Battery Gigafactory boss: We will reduce cobalt consumption by half and build a R&D centre near Bratislava

20th February 2020

This article is a translation of the interview published by Dennik E on February 19th. A new battery R&D centre…

This article is a translation of the interview published by Dennik E on February 19th.

A new battery R&D centre between two companies, Slovakia’s InoBat and America’s Wildcat, will be built near Bratislava for one hundred million euros and a gigafactory for one billion is planned near Košice.
Management of the Slovak-side of the project is also negotiating to extract lithium from a Czech mining company.
They are also discussing a joint venture for recycling of old batteries with promising new technology.

The Slovak project InoBat Auto and the Swedish Northvolt are the only two European battery facilities in development that are not backed by Asian investors.
Key co-investors of the project include the Rosina’s, from Matador Group, and Czech investor Jaroslav Strnad. There are also ongoing negotiations with two other big investors from the Czech Republic and Hungary.
Until now, billions of Euros in investments have only come to Slovakia through large multinational auto manufacturers. However, investment banker Marián Boček is now bringing an investment of EUR1.1bn euros to Slovakia. He spent 17 years abroad, working for global banks and foreign governments.

He has been involved in deals with a total value over EUR10bn. Initially, at home in Slovakia with his investment group IPM, he invested in the stars of the Slovak startup scene, including Aeromobil and GA Drilling. Today, together with American company Wildcat Discovery Technologies and global investment group Koch Industries, their new joint company InoBat Auto is going to build a R&D centre and a large-scale battery production factory for electric vehicles.
In an interview for Dennik E, Marián Boček discusses:
the benefits of the project and how he wants to eliminate its risks;
whether the project will require State aid also for the gigafactory;
which carmakers he considers to be potential offtakers;
what future he sees for hydrogen cars;
why he returned to Slovakia.

DE: How did you persuade the American company Wildcat to come to invest in the development and production of electric batteries here in Slovakia?
MB: It was a matter of personal connections. Our colleague from IPM management, Peter Gajdos, was one of the first investors in Wildcat. I’ve known Peter for 30 years, and he also has vast experience in global business. Thanks to Peter, we looked at how we could use the know-how of the American company here in Slovakia. Our country is very convenient for such a project because of its geographical location. Within a few hundred kilometres, there are at least nine global car manufacturers. This greatly reduces logistics costs while securing battery supply. There are also many very skilled engineers in the industry. But Wildcat is also coming here because its management is already quite frustrated with the funding models that are currently running back in the US.

DE: How is your funding better than in in the US?
MB: The entire American innovation sector is currently frustrated by the fact that investments are mainly driven by funds that only want to quickly cash out of their investment. Funds are not looking for a long-term strategic dimension, like we want to do in our Slovak project. Wildcat has already invented several improvements for the battery business in laboratory conditions and we are now going to transfer them to large-scale industrial production in Slovakia.
A New Wind in E-Mobility

DE: What are your development goals? What do you want to improve about batteries?
MB: One of the limitations of e-mobility, perhaps, is that electric vehicle manufacturers today have to adapt their car design to the battery market’s offerings. Car models must adapt to batteries. It is practically impossible to find a battery manufacturer with a “tailor-made” product today.
One of the main challenges of our new Slovak project is to reverse this situation. The uniqueness of the Wildcat technology that we use lies in the fact that it can produce car batteries according to customer requirements.
In practice, it will mean that the car manufacturer enters the requirements for the battery system – capacity, performance, shape or weight – and we will propose solutions. We will offer batteries for electric vehicles that are still in design process. This is similar to the way a digital camera came to the market.
Of course, our batteries will be premium. We will offer them mainly to the similarly premium car makers. Thus, one of our great advantages is Wildcat’s extensive experience.

DE: What sort of experience do they have?
MB: Wildcat has been involved in this sector for 12 years. During that time, Wildcat conducted more than 225,000 experiments and completed more than 80 projects for its customers. They cooperate with companies such as BMW, Daimler, Toyota, Samsung Electronics and BASF.

