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The mysterious story of the battery startup that promised GM a 200-mile electric car

At the end of November 2012, Atul Kapadia and Sujeet Kumar hosted the staff of their startup company for a holiday lunch of Mexican food at a Palo Alto, California restaurant. For days, the pair—the CEO and CTO, respectively, of a lithium-ion battery company called Envia Systems—had awaited an email from General Motors.
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It was to contain a deal rare to an industry newcomer—a contract worth tens and possibly hundreds of millions of dollars to provide the electric central nervous system for two showcase GM models including the next-generation Chevy Volt. Untested small suppliers almost never get in the door of the world’s major automakers, which regard them as too risky to rely on. But GM was won over by what seemed to be the world’s best lithium-ion battery—a cell that, if all went well, would catapult the company to a commanding position in the industry with a middle-class electric car that traveled 200 miles on a single charge and rid motorists of the “range anxiety” that disquieted them about such vehicles. GM would have the jump on the high-end Tesla S, the only other major model with that range but one that would cost much more. For Envia, the contract could lead to an IPO that would make both men rich.
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But the talking had gone on so long and with such uncertainty that neither man had even told Envia’s staff scientists of the impending deal. Even if they felt more confident, they could not have said anything, since such news could affect GM’s share price. Word had leaked around the Envia lab anyway. An edginess hung over the lunch.
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Kapadia’s cell phone rang as he drove back from the holiday party. It was General Motors: Senior management had finally signed the documents. They were on their way by email. Kapadia turned off the phone but tried not to let on.
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Back at Envia, situated across the bay in the industrial city of Newark, company employees gathered in the conference room for a regularly scheduled office meeting. Kapadia stood before some papers. He said it was the company’s first licensing deal, one involving the biggest and most prestigious possible customer of all—General Motors.
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“Just to let you know this is not my achievement. This is your achievement,” the CEO said. “And I am signing on behalf of you.” The room erupted as Kapadia bent over and initialed the papers. Envia’s three-dozen scientists and business staff sounded like 200. They cat-called and screamed. The administrative staff jumped up and down.
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A year later, the deal is in tatters, GM has accused Envia of misrepresenting its technology, and a document suggests why the carmaker may be right. The startup’s unraveling is a blow for GM as it transitions to a new regime next month under CEO-designate Mary Barra, setting back its ambitions in the potentially gigantic future electric-car industry. It also risks making Envia, the recipient of several small federal grants, another punching bag for critics of US government funding of advanced battery companies.
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Envia meanwhile is mired in two angry civil suits and the two executives are at daggers drawn, with Kapadia accusing Kumar of fraud and intellectual property theft, and Kumar dismissing the allegations as the rants of an ousted executive who performed badly. Envia “was an illusion,” alleges Michael Pak, the plaintiff in an IP theft suit against Kumar. “While the illusion is there, you can sell the company and run away. But illusion doesn’t last forever.”
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The Great Battery Race

Four years ago, the US and China set in motion a race for dominance of electric vehicles. At the cusp of two crises—the collapse of Detroit and of the global financial industry—lithium-ion batteries and electric cars seemed among the likeliest chances for driving the kind of fast economic growth that the high-tech and semiconductor industries had led in the past. President Barack Obama declared that the US would have one million electric vehicles on the road in 2015, and China vowed to accomplish the same. Both envisioned besting Japan, which had established an early lead with Toyota’s Prius, along with consumer-product juggernaut South Korea.
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Central to Obama’s calculus was the creation of a lithium-ion battery manufacturing industry, an aim that Congress primed with $2 billion of direct stimulus grants and an additional $400 million for Arpa-E, a funding unit for frontier innovation within the Department of Energy. First invented in 1800, batteries are an old technology, but the financial stakes should anyone crack their confounding physics have resulted in waves of unusually motivated scientists, industrial leaders and politicians. A breakthrough in batteries could not only allow cars to go farther, but smartphones and emerging wearable devices such as smart watches to last longer, and solar and wind generators to better store the power they produce.
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Obama at Argonne National labs
Obama had a Chevy Volt behind him when he made the case for more federal funding for electric car research at the Argonne National Lab in March.Reuters/Jason Reed

