This document provides an overview and analysis of the rechargeable battery market with a focus on opportunities for NanoLab, Inc. to enter this competitive space. Key points include: - The market is rapidly growing and shifting from NiCd and NiMH batteries to lithium-ion and lithium-polymer batteries due to demands for smaller, lighter batteries with longer run times. - Lithium-polymer batteries offer benefits like flexibility and higher energy density but also face challenges around production costs, reliability, and temperature handling. - The document profiles several companies competing in the lithium battery market and analyzes their technologies, target markets, and business strategies.

1. Rechargeable Battery Market Assessment Report:
An Opportunity for NanoLab, Inc.
Robert Shines
Marketing Consultant
May 17, 2001
Executive Summary
In order for NanoLab, Inc. to successfully enter and remain in the highly competitive
rechargeable battery market industry, it must first consider a series of potential alliances,
which will enable the firm to stay ahead of its present and future competitors as well as
successfully serve its customers in this rapidly emerging market space.

2. Market Trends and Dynamics
Prologue
Portable product original equipment manufacturers’ (OEMs) market space can be defined
as “global mobile connectivity” for their customers. Consequently, there is global
demand for a rechargeable battery that is small, lightweight, ultra-thin and operates
longer than standard batteries. It has been said that, “As the world becomes more wired,
the demand for liberation from those wires grows, so people can escape with their
notebook computers and cell phones.” This need will only intensify as the portable
product list evolves from these present-day devices into future personal digital assistants
(PDAs), digital phones and cameras, pagers, wireless Internet appliances, electronic
books, electronic tablets, Web pads, MP3 players, bar code devices, etc. Therefore,
multinational as well as smaller battery manufacturers and their suppliers must help the
OEMs sustain this emergent market space.
Industry Overview
A few short years ago, nickel cadmium (NiCd) and nickel metal hydride (NiMH) were
the preferred materials for the rechargeable battery industry, accounting for as much as
55% of sales.1
In that short time span, however, these compounds have been supplanted
by Lithium-ion (Li-ion) as the preferred rechargeable battery material for notebook
computers and cell phones.
2
With regard to Lithium-ion, the notebook computer is seen as the primary driver for
technological advances, with the cell phone as a close second. This shift is occurring due
to several reasons. The first and foremost of these is that as these portable devices
become ever smaller, OEMs are demanding that the battery component likewise become
smaller and lighter. Battery performance is not to be sacrificed, however. Indeed,
performance is expected to increase to keep up with nickel metal hydride cells as well as
with the other internal components of the portable device, such as the semiconductor
chip. Flexibility is also seen as a factor in driving portable device OEMs toward lithium-
2

3. based chemistries as opposed to nickel-based batteries. Because of this, the global
demand for Li-ion batteries is projected to increase around 22% annually through 2004,
with a slight leveling off of demand at 15% annually through 2009.3
Projected Worldwide Lithium-ion Battery Sales
2.0 2.4
2.9
3.6
4.4
5.3
6.5
7.5
8.6
9.9
11.4
13.1
0
2
4
6
8
10
12
14
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Revenue(US$Billions)
Li-ion batteries are still under fire from some OEMs, however. With end users
demanding more run time from their notebooks and more “talk time” from their cell
phones, the energy-density of the unit battery will become the crucial issue. Li-ion
batteries have been shown repeatedly to provide a higher energy-density storage capacity
over their nickel-based rivals. On average, battery manufacturers have managed to
increase Li-ion battery energy-density 10% to 20% annually.4
However, this increase is
negligible compared to the doubling of computing power roughly every 18 months due to
Moore’s Law. With regard to computers, if power consumption continues to rise at this
rate, there is virtually no major resultant change in run time.
Battery life is also degraded as computer processing speeds reach in excess of 1 GHz. At
this rate, the chip runs very hot, which requires more power, which in turn takes its toll
on the battery. As a temporary measure, many PC manufacturers are trying to place the
battery away from heat-generating components. Some concepts proposed include placing
the battery on the back of the screen or on the back of the computer itself.
Cost is also another point of contention with Li-ion chemistries. Some OEMs are still
reluctant to make the switch from NiMH to Li-ion because the price added by lithium is
about 20% and they are reluctant to pass on that cost to their consumers. The added
expense is because Lithium-ion batteries require a safety control circuit to prevent
overcharging and over-discharge. Simplifying this control unit is a hurdle Lithium-ion
technology must overcome to become more economical. However, the price of lithium
batteries is expected to come down due to increased production volumes and economies
of scale benefits, which will make them more price-competitive. This must take place if
Li-ion is to make its way from higher-end consumer products to lower-end equipment.
3