DE: Can you mention further innovations?
MB: Our project will eliminate today’s fundamental problem in the European Union in the field of electromobility, which is the lack of technological sovereignty. The current situation is alarming in strategic and security terms. The European Union is losing its sovereignty in the field of intellectual property rights for the production of battery cells. All we have to do is look at the Central European billion-dollar investments of Asian producers. LG Chem wants to build a battery cell plant in Poland and another Asian investor, SK Innovation, wants similar facility in Hungary. Without European patents, Europe is at risk of becoming a ‘workshop’ for Chinese and Korean producers. But InoBat Auto will have its own European patented solutions.

DE: To what extent do Asian producers dominate planned European battery production?
MB: There are 10 such factories being planned in Europe at the moment. But only two of them will have European intellectual property rights. These are Northvolt in Sweden and InoBat Auto in Slovakia. There are fewer concrete plans for new projects in Varta, Germany and Safta, France. However, their benefits aren’t clear yet. The European Commission estimates that 20 to 30 battery gigafactories will have to be built in the EU to meet the needs of automakers. It is already known that by 2023, the demand for batteries for European auto makers will 5 times exceed the production capacity of all EU producers
Bratislava and Košice

DE: When will the construction on the R&D centre begin?
MB: We’re investing the first EUR100mil Euros not only in a new R&D centre, we’re also building a pilot line to test new developments. Construction of the first phase is to begin in the second half of this year, with the first batteries being produced in 2022.
The pilot production line will have a capacity of 100 MWh. It will produce 1500 battery modules a year, or in other words, 400,000 battery cells. We are already finalizing the documentation for purchasing the land and the construction of the R&D centre itself as well as the pilot line.

DE: Where exactly will the new R&D centre be located?
MB: It is within 40 km from Bratislava. We want to be close to the airport and the capital, which will also be more attractive to many foreigners working for us. The project will also attract specialists from abroad.

DE: As you already mentioned, you want to be as close as possible to car manufacturers. Plus, you definitely want to be near the highway. Will the new development centre be somewhere along the highway towards Trnava and Nitra, where Peugeot and Jaguar Land Rover have their plants? Perhaps, somewhere in the area of Voderady?
MB: More or less. Something like that.

DE: And when will you build the gigafactory?
MB: The realization of this phase depends on the positive feedback from customers in the first phase. But the construction of the factory is estimated to take place between 2022 and 2024.

DE: Can you describe the new battery manufacturing plant in more detail? A EUR1bn investment budget is very high.
MB: Currently, it is too early to talk about specific parameters. All I can say is that its production volume will be 10 Gigawatt-hours per year. The operation will also be significantly automated. Thanks to partners such as Matador and Manz, who are pioneers in robotics and leaders in the production of automated production lines, we are considering the most advanced technologies.

DE: You have already mentioned that a new factory is going to be built somewhere in the east of the country. Where exactly?
MB: We are looking at an interesting vacant industrial site near Košice.

DE: Haniska Regional Industrial Park?
MB: (laughs) That is one of two options.

DE: Are you looking east due to higher investment incentives and lower salaries?
MB: It is more motivated by the fact that there are amazing R&D and human resources in Košice. Košice Valley is not just a marketing term, it is a very real asset. They have well-qualified people at the universities as well as in its development. Maros Halama and Andrea Fedorkova are world-class experts in electric vehicle batteries, who also advise car manufacturers such as BMW. We’re going there because of the people.

DE: What investment incentives do you hope to get from the government for this larger project, since the government has already allocated EUR5mil euros to the R&D centre?
MB: The first step is the R&D centre, so it’s too early to comment on the larger project. However, given the strategic importance of InoBat Auto, it would be quite natural that any government will be able and willing to support such a project.

DE: If the Slovak government doesn’t support the factory, is it possible that you would eventually build it in a different country?
MB: Interestingly, some neighbouring countries are already showing interest in our project. In any case, our model is replicable in other countries, too. The European Investment Bank itself is looking at InoBat Auto to see if similar factories could be established in different European countries. Indeed, estimates show that by 2040, Europe will need up to 100 gigafactories for battery production.

