge whether that point works inside the full system.
From lithium to cells to packs
A simplified view of the battery manufacturing process helps clarify why this market is so demanding.
Lithium first has to be extracted, whether from rock or brines. It then has to be processed and refined into usable forms such as lithium carbonate or lithium hydroxide. These materials enter the manufacturing chain and are combined with cathode active materials and other inputs.
The next step is electrode production.
Materials are mixed and coated onto surfaces through processes such as slurry casting. The coated material is then processed to create uniform layers, often through calendaring, which helps produce thin, consistent electrode structures.
The cathode and anode are prepared separately, with anodes commonly involving graphite and, increasingly, graphite-silicon combinations.
Those components are then brought together with separators and electrolyte. The cell goes through formation, where it is electrochemically cycled and prepared for use. Depending on the format, the cell may be rolled, packaged, tabbed, and assembled into its final form.
But the cell is still not the complete product.
Cells are assembled into modules or packs. Packs require electrical connections, mechanical integration, packaging, and a battery management system (BMS). The BMS acts as the intelligence layer that communicates with and coordinates the behavior of the cells.
Only then does the battery become part of the final system.
For a founder working on one material, one process step, or one component, this process creates a hard reality: the innovation has to fit into and perform across every downstream layer.
A gigafactory is not just a bigger lab
The move from laboratory work to manufacturing is not a linear scale-up. It is a different operating environment.
It requires capital, a manufacturing line, repeatable processes, and the ability to produce cells reliably in the same way over and over again.
One rough reference point from the conversation is that a 10 gigawatt-hour battery manufacturing plant in the US can require hundreds of millions of dollars in capital expenditure, before even considering the operating costs required to keep the facility running.
That figure is not meant to be a precise universal rule. The exact number can vary depending on the project, but it captures the scale of the challenge.
Battery manufacturing is capital intensive because the product is physical, the process is complex, and the market requires reliability at scale.
Owning One Breakthrough Is Not Enough
A team may develop a better anode, a new cathode material, a safer electrolyte, or a novel manufacturing process.
At the scientific level, the breakthrough may be real. It may show impressive performance in early testing. It may even look compelling in techno-economic models.
But batteries are systems.
A founder can be world-class at one component and still be forced to prove performance at the cell level. Customers do not buy an anode in isolation. They need confidence that the full cell will behave reliably and consistently inside the broader battery system.
This changes the company-building journey.
A better anode still has to work inside a cell
Take the example of a silicon anode.
A founder may have a strong technical thesis and compelling data showing that the anode improves performance. But that anode still has to fit into a cell. It has to interact with the cathode, separator, electrolyte, and manufacturing line.
The customer wants to know whether the new material behaves predictably in the full system.
Does the cell perform reliably?
Can it be manufactured reliably in the same way every time?
Does the improvement still hold once it is tested inside the complete battery system?
These questions are the reality of adoption. Every improvement has to be validated inside the system that will carry it to market.
The founder becomes a cell manufacturer without wanting to
This creates one of the most difficult capital efficiency problems in battery startups.
A founder may begin as a materials company. The company’s expertise may be concentrated in one part of the stack.
But to prove that the material works, the founder may have to build cells. To build credible cells, the company may need a manufacturing line, physical infrastructure, and process know-how.
Before long, a materials company starts behaving like a cell manufacturer.
This may not be the founder’s original strategy. It may not be where the company has the strongest expertise. But the market demands system-level proof, and system-level proof often requires physical infrastructure.
That is why battery startups can burn capital even when they are trying to remain focused.
The problem is that the proof required by the customer sits downstream from the original innovation. If the ecosystem does not provide enough external infrastructure to bridge that gap, the startup has to build more itself.
This is one of the reasons the battery sector is so complex.
A company can have a real breakthrough and still face a financing path that looks long, expensive, and dependent on manufacturing proof, customer qualification, and eventual volume.
The missing contract manufacturing ecosystem
One important structural issue discussed is the lack of a strong contract manufacturing ecosystem. A useful way to understand that gap is through an interesting parallel with the biotech sector.
In biotech, capital-efficient company formation became more possible because an ecosystem of contract manufacturers developed around the industry.
A startup did not always need to own every piece of manufacturing infrastructure from the beginning. It could rely on external manufacturing partners for parts of the development and production journey.
That does not make biotech easy. It is a difficult market with its own cycles, risks, and capital requirements. But the presence of contract manufacturing infrastructure changed what early-stage companies could attempt without owning everything themselves.
Batteries do not yet have an equivalent layer at sufficient depth.
