#252 The Big Battery Bill: What the OBBB Means for Batteries in America | Eric McShane (Electroflow Technologies)

In this episode, we talk with Eric McShane, co-founder and CEO of Electroflow Technology (backed by Breakthrough Energy Ventures). Eric is on a mission to revolutionize lithium production, a vital battery material.

We discuss the "Big Beautiful Bill's" impact on the battery industry and how Electroflow Technology's innovative approach addresses the critical need for domestic lithium production, especially given that "99% of this crucial battery material [LFP] is made in China." Eric shares how their unique process transforms brine into LFP, helping the U.S. become competitive again by "building real stuff" and using abundant low-concentration lithium brine resources.

Key Topics:

• BBB's Impact: The "Big Beautiful Bill's" role in boosting U.S. battery capacity and achieving self-sufficiency in materials like lithium iron phosphate (LFP).
• Electroflow's Innovation: Details on Electroflow Technology's unique method for transforming brine into LFP and its benefits.
• Go-to-Market Strategy: Electroflow's plan for market entry and key differentiators.
• Climate Tech Perspective: Eric's insights on being a climate tech founder and the excitement of "building real stuff."
• Future Goals: Electroflow Technology's objectives and plans for utilizing U.S. lithium brine resources.
• Get Involved: How investors and engineers can connect with Electroflow Technology.

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Chapters

• 0:00 Cold Open
• 0:41 Intro to the discussion
• 7:44 BBB’s Importance: Discussion on the significance of the "Big Beautiful Bill" for increasing U.S. battery capacity and achieving self-sufficiency in essential materials like lithium iron phosphate (LFP).
• 13:27 Electroflow's Innovative Process: Details about Electroflow Technology's unique method for transforming brine into LFP and its benefits.
• 24:34 Go-to-Market Strategy: Electroflow Technology's plan for entering the market and its main distinguishing features.
• 26:03 Climate Tech Founder Perspective: Eric McShane's thoughts on being a founder in the climate technology sector and the excitement of "building real stuff."
• 31:10 Future Objectives: Electroflow Technology's upcoming goals and how they plan to use the abundant low-concentration lithium brine resources in the U.S.
• 35:30 Calls to Action: How interested investors and skilled engineers can get involved with Electroflow Technology.

Transcript

Silas Mähner (00:00)
In today's episode, we are going to be doing a partial breakdown of the big beautiful bill.

Eric McShane (00:04)
We wanted to be part of bringing tech solutions to the world.

Silas Mähner (00:07)
Our guest today is Eric McShane, the co-founder and CEO of Electroflow Technology.

Eric McShane (00:13)
About 99 % of this crucial battery material is made in China.

Silas Mähner (00:17)
whether

or not you're an investor or founder in the battery space, it be very helpful for you.

Eric McShane (00:21)
Without

that supply, you can't really make the most affordable batteries in the US. The BBB is sort of like accelerating your need to make more domestic content faster. So in my opinion, think the way to become competitive again on the global stage is...

Silas Mähner (00:41)
Hey everyone, welcome to another episode of Clean Techies, the number one podcast for climate tech founders and investors to learn from other climate tech founders and investors. I'm Silas Manor, Clean Tech Head Hunter at Earth Tech Talent. And today I will be your host. So in today's episode, we are going to be doing a partial breakdown of the big, beautiful bill. Really rolls off the tongue, doesn't it? We're actually going to be breaking down specifically the part of it that pertains to battery production in the U.S. And our guest today is Eric McShane, the co-founder and CEO of Electroflow Technologies.

And the reason we're having him on is he had put together a really nice sub-sec article called the one big battery bill, which is a bit of a play on the bill, the bill name, obviously. And the reason he put that together is he actually found that there's a lot of the things that people were worried about. The credits that we were worried about getting axed have been slightly adjusted where there's still be there, but there's a lot more scrutiny on where the minerals come from for battery production if they're going to qualify for the credit. So.

these tax credits in short, you know, I won't spoil the episode, but a lot of them are not going to be applicable unless the material, the content of the batteries is mostly domestic. meaning from the US or from a specific trade partner. So what we do today is we kind of break down that article in a podcast format so that anybody listening can understand. whether or not you're an investor or founder of the battery space, this would be very helpful for you. If you do prefer to read, I will link the

the SUBSAC article in the comments as well, or in the description, so feel free to read it as well. But it is a really interesting episode and it's worth noting that just what he's doing and what Electroflow Technology is up to is they have developed a unique method of separating lithium from brine sources, even sources that are not highly concentrated. So typically you need a highly concentrated brine source to be able to get the lithium out. They can do it with a very non-concentrated source still efficiently. And on top of all this, their output is actually a product that is

very high quality, if I understand correctly, enough high quality that it can go straight into battery production without further processing. Whereas usually they kind of elevate the mineral to an extent, which then requires further processing before it can go into the actual battery production. So that's what he's up to. Obviously he has a vested interest in seeing this workout, but he did a lot of really great research and I thought it was very important that we share this. So I'm sure you're going to enjoy the episode without any further delay. Let's get into it. All right, Eric, welcome to the podcast. How you doing today?