DE: So, is it possible that you would build factories in other European countries, too?
MB: There is space for others, but I wouldn’t want to get ahead of myself. Our priority is the first gigafactory in Slovakia.
They won’t pollute the country

DE: Battery production is also quite environmentally demanding. How do you aim to ensure that the country does not have to worry about environmental risks from the production?
MB: Of course, materials such as lithium, cobalt, manganese, or nickel are commonly used in battery production. Thanks to the technology partner Wildcat, however, the production will use a lower proportion of cobalt; up to one half. This ultimately has a significant positive impact on the environment and social life of the countries where this raw material is extracted.
Of course, our production will have to meet the highest safety standards with an emphasis on preventing environmental risks. Our project includes, for example, a recycling policy plan. We will not be launching thousands of car batteries into the world, knowing once they are no longer usable, they will harm the environment. We also plan to use renewable energy sources for production.

DE: From your perspective, how can we have a really sensible approach to battery recycling?
MB: We are already discussing this with a strategic partner south from Slovakia. The company has the technology for hydrometallurgical destruction of batteries to their basic chemical elements. So, it is a similar project to Wildcat where we transfer good ideas from the laboratory to real life. This would be another facility, valued at around EUR40mil.

DE: Do you already have a clear idea of which carmakers could be the key offtakers?
MB: I believe all of them will be. We also believe that our investment will contribute to making Slovakia attractive to the global automotive industry by offering custom-made batteries. In addition to our project, there will also be significant scope for engaging the R&D capacities of our universities and the entire academia. Our project can lead to the return of Slovak scientists to Slovakia as well as attract other world-class expertise to come here.
Attracting more partners

DE: This is a huge project. How can it be financially covered by smaller companies like Wildcat and InoBat?
MB: We have already made good progress concerning the financial coverage of the first phase of the project valued at EUR100mil. We are not alone in the project. IPM alone has EUR1bn in assets under management. The regional engineering groups Matador Group and MSM Group have invested in InoBat Auto and we are now negotiating with two other top players from the Czech and Hungarian industrial scene. They could join the project in just a few weeks. We are discussing debt financing with the European Investment Bank and Slovak Investment Holding. Development finance should be fully covered by the beginning of the summer.

DE: How do you envision the final co-ownership structure of the project?
MB: Wildcat will retain a minority position. The majority of shares will always be held by Slovak co-owners. We are continuously looking for other investors from the Central European region. We want to remain a European company. Production lines are also supplied by a German company. We are even considering capital investment in a new Czech lithium mining project in the Krušné Hory. Our entire supply chain will be as European as possible. We want raw materials that we can buy here in Europe.

DE: Aren’t you afraid that the boom in building new European battery factories will be overstretched and the factories will face financial problems?
MB: There are two factors that play in our favour regarding this risk. First, we will be one of the first producers and secondly, we offer custom made batteries. This distinguishes us from competitors who offer mass production of catalogue batteries. We won’t ever be just a production line, but production linked closely linked to R&D. Even if market dilution occurs, we will be among the best survivors.
The coexistence of electromobility and hydrogen

DE: At InoBat, you are also working on the development of hydrogen powered cars. When do you think the first models of cost-effective hydrogen cars will be available on the market?
MB: At InoBat, hydrogen is still only in an experimental phase. I see hydrogen as particularly interesting for trucks, buses and trains, because today’s batteries are not sufficient in terms of energy density. However, the limitation of hydrogen is the refuelling infrastructure. Compressed hydrogen is simply a dangerous thing. A hydrogen station in Norway has already exploded. Therefore, the question of how to get it into cars using liquefied hydrogen is being investigated. I think hydrogen cars will be a reality in passenger transport in the next 5 to 10 years. Today, electromobility is a decade ahead of hydrogen in science and research. That’s the reality of it.

DE: Some people say that hydrogen cars, thanks to longer range and faster refuelling, will eventually push electric cars out of passenger transport. Do you think that this is correct? Or do you think both types of cars will coexist in such a way that electric cars will serve more for urban transport and hydrogen will work for longer distances?
MB: Electromobility won’t be replaced by hydrogen. Hydrogen will just have more use in freight transport or buses. This is also likely because the range of electric vehicles is still expanding.

DE: Will electric cars eventually have a range of 1000km on a single charge, like we are used to have with internal combustion engines?
MB: That depends on battery chemistry. The distances will surely be extended from the current 500km or so. We are working on it with Wildcat.