If there were a broad network of contract manufacturers for batteries, component-level startups could potentially build in a more capital-efficient way. But today, that layer is not deep enough, and OEMs still need to test and qualify the battery themselves.
This is a structural issue.
If a founder could take a new material to a robust network of contract manufacturers, produce credible cells, and generate the data required for customers, the company-building path would look different. It would still be hard, but the burden of infrastructure ownership would be lighter.
In the absence of that layer, founders have to be much more careful.
They need to know early which parts of the manufacturing journey they must own, which parts they can access through partners, and where the proof of value actually has to occur.
Qualification, licensing, and economics
A battery innovation does not become valuable simply because the technology works. It becomes valuable when the market believes the technology can be adopted, manufactured, qualified, and delivered at scale.
That requires more than technical data. It requires a credible path through customers, production, financing, and time.
This is where battery companies often face long timelines. An important milestones may require years of testing, physical infrastructure, and OEM qualification.
For example, qualification cycles for automotive customers can be very long.
Even a strong technology has to prove that it behaves reliably and safely over time. OEMs need confidence that the cell will perform consistently, not only in ideal conditions but across real-world usage. They have to understand reliability, safety, manufacturability, and integration risk.
This process can take years.
The exact timeline will depend on the customer, application, chemistry, and level of integration, but the strategic point is clear: qualification is a central part of the adoption process.
Licensing often appears attractive in battery materials.
In theory, a company can avoid building massive factories by licensing its technology to larger manufacturers. The model can include upfront payments, milestone payments, and royalties over time. It can seem attractive because it appears to reduce the need for the startup to own the full manufacturing stack.
But licensing only works if the licensed technology reaches volume. Royalties depend on production. If volume does not materialize, neither do the future cash flows. Again, the major economic value often depends on adoption at scale.
Founders Should Think Scale First
One of the most important lessons from the episode is that battery founders should think about scale earlier.
This does not mean every startup needs to build a factory immediately. It does not mean every company should raise hundreds of millions of dollars before proving anything. It means the technical roadmap should be designed with manufacturing reality in mind from the beginning.
A founder cannot afford to treat scale as a later question.
Cell size matters
Cell size matters because it signals how close the company is to meaningful proof.
Coin cells and very small cells may be useful for early experimentation, but they are not enough to establish confidence that a battery technology is moving toward real-world relevance. Investors want to see progress toward formats that begin to resemble real-world relevance.
One amp-hour cells are still small. Moving toward five amp-hour cells begins to create a more meaningful signal. The number may vary by application, but the principle is that founders need to show that performance survives when the system becomes more realistic.
Defense, robotics, and grid
For some founders, the smartest path may not begin with the largest market. A startup may need earlier markets that generate stronger near-term pull, faster feedback, or more credible commercial validation.
Dual-use is one possible path.
In defense, customers may care deeply about speed, performance, reliability, and mission capability.
Some of these buyers may move faster than traditional automotive or utility customers. They may also value differentiated energy systems if those systems create a real operational advantage.
But the key is traction. Investors will want to see evidence that real customers are engaging seriously.
Grid storage can also be attractive, especially because demand is structurally strong. But founders have to recognize that utilities and power customers may move slowly.
Reliability, bankability, and long-term economics matter. The market pull is real, but the adoption process still requires patience and proof.
The broader lesson is that founders should not choose markets only by size.
They should choose markets based on where they can prove value, and generate credible customer signal. A smaller early market with urgent demand may be more useful than a massive market that takes years to validate.
The goal is to sequence ambition correctly.
The battery founder’s real job is to reduce industrial risk
To recap, battery startups are difficult because they sit at the intersection of science, manufacturing, capital, and adoption. A founder has to manage all four.
The science has to be real. The manufacturing path has to be credible. The capital plan has to match the proof points. The customer has to care enough to participate in the journey.
This is why the best battery companies are not built around technical optimism alone. They are built around disciplined risk reduction.
Every milestone should answer a specific question.
Does the material work beyond the lab?
Does performance survive in larger cells?
Can the process be repeated?
Can the cost structure support the target application?
Will customers test it?
Will they pay for it?
Can the company reach the next proof point without consuming more capital than the opportunity can justify?
The strongest founders will show why the technology matters for a specific market, how it fits into the value chain, what it takes to manufacture, where customer pull is strongest, and which proof points will make the company more investable over time.
That is the reality check.
Batteries remain one of the most important sectors in deep tech. The companies that succeed will be the ones that understand this early. They will think beyond the material, beyond the lab result, beyond the spreadsheet, and beyond the first customer conversation. They will build with the full system in mind.