Seeming to effortlessly navigate the bewildering juncture of big science, big business and big geopolitics, Envia was a showcase success for Arpa-E. It was one of the most promising of a clutch of electric-car battery startups that won federal grants, and the GM deal was one of the highest-level endorsements possible for its technology.
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This story is the product of dozens of interviews that I conducted with Kumar, Kapadia and their staff members over the last two years, in addition to the lawsuits filed in recent weeks.
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An immigrant’s story
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Kumar, the Envia CTO, grew up in the eastern Indian city of Patna, the pampered youngest son of a civil engineer. Frequent blackouts meant that Kumar studied by kerosene lamp at night, and when he was accepted to a doctoral program in materials science at the Rochester Institute of Technology, it was the first time anyone in the family had studied abroad. Kumar describes arriving penniless in New York in 1990 on his way to a full, four-year scholarship, a $1,000-a-month stipend and a series of campus jobs.
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Sujeet Kumar Envia CTO
Envia’s Sujeet Kumar Photo by Michael RouthMichael Routh/Dream Chaser Media

When he graduated in 1996, Kumar’s only offer was in Silicon Valley, where he became the first employee of NanoGram, an East Bay battery-and-electronics development startup. A decade, some cashed-in stock options and a few changes-of-hands later, he was hired to lead a development team from scratch at NanoeXa, a lithium-ion battery startup founded by Pak, a South Korean-born entrepreneur. Those who knew Kumar found him to have an intuitive grasp of electrochemistry. And, in an industry characterized by an unusual degree of exaggeration, he was “a man of his word,” according to a scientist who met him at the time. “He would do what he said.”
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The first task was to find potentially winning intellectual property around which to build NanoeXa. When it comes to innovation in battery development, there are three main options—you can improve the anode, the cathode or the electrolyte. The anode and cathode are the negative and positive electrodes between which the lithium shuttles, the act that creates electricity. The electrolyte sits in the middle and facilitates this shuttling motion. The ideal battery will first hold a lot of lithium and then send as much as possible of it into the shuttling motion without causing the especially sensitive cathode to collapse. If you can do those two things, your car will go a long distance.
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An additional plus for electric car batteries is the ability to draw out the lithium fast—that is the power that allows a driver to speed up immediately on depressing the accelerator. But these traits tend to work against each other—you can pack in a lot of lithium, but only draw it out of the two electrodes slowly, which means that you can drive non-stop between New York and Washington, but may be in trouble if you need to quickly maneuver out of someone’s way. Or you can choose the alternative—you can generally accelerate fast, but go only a relatively short distance on a single charge. On top of these features, you would like your battery not to catch fire, a non-negotiable requirement, especially when it comes to consumer batteries. That is where the electrolyte comes in—depending on the additive, it can reduce the tendency for the volatile technology to burst into flames.
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NanoeXa aimed its IP search on the cathode, where the easiest performance gains are achievable since they still have far to go to catch up to the capacity of the standard graphite anode. Kumar and the company’s early team perused patents and journal papers and consulted experts before settling on a promising cathode invented by Argonne National Laboratory outside Chicago. The cathode combined nickel, manganese and cobalt into an exceptional composite that astonishingly had not attracted a single licensee. NanoeXa became the first customer for the chemistry, which is called NMC for short.
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What Kumar noticed was that NMC possessed all the necessary traits. Workhorse batteries based on lithium-cobalt-oxide chemistry—the type contained in most AA and laptop batteries—deliver around 150 milliamp-hours of specific capacity per gram (a measure of how densely they can store electricity). But Argonne researchers had managed at lab scale to push an exotic formulation of NMC to 250 and even 280 milliamp hours per gram, a 66% jump. The composition also provided pep—the lithium could be shuttled fast. And, made with manganese, NMC is one of the safest lithium-ion formulations; lithium-cobalt-oxide is much more prone to catching fire.
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When you license an invention from a national lab, what you generally receive is not a working technology but rights to a relatively raw, bench-scale patent that must be built up into a commercial product. That was what NMC was—it needed to be optimized in the lab. But, all in all, Argonne’s NMC composite seemed to be a top candidate to enable an electric car that could begin to compete with the economics of incumbent gasoline-fueled vehicles.
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