Eric McShane (03:04)
Hey good, how are you doing Silas?

Silas Mähner (03:06)
I am fine as frog hair and I can say I'm probably a little bit jealous of the weather you have because I was just in that area I got back yesterday. So how are things in Stanford area?

Eric McShane (03:13)
Pretty good. Yeah, as you said, the weather's kind of the same every day. Always really nice. we just moved into a new facility as well within the area. So we're pumped about that. It's been a time of a lot of change.

Silas Mähner (03:24)
Yeah, man. It's really cool. mean, I had obviously been a big fan of tech for a long time, but I took my first trip to the San Francisco and Silicon Valley area and I was just enamored, man. was like, this is, these were all my legends. You know, the people I've looked up to have walked and have treaded before me and I'm super grateful to be there. So I can imagine, you know, being able to soak in that aura every morning is probably nice, but we won't, we won't delay too much in the intro here and talk about the weather. You know, we'll talk about weather in other ways today. Give us a quick intro before we, before we get too far into it about who you are and what you're working on today. And then, then we're going to go into.

this big battery bill article that you wrote.

Eric McShane (03:56)
Yeah, sounds good. I'm Eric. I'm a scientist by training. Did almost 10 years of academic research actually starting in undergrad and then going all the way to a postdoc. Broadly, I was researching batteries. So my first research position was trying to find better battery materials. Next research in PhD was really finding out why fast charging of batteries is so hard and what degradation modes there are during fast charging. And then really did love that. I fell in love with the research aspect of batteries.

And I went to do a postdoc thinking I would continue doing that kind of forever. I would go be a professor right after the postdoc. But instead went over to Stanford to do my postdoc and like quickly changed my mind. Like within a couple months of getting there, I learned for the first time kind of what entrepreneurship was. Sounds silly, but I really didn't know like what a startup was or what being an entrepreneur was. You get to Stanford and you're quickly enthralled by that sort of stuff. And it caught me as well. Caught the Stanford entrepreneurship bug. I was lucky to meet my co-founder over there.

who is a chemist by training, I'm a chemical engineer. And we just hit it off so well. Like you're saying Bay Area, you get to see like the future before it's the future already, like all these EVs going around, like everyone doing cool AI stuff. And we wanted to be part of like bringing tech solutions to the world. And so, you know, we got to thinking like, what has our skillset enabled us to do that's gonna really move the needle? And like I said, I was researching batteries. He's a really talented chemist that actually

One fact about Evan is he the record for most metals put in one nanoparticle using colloidal methods as a postdoc. So suffice to say, he's pretty smart. And we were like, where can we apply this knowledge we've gained? And converged on sort of a problem within batteries, but one that we thought wasn't getting enough attention at the time. It's the lithium problem originally. It's like, we know we need a lot of batteries, but like, what's like holding it back? Why aren't there more of these on the road already or batteries on the grid?

And we came to the conclusion it was kind of the materials that go into battery that are limiting. We needed enough materials at a price point that makes sense to make a lot of batteries. So they didn't teach like lithium mining 101 at Stanford, unfortunately. So instead of that, we were like, let's like find whatever information we can. We wanted to learn about it. So we kept sharing like podcasts and YouTube videos with each other after work every day and just learned as much as we could. Yeah. I've turned into like a voracious like YouTube watcher.

not much of a reader, at least YouTube watchers I can go through a lot. Yeah. Yeah. And so now like at Stanford, we like didn't have so much time beyond our like normal projects to work on it, but we at least like looked into it and developed like a tiny prototype for what we thought it could be. And now we spent out the company in late 2023 and been at it for a little less than two years and it's been an awesome journey. So hopefully that gives a place to start. I'm happy to talk through more about our journey as well.

Silas Mähner (06:43)
Yeah, absolutely. I think this is really good. in general, you know, kind of not necessarily plan to be an entrepreneur, but really influenced by Stanford and decided to kind of work in the area that you had a lot of expertise in at that point, which is in lithium space, which is a very interesting topic, obviously, today. I'm going try to frame this properly. So, you know, we're recording this on July 15th. This should come out this week, actually, so it shouldn't be too far, too laggy. But just recently, the big, beautiful bill was passed and

A lot of people in the clean tech space are obviously really worried about what this means for it. A lot of analysis being done about what it is. And then I came across your LinkedIn post, which is quite interesting. You reframed it that it's actually quite good for at least the battery space, right? And yeah, think you titled this article, you wrote one, what do call it? Big battery bill? think that's what you called it. So I wanted to, I think we should dive into this first, kind of help us break down what this is. Cause you've spent, know, according to you, you spent a lot of time understanding what it's all about.