DE: What do you think of analyses that suggest that because of population growth, the current 1 billion of traditional cars will remain in 2040, and electric or hydrogen cars will only make up about 600 million cars?
MB: It is an unequivocal fact that when we compare the energy density of petroleum and batteries, petroleum density has up to 500 times higher energy density. Gasoline will still be used in cars and airplanes, switching to electric vehicles is clearly driven by politics and ecology.

DE: What do you say about the fact that British politicians are now claiming that in 2035 no new combustion engine cars will be sold in its territory?
MB: To be honest, that would be great for us. This is a chance for more gigafactories and an opportunity for our InoBat Auto in Britain. We could start another production project there.

DE: But can’t electric vehicles end up similarly as biofuels from cereals and oilseeds? They also experienced great peak at the turn of the century and were supported by politicians as well as environmentalists. But today, the are limited to 70% blending in gasoline and diesel.
MB: Electromobility is different from biofuels. Electric vehicles have clearer support and batteries have been developing for years. They are not entirely new, like biofuels. We have been using batteries in many devices for a long time, and now it is time for them to be used in cars. It’s just the natural evolution of the battery business.

DE: What kind of car do you have?
MB: I have a hybrid Lexus.

DE: l You will probably switch to an electric car next time.
MB: Definitely! And of course, I will buy a car with our InoBat batteries.

DE: For marketing purposes, you won’t be able to have any other car.
MB: (laughs) I believe that it’s not too long before our premium batteries will be available le in really attractive cars, but I don’t want to overstate since we’re still in negotiations.
Doing something at home in Slovakia

DE: You were working abroad for a long time. Why did you return to Slovakia?
MB: I wanted to be able to do important projects like InoBat Auto here. I have been involved in starting several projects around the world, which put them on the map in the business world. Now I want to repeat the same back home. InoBat will certainly be a strategic enterprise of pan-European importance.

DE: What projects were you involved in?
MB: I worked for the World Bank or the French government, my colleagues and I have done several really crazy projects. We built the first wind park in Jordan with an output of more than 110MW, the first private power plant in Pakistan, a power plant in the Chilean desert Atacama, which now supplies electricity to large cooper mines there. With these projects, I understood that value is not in buying and selling companies, but in creating them. Now I want to build something very beneficial and unique in Slovakia. I returned home five years ago to create a very successful fund to support Slovak ideas that could become world-class.
I also did well in America. But when I read Dennik N or Sme, what was happening here pulled me home. I returned and brought along other successful Slovaks. They are all extremely talented people who, just like me, believe that we will put Slovakia on the world map. Another reason was that even if you’re successful abroad, you are still just an immigrant.

Marian Bocek (37) – A native of Ružomberok, Slovakia, Marian is a Co-founder and Managing Partner of IPM, an investment and consulting company based in London and Bratislava. Besides InoBat, IPM has also invested in several innovative Slovak companies such as GA Drilling and Areomobil. Marian gained experience in investment banking at InfraMed, Nubuke Investment, and the International Finance Corporation. He has worked on deals in Asia, Europe, Africa, and Latin America. He specializes in energy and high-tech development. Marian started his career at Lehman Brothers in New York and is a graduate of the University of Cambridge, where he frequently returns as a lecturer.

About IPM Group
The investment group of Marian Bocek focuses mainly on supporting infrastructure and technology projects in the field of energy, mobility, and artificial intelligence. It has been operating on the market for five with already over $1billion in assets under management.
Its portfolio includes LNG terminals in Dunkirk, France, Chile, hospitals in Turkey, and solar parks in South Korea. In Slovakia, it has established a waste management fund as well as technological companies Tachym, ESS and GA Drilling. In addition to managing private investments, IPM also manages finances for Samsung, Korean pension funds, and Slovak Investment Holding. The IPM Group also co-invests in joint ventures with reputable investors such as Bill Gates’ Breakthrough Energy Ventures, SoftBank, and Koch Industries.
IPM has offices in Bratislava, London, Seoul, San Francisco, and Hong Kong. It employs more than 30 investment professionals.

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