Eric McShane (07:29)
Fed.

Silas Mähner (07:39)
and how it's going to actually, hopefully, help the battery industry in America.

Eric McShane (07:44)
Yeah, I think it's a very important bill. I think it was widely criticized as sort of hindering renewable energy deployments, which, you know, maybe the case a bit like it's going to slow down like solar and wind deployment, for example. But it's a forcing function, at least in the battery space to build battery capacity. And that means like the full stack of battery capacity from the raw materials all the way up to the battery cell in the U.S.

because otherwise, you know, we're going to be entirely dependent on the folks who can actually make the materials that go into batteries elsewhere and they can cut off that supply at any moment. So just dove really deep into it because, you know, it affects the space we're working in and always interested in this stuff. And about 99 % of this crucial battery material called lithium iron phosphate or LFP is made in China as it stands today. And that's the material that

is going to enable these mass market batteries for the future of all the applications of batteries, whether it's EVs, grid storage, drones, robots, you name it. And that's not a good place to be. 99 % is a big number. And if they cut off that supply, we can't really make the most affordable batteries in the US. We don't have the materials to do it. And the big, beautiful bill, or as I call it, the big battery bill, because of this, is going to force the US to actually build a self-sufficient supply of every material that makes up the battery.

So that starts from like the lithium chemical, then making the electrode material, LFP, to making the battery cells, et cetera. So I think it's extremely important that we actually do become self-sufficient in making batteries because there's, you know, national security implications among other things. And yeah, that's why I titled it the big battery bill and happy to dive into that a bit.

Silas Mähner (09:24)
Yeah, so breakdown, guess, again, you're have to explain this to me and to our audience, as if I know nothing and as if I'm five, right? Because we want to make sure this is really simple. So the premise here is that the IRA was going to get gutted, right? But in general, a lot of those things were not gutted. So can you just explain what were the core things that people were worried about when it comes to batteries and what are they titled, who does it affect? Let's start just with the actual kind of, I think if I'm not mistaken, it's the 45X credit. So you can kind of break this down for us.

Eric McShane (09:54)
Yeah, sure thing. Yeah, the 45x credits apply at the material level. So for lithium production at the electrode levels or LFP production, and then the cell level. So you get some credits for making the cell in the U S and then even the system level as well. But this was always the case, you know, in the original IRA, but what the BBB changed is that some of these credits, you know, sort of decrease in their favorability over time.

You had some sourcing requirements from domestic materials in order to receive these various credits before. And the BBB is sort of like accelerating your need to make more domestic content faster, which you could say that hinders the deployment because you have to make these potentially more expensive by getting more domestic content in the near term. Also, it's a huge forcing function to make materials that we need onshore or at least at

partners that have a trade agreement with the US. And so now with the BBB, one of the things I really focused on in the Substack article was that there's a new provision that requires you to have enough domestic content, even in the most upstream portions of the supply chain in order to qualify for later downstream credits. So for example, like a common loophole that might've been exploited before is that you can make

battery sell in the US and receive the credits associated with that for 45x. But then you could buy your active material from China and still qualify. And this is, for example, LFPs 99 % made in China, almost everyone would have had to do that to make these types of batteries. Now that's not allowed anymore. As of 2026, you got to have some domestic content in your battery. If you use, for example, LFP from China, you automatically are disqualified. Takes up about 40 % the cost of a battery.

Silas Mähner (11:46)
So is that if you have even just a tiny bit of LLP from China or if you have like, what's the percentage? Do they specify?

Eric McShane (11:53)
Yeah, it starts at 60%. That's the most sort of generous you need to know. Yeah. And then it gets more stringent over time. And like I said, the LFP cathode is about 40 % the cost already. So if you're LFP from China, you're automatically disqualified even in the near term. And it's going to get harder over time.

Silas Mähner (11:59)
60 % domestic.

And so you're saying that there is effectively no production of this in the US currently, is that correct?

Eric McShane (12:18)
That's correct. 99 % made in China. Yeah. Crazy thing about.

Silas Mähner (12:21)
So where are we going to find this from? I mean, obviously, you can maybe talk about what you guys are doing, but where do you see this going? Like if this is a requirement by 2026, right? People want to get access to these credits. Where are they going to get it from? Can it come from other places that are not China? Hey guys, Silas here. Quick interruption. If you're a founder similar to Eric and you're kind of a similar situation where you're scaling up your technology, cash is tight, but getting the right talent is also very, very critical. I'd love to discuss talent acquisition with you.

As most of you probably know, the way I actually pay the bills is I run a search firm called Earth Tech Talent, and we specifically place top engineering and sales talent at clean tech startups in the United States. And the best part is that we do this for roughly half of what other firms charge. So if you're growing your team and you want support from somebody who has been there for a while, I've seen kind of what makes or breaks a team. Reach out today. You can do so at earthtechtalent.com forward slash contact. That's earth with no A E R T H tech talent dot com forward slash contact.

and we'll have to chat with you about your needs. Just feel free to also give you any advice that I can. And if you guys are looking to work with a recruiter, glad to help you out there. All right, back to the show.

Eric McShane (13:27)
Yeah, so I think there are a couple of options. We could use the same processes or, you know, analogous processes that are used in China to make this material. But unfortunately, we don't have the scale. We don't have the know-how. It's going to be more expensive in the U.S. if we use exactly the technology used in China to make these materials. So in my opinion, I think the way to become competitive again on the global stage is we got to do a new way of making these materials. And that is kind of what we're trying to do at Electroflow, turns out. Electroflow, we've just recently developed.

a technology to start from the original lithium resource, the salt water that's naturally occurring called brine. And we can in three steps convert that to LFP. And it's completely different from how everyone else does it. The normal supply chain takes give or take 10 steps to go from like a salt water lithium resource to a cathode material like LFP. We've invented ways to condense this down to just three steps. And we think we can make the cheapest LFP in the world by using this technology.

Silas Mähner (14:24)
And so you've probably, I'm assuming you've proven this kind of on a bench scale and very small, but you guys need to scale up, that correct?

Eric McShane (14:29)
Yeah, that's right. And we're going to scale it up as fast as possible. But yeah, right now we're at more of bench scale.

Silas Mähner (14:34)
Yeah. So, okay, we'll be realistic about some of these things because I think it's I obviously love innovation, otherwise I wouldn't do this podcast. I wouldn't do this work. for anybody who's like, listen, we need massive production right now. Do you foresee where they might end up sourcing some of this stuff? there other options or people, other partners that are going to be able to bring this stuff in or that they can take their know-how and just plop it in the US and then ship in the minerals?

Eric McShane (14:59)
I guess one option is we could license technology for making these LFP material from China. And it's a little bit of a gray area. Like if you do exactly that, are you going to be compliant with all the IRA incentives? But yeah, like I said, it's going to at least initially be more expensive to do that. You got to pay the licensing fee. Plus you don't have the scale yet. So yeah, I'm a big proponent of new innovation that inherently makes it much cheaper.

Silas Mähner (15:22)
Because in general, you're pointing out is that even if we take the kind of existing know-how or whatever, we're going to run into a point where batteries are going to become more expensive,

Eric McShane (15:31)
That's right. Yeah. Like in the near term, if we just use the same old processes, it's to be more expensive to do it.

Silas Mähner (15:36)
Okay,

interesting. And then what is the viability in the first place of even, if you understand this, of shipping in the minerals? Like do we have the mineral production here that we can actually, if we can create processing, we can do it in the US or do we still not even have a lot of minerals?

Eric McShane (15:51)
Yeah, if we look at specifically lithium, which is at least an LFP batteries, that's the one critical mineral. Lithium is the one critical mineral that needs to make an LFP battery. Only about like 1 % or so of all the world's lithium is mined or extracted in the U.S. So even looking that far up street, it's pretty dire. That being said, there's some free trade partners that produce a fair amount of lithium like Australia and Chile. So if we really needed to, we could like get lithium, albeit at like the price point that they set. But

Really, yeah, the key, key bottleneck is that LFP production step. 99 % of it's made in China. So we need to figure out ways to do that better.

Silas Mähner (16:28)
Do you foresee any and again, I'm not exactly the most well-versed when it comes to lithium but I thought that a lot of it is driven by the price of lithium, kind of similar to oil and gas. If the price of oil is very high, more people will invest in it. If the price of lithium is high, more people will invest into processing it or mining it. Do you foresee this kind of push ending up pushing that price up to then bring in more investors?

Eric McShane (16:49)
Yeah, they often so what's saying is like the solution to high prices is high prices. And we're similarly low prices is low prices. So as you've probably seen, lithium prices have been extremely volatile in recent years, got up to about like 10x higher than it currently is today just a couple years ago, and then it dropped right back down. My guess is it stabilizes somewhere in the middle of those two values. But we'll see about that. So you know, like the price is going to be what it's going to be, it's going to be volatile along the way, because we need to scale that supply chain up like

by our estimation like 40X in the next say 15 years. So we'll take the price as it is, but yeah, we need to have some ability to make these materials for ourselves to be self-sufficient.

Silas Mähner (17:28)
Yeah. And then surrounding out your understanding of the BBB, can you just kind of really clarify who are the people who can still take advantage of this credit? Is it anybody who is processing, creating cells or creating kind of packaged up batteries?

Eric McShane (17:43)
So as of right now, there are a lot of battery cell producers, or at least aspiring battery cell producers trying to put factories up in the US. And they were maybe banking on their ability to just get the raw materials for the battery elsewhere and then continue getting the credit. But that's changed. That has clearly changed with the big battery bill. So they're going to need folks that can produce these materials ex China. And yeah, it remains to be seen how they do that. They can work with us. Shout out.

Or they could find any non-China producers that are up and coming that make these materials as well.

Silas Mähner (18:15)
Yeah, okay, got it. anybody making those pieces, okay, got it. Interesting. Yeah, I do wonder the implications obviously like it's you and I are probably both very like pro like, let's build stuff again in America. But I wonder what to what extent the existing infrastructure investment that was happening in the battery space is going to be like, shoot, like we have to reconsider our investment in the first place because of how much more expensive it's going to be. And can we, know, feasibly get that further upstream supply?

and still qualify for the credits. that'd be very interesting to see. I do wish that it would have been, I mean, obviously this is good news that we're not looking at complete gutting of everything, but it would be nice if there was a little bit more, less disadvantage to the industry, right? But you and I are on the same page in that. I don't think the Trump administration is, unfortunately. now let's, thanks for breaking that down for us. I appreciate the perspective and having done the research on that. It's something I was not necessarily interested in doing. So I'm glad to have you do that.

Eric McShane (18:47)
Absolutely.

Silas Mähner (19:13)
Let's talk a little bit more about your technology, right? Just kind of break it down again, very simply, how does this work? It sounds like you guys take Brian in and you extract the lithium and it comes out, but just walk us through this process.

Eric McShane (19:24)
Sure thing. So first, what's a brine even? Some people aren't necessarily familiar with that term. A brine is just like a very salty water. And you could argue maybe the ocean is a brine. It's not particularly salty compared to some other brines, but that's one type of brine. The brines we work with are more like these subsurface brines that are just naturally occurring. And they're located really throughout everywhere, including the US. And

A lot of, for example, oil operations, they pump out oil from the subsurface and a lot of the water subsurface brine comes with it. So a brine is just a salty water. We use these salty waters to extract particular minerals. In our case, we extract lithium from these salty waters. Some of them have a decent amount of lithium, it turns out. And we've developed technology that's really good at extracting lithium from these salt water brines. In our particular technology, we send the brine through an electrochemical cell actually that

kind of looks and operates a lot like a battery, it turns out, because batteries are going to shut the lithium around. And it goes through the electrochemical cell, takes out the lithium, and then that same step converts it to a battery-ready lithium chemical form. And this is important because in our understanding of the existing supply chain, it's more like six different steps are normally required to go from a brine to a lithium chemical. We do it all in one step. off the bat, that's our core innovation that's enabling even the downstream.

effects of that.

Silas Mähner (20:48)
Is that important because the traditional method is just so much more capital intensive to buy all the machinery and to run the operations of that? Is that the of the core reason why it's, hey, even though it's six steps, it's still just not efficient compared to what we could do?

Eric McShane (21:03)
Yeah, taking even a step back from that, the existing methods of getting lithium are actually not necessarily what we're trying to do. So our methodology is a class of DLE or direct lithium extraction. And that's been, you know, an up and coming way of getting lithium for years, but no one's really cracked the nut on making it fully commercially yet. So actually the existing methods are much different. How about half the world's lithium is you extract it from a rock, like traditional mining that you imagine when you hear the word mining.

Then the other half of the world's lithium does come from a brine, but it's not a lithium extraction process like I've described with our technology. You actually pump the brine to this big pond and you just let the sun evaporate the water and pluck off the lithium after enough time. Yeah, it was amazing just jumping into the space, but that's actually how it's done. Half the world's lithium is obtained from these big ponds that you just let the water evaporate from. So we're doing like the next jet that's clearly like got some environmental and cost benefits, these DLE or direct lithium extraction processes.

Silas Mähner (22:02)
Yeah. Okay. Got it. Yeah, that's helpful. think we've had, it's been a while, but we had somebody who talked about this a little bit in the past, just like the conventional wisdom or the conventional method of doing this is just completely different, right? Completely slow. No, it's, we've been doing this because that's just how we do it, right? ⁓ So that's interesting. So in terms of your guys' journey right now, so you've done this at the bench scale. What does the next steps look like for you guys too? Because I can imagine that if you're trying to really take advantage of this, you need to move quickly.

to be able to get some sort of production amount ready to be able to go to market and to do it in a way that people can trust that, the quality is going to be good enough that we can put it into our batteries. Or I shouldn't say good enough, it has to be very high quality to actually go into the battery. So can you talk more about what these next steps look like for you guys?

Eric McShane (22:48)
Totally. Yeah. And so even after the lithium extraction and conversion step, we've recently developed a way to make all the way to the LFP cathode material. So that's really our end product. That LFP cathode material that's 99 % made in China. And to understand sort of like what specs and what purity folks want, we've just been talking directly to people that would buy these materials within the U.S. There's no shortage of demand for it. You know, people are looking for ex-China LFP materials and we just get

exactly the specs that they want in these materials from the customer directly so that we can plan our technology development based on the specs that the people want. That's been an awesome journey so far. We know we're trying to get enough material to start the qualification process with some of these customers as well. It requires order magnitude, a couple kilograms to get the qualification process started. So we're not quite there yet, but we're scaling up. And especially with upcoming fundraising, we think we can get there really quickly.

Silas Mähner (23:42)
Is there a... Is it pretty uniform what people are looking for from a specs perspective?

Eric McShane (23:47)
It's, I don't know, it's like give or take fairly uniform. But you know, some people want like specific things like better compaction density to pack as much energy as possible into a small space, things like that. The chemical composition is fairly uniform and the impurity specs are pretty uniform across all the customers.

Silas Mähner (24:05)
And so as you guys are doing this and you're trying to figure out, how can we benefit from this? And this is a big, big push, obviously, and it's going to be a pain in the butt for a lot of people that they need to solve. Are you going to market from a perspective, hey, since we're only going be able to produce smaller amounts, let's go to the really specialty producers or are we going to go for, hey, there's a large producer, they're going to need lots of this stuff. We're just going to try to go for, maybe the quality doesn't have to be as perfect, but because they're such a big producer, we'll be able to get the margins that we need to build it.

Eric McShane (24:34)
Yeah, we're going to try to sell at first within the US most likely because you can demand a significant premium in the US for selling the same LFP material as you can sell in China. It's because it's such a nascent industry ex China. And there's some ideas we have for initial customers even within the US as well. know, things like university labs that buy at small scale, but typically buy at a premium compared to these much larger buyers. That's attractive to us and other

similar types of customer profiles we're looking at as well.

Silas Mähner (25:04)
Okay, interesting. then, so you've got to forgive me because some of these things I don't remember all the nuances here, but when you compare what you guys are doing to some of the other people who have tried to do this kind of similar process where it's like, know, brine in, lithium out, what are the big innovations that you guys have and what are the big differences compared to the other technologies? Because I know there are other people who have been toying around with this. I don't know them super well though.

Eric McShane (25:25)
Yep, yep. The biggest differentiator we have is if you run into any DLE or direct lithium extraction company, really their product is lithium chloride, which is really like a precursor to a precursor to a battery material. But we figured out a way to make a battery ready lithium chemical stream directly in one step from Brine. That's a huge differentiator. ⁓ Like I said, there's about six steps normally to go from Brine to lithium chemical. We do it all in one.

And so doing, we save a ton of capex because you delete process units and even op ex as well. It's very low energy, things like that. So that's the biggest difference between what we're doing and other deal.

Silas Mähner (26:03)
Interesting. So effectively, the output is way more valuable than just a pure play commodity that still has to be processed, right? That's like one of the big step up factors and you're able to do it in one step, which is pretty insane. Obviously, I wish you could share the secret sauce on here, but I'm sure that's confidential. But let's see here. What else I wanted to ask you about? Right now, it's a really interesting time to be a founder in climate, Jeremy. Like just being a founder right now.

There's a whole different landscape of there's a lot of interest in the defense space with the government. There's a lot of interest in AI, but yet you're working in kind of this hard tech climate world where it intersects with a lot of things. I can imagine that there's definitely going to be some focus on working with defense because of the batteries and drones and things like that. But how do you, I don't know, this is really amorphous question, but how do you visualize being a founder in this time? Why does it excite you specifically to work in this particular space? What are you most excited about in terms of the current environment?

Eric McShane (27:00)
Totally. Great question. I think this has evolved over time for me. Like I originally was thinking, let's get into the lithium space because we can make more batteries, which is going to help power clean energy and really let clean energy proliferate throughout the world. And that's still important to us. But I've become really, really fascinated and interested by now. I'm like most fascinated just by like the idea of like building real stuff. Sounds silly to say, but I think factors are super cool.

Yeah, and like factories are not like your grandfather's factories anymore where it's, you know, it's not like a sweatshop anymore. Factories have a ton of cool technology. And I didn't get an appreciation for that until we're like now trying to build like our own mini factory. You know, in research, like you don't think about how is the thing made that you're making. You think about like, you know, how can I adjust the chemistry to do XYZ? But it makes it a really rich problem to like think about not only the widget, but making the widget, you know.

And that just has been so cool. Like just finding like suppliers of the various things that go into our cell stack is cool to me. Like seeing how these various machines work that can turn out like a flow plate that goes in our stack is pretty cool. Yeah, once again, I'm becoming a voracious YouTube watcher to learn a lot of this, but yeah, I think that's one of the coolest things for me being a founder now.

Silas Mähner (28:13)
Do you find a lot of resources through the communities that you have with Stanford or some of your early investors? Are there actually a lot of hardware related resources?

Eric McShane (28:22)
I would say so, yeah. Stanford helps a lot on the more fundamental side, like our contacts there are mostly in the academic research space. And we still do keep in contact with folks there to get insight into how we can do things better. And our investors are a different type of advice and input. They've seen companies scale from the bench we're at to huge companies. One of our big investors, actually both of our biggest investors invested in this company, Sol Eugen.

which they saw from the super early days. Now they're making huge factories. They're already Unicor, even. So they can help us and help us with things like lessons learned along the journeys like that. And that's really cool to see as well.

Silas Mähner (29:02)
How was understanding the go-to-market strategy for you? Because obviously as a technical person, there's like this typical, hey, most like PhDs, have a product or they have an idea, but they don't know how to go to market. Like, how was that learning experience for you? And what was your core reflections on how you figured that out well?

Eric McShane (29:19)
Yeah, yeah. Like you said, mean, lot of VCs or investors generally would look at two PhD founders and be like, let's make sure this is not just a science project. And we take that to heart. We're trying to move like as fast as possible. Like we're going to prove to them we're not a science project and we like love the idea of manufacturing stuff. For me, like I didn't have a formal business training. I didn't take any business classes as an undergrad or PhD or anything like that. But once again, it's like something you can like pick up on the job, I think.

And through YouTube and podcasts and things like that, I've been trying to consume as much as possible to that end as well. you know, it's a lot like you can apply engineering and physics and chemistry principles to business as well. Like it's an optimization in the end, like how quickly can you get to market, what's your margin and then you can run the numbers. Like it's like an engineering exercise sometimes more so than it's just like a gut feel. And that's how I've kind of approached it. Like an engineering perspective on the business world has, I don't at least been different, maybe better.

Yeah, so people to run their businesses.

Silas Mähner (30:21)
Yeah, I I was gonna say because I just wanted to commend you on it It seems like you have a relatively good understanding of kind of the the ways that you could go about this right where some people would at least in this stage be pretty like oblivious to some of those items, right? So I was just gonna give you kind of a pat on the back there because it's pretty good approach to it ⁓ Very cool. I think I think we've covered a lot of the core things I wanted to run through I am curious if you guys have any particular objectives in the future whether or not you plan to actually License out the technology to other other people

Are you looking to build factories? What is your dream for this? And the reason I ask this question is I am very interested in seeing companies be built that will be the powerful companies that run the world in the future. I don't want to the same old companies that are powerful now and running the world now in 100 years. So what do you guys think is your dream goal there?

Eric McShane (31:10)
Yeah, I am, like I said, pumped up about building factories. So you're going to hear a lot of advice that's like, it's so capital intensive, whatnot. But I think that is like where our core competency lies. We have a team of like almost all engineers and chemists, and that's what we love doing. Like we love like building technology. We want to see it go from the lab to like the real world. So we're going to continue building factories that churn out our core technology. In the long run, you brought up licensing. think licensing probably makes sense. You know, if a Brian owner...

wants to extract lithium and make cathode materials from their brine. Like we'll do a couple of those projects ourselves, like be the operators of the machine. But once we prove it works on a couple of brine resources, it does make sense, we think, to license out the technology in the future. It's a little bit capital light approach to getting similar outcome of more cathode and more lithium. So yeah, that's kind of how we see our trajectory going. Pumped about factories, pumped about getting this technology in the real world.

Silas Mähner (32:04)
Yeah, absolutely. I forgot to ask you about this too, is are there plenty of sources, you mentioned that not a lot of of the lithium is coming from the US now, but are there plenty of sources in the US that we can get lithium from, assuming we can, you know, actually go to do mining or to find ways to pump the brine out?

Eric McShane (32:20)
Yeah, there is plenty of lithium. The problem is always like what concentration is the lithium present in these brines? yeah, existing technologies just for numbers, you know, you'd kind of want like 200 to 400 parts per million lithium to make it a viable project. But we're able to go down to more like 20 or 30 parts per million. So a factor of 10 different. And that opens up by our estimation, many billions of dollars of lithium that's just sitting there idly right now.

the US. That's just untouched. Maybe it's used for like geothermal or oil operations or something, but that's same Brian is, but not for lithium yet.

Silas Mähner (32:58)
Interesting, so you're saying that the lithium brine resources that are there, a lot of times they're not touched because they're not good enough, because they're not concentrated enough, it just doesn't pencil?

Eric McShane (33:07)
Yeah, it doesn't pencil with existing technology, but we think we can change that once we reach scale.

Silas Mähner (33:12)
Interesting. And maybe we could go into this a little bit more detail here. Are you able to basically build, in theory, build these facilities at the place of extraction? And what's it going to be like in terms of energy intensity to get electricity there to actually keep those operations running?

Eric McShane (33:29)
Yeah, we're going to make our contraptions of this electrochemical cell in a warehouse, currently our warehouse is in California. know, ultimately we might go somewhere like Texas or Nevada to make them in huge scale. We'll put them in shipping containers and send them out to the brine site. So that's how we achieve sort of rapid distribution and make our modules like amenable to distributing like that in shipping containers. And then, you know, in the early days we'll probably operate the machinery ourselves as well. So we'll go out to the brine site with, you know, one or two folks to make sure that it's operational all the time.

And that's how we're going to reach scale quickly. Going to pump out the modules in the factory and then bring them out to the brine sites where the lithium.

Silas Mähner (34:05)
And is this a continuous process or is it going to be something where it's like hey we load up the cell and then we have to undo it like empty it out

Eric McShane (34:11)
Yeah, it's a continuous process, you have to make sure that you have some oversight to make sure it's running smoothly, like sample the lithium content every now and then, things like that.

Silas Mähner (34:19)
Interesting. And so what is the energy intensity of this product in general? Because if you're going to be putting these out in the field, will you have to have battery backups to keep it running continuously? What's your thought process there?

Eric McShane (34:30)
Yeah, our electrochemical cell uses very low energy, it turns out. Interesting. So it's a voltage that's quite low, and then corresponds to very low electricity requirements for the cell as well. And our goal in the first place is to deploy at some brownfields type projects, like an oil operation that has lithium containing water. And they typically have a decent amount of energy already on site. we could draw from that. We're not going to take a huge amount of energy from their existing operations.

Silas Mähner (34:58)
Interesting. Okay. So you shouldn't have great constraints as you're trying to solve the great constraints.

Eric McShane (35:03)
That's right. Yeah, no, that's a good point. Yeah, we've optimized around this too. We're not trying to be an energy hungry process. Yeah, that's important to us.

Silas Mähner (35:09)
Yeah, it's pretty fascinating. do see some ⁓ really interesting things the way you guys have built this. Again, I don't mean to be patting you back too much, but it seems like it's relatively well thought out. Maybe you've got some good advisors there, But anything, I guess, that you want to of wrap up with, what are you looking forward to the future? Any calls to action or anybody, if they're listening, who can help you? What are you looking for?

Eric McShane (35:30)
Sure thing. We're currently in the midst of raising our next fundraising round. So when this comes out, we'll officially be kicked off as of today. It's a couple of days away. And we would love any inbound from interested investors that like our mission and like what we're doing here. So that's one thing immediately coming to mind. then ultimately, when we do raise that, we'd love really motivated, talented engineers that could come join us. And like I said, once we wrap up the fundraising, we'll have the resources to go and hire all of you.

really talented engineers. But once that's in place, we would love to have inbound from folks that are really passionate about the problem we're solving and would love to help us along the journey.

Silas Mähner (36:09)
Yeah. And what about pilots? Do you guys have pilot projects lined up already? Any particular, if there's any interested parties listening on that space?

Eric McShane (36:16)
Yeah, so we've done our first deployment at a geothermal site. That was really great for learning. We proved that the technology from the lab works very similarly when you deploy it in the field, which is reassuring. Now we just got to scale the thing up and actually produce meaningful lithium from that in the next deployment. And we have in the pipeline a couple more like brownfield type pilot projects. ⁓ So stay tuned on that.

Silas Mähner (36:39)
Okay, nice man. Well again, I really appreciate you coming on the pod. Appreciate you breaking down this. link the, the sub stack post that you made out is also for the people who like to read. I'm not one of them. like to, I like to listen, listen on watching. But yeah, I appreciate you coming on, man. I'm looking forward to seeing what you guys do in the future and this event, this will be great.

Eric McShane (36:54)
Yeah, thanks. Likewise, Silas. Looking forward to keeping in touch.