4. In short, as user demands for more add-on features such as CD-ROMs and multimedia
applications multiply exponentially and as notebooks and cell phones continue to merge
and give birth to the next generation of wireless Internet gadgets, these issues are only
going to be compounded. In essence, end users are continually demanding more features
along with the freedom to use them longer and are not sympathetic to the need to stop
and recharge.
Enter Lithium-polymer
Lithium-polymer cells are similar to Lithium-ion batteries, but have the ability to be
manufactured as thin as 3-mm. Interwoven with a plastic laminate, it has the ability to be
stretched over a wider area. The laminate is actually a gelatinous electrolyte, which
allows the battery to be shaped into various forms. This malleability enables the battery
to be ideal for fulfilling computer and cell phone OEMs’ specialty application
requirements. The gelatinous electrolyte also has a lesser chance of leaking out onto the
product components, as could be the case with the liquid electrolyte found in standard Li-
ion batteries. Additionally, Li-polymer batteries have a higher energy-density than their
Li-ion counterparts. This, consequently, translates into higher battery capacity.
Five Key Benefits of Li-polymers
* Very low profile
* Flexible form factor
* Higher energy-density
* Better cost (reduced external control circuit)
* Safety (less chance for electrolyte leakage)
Because of these attributes, Li-polymer batteries are growing predominantly in the cell-
phone market, while standard Li-ion batteries are driving the notebook marketplace for
the moment. This is primarily due to the size and weight factor of cell phones versus that
of notebooks. The size issue will become even more of a factor as cell (and by extension,
digital) phones evolve into more PDAs, E-books, Web pads, MP3 players, and the like.
As run time for notebooks has given way to talk time for cell phones, we shall soon see
“write time” and other “times” become predominant in some of these newer devices as
users’ voracious energy appetites explode.
4

5. 5
Accordingly, the demand for Li-polymers will also soon explode. Several large battery
manufacturers, including Toshiba, are betting their futures on this new technology. At
this stage, these firms are scrambling to ramp up production in their efforts to be first to
market with the product. Smaller battery concerns are likewise scrambling to make
alliances with one another to ensure that they too have the resources to enter and stay in
this rapidly expanding market space.
With this growth, Li-polymer batteries are eventually expected to cut into the market for
standard Li-ion cells. It’s anticipated that between the year 2007 and 2008, Li-polymer
batteries will experience a growth in annual sales conservatively estimated at 150%.6
This is the primary factor in the decrease of Li-ion’s growth rate from 22% to only 15%
during this time period.
Projected Worldwide Lithium-ion Battery Sales Vs.
Worldwide Lithium-polymer Battery Sales
6.5
7.5
8.6
9.9
11.4
1.0
2.5
4.0
13.1
0
2
4
6
8
10
12
14
2004 2005 2006 2007 2008 2009
Year
Revenue(US$Billions)
Li-ion
Li-polymer
As with Li-ion batteries, price continues to be an issue with Li-polymer. OEMs that
emphasize a low cost-based marketing strategy are presently not prepared to pay the
expected 30% to 50% premium for Li-polymer over Li-ion. This will give the Li-ion
5

6. market a brief respite. These cost-focused OEMs will opt for the size and weight
convenience provided by polymer only up to a certain point. For their higher-volume,
low-end products, it is essential that they select the most cost-effective battery.
Lithium Battery Cost
for Notebook Computer7
$27.32
$35.69
$44.06
$52.43
$60.80
$21.86$26.75
$31.64$36.53$41.42
0
20
40
60
80
2000 2001 2002 2003 2004
Year
CosttoOEM(US$)
Li-polymer
Li-ion
These OEMs are willing to incorporate a premium battery for their top-tier products,
however. In addition, OEMs such as Nokia, which emphasize product differentiation, are
more than willing to integrate Li-polymer batteries into their devices. This enables their
product to offer unique solutions and performance enhancements over their competitors’
low-end products. In any event, the price differentiation is largely expected to disappear
by 2004, further contributing to the market share erosion of traditional Li-ion cells.
Several performance issues involving Li-polymer remain, particularly with regard to its
production process. These include reliability, cycle life, temperature and handling. It’s
been found that many Li-polymer batteries degrade by about 50% in capacity and
availability within 200 cycles. Moreover, some consider the battery’s extremely small
size to be impractical to the end user, who must constantly insert it in and remove it from
the device. A special stiffening material has been proposed which will be added to the
battery. This, however, reduces the flexibility and lightness of the cell and increases its
size. Clearly, much work needs to be done to make it more reliable and cost effective for
large volume cell phone OEMs to incorporate in their production processes.
Competitive Landscape
“Know your enemy. Know yourself. And your victory is never in danger.”
-Sun Tzu, The Art of War
6

7. Strategic Overview
The multinational battery industry is a spectrum ranging from truly global players on end,
to smaller manufacturers in the middle, to those who are only trying to license their
proprietary technologies to these first two groups at the extreme end. The following
section attempts to briefly summarize the recent activities of the most active of these
participants. As these dynamics are analyzed, it is hoped that several possible strategies
for NanoLab’s successful entrance into this marketplace are realized.
The following table briefly gives an overview of the market participants to be profiled.
Firm
Location
Employees
Primary Business Activities
ELECTROFUEL
Mississauga, Ontario
120 currently, 350 expected by year’s end
Li-polymer battery R&D and commercialization
LITHIUM TECHNOLOGY CORP.
Plymouth Meeting, PA., Auckland, New Zealand
17 currently, 47 after merger with Pacific Lithium Ltd.
R&D and commercialization of Li-polymer technology, heavily involved in licensing
VALENCE TECHNOLOGY INC.
Henderson, NV. with manufacturing facilities in Mallusk, Northern Ireland
400
Licensee of PliON technology, licensor and manufacturer of hybrid technology
TOSHIBA (TEAC)
Irvine, CA.
8,000
Engineering, manufacturing, marketing of semiconductors, storage media, and electronic
components
ULTRALIFE
Headquarters and primary manufacturing facility in Newark, NY.; additional production
and R&D Center in Abingdon, England; polymer cell manufacturing facility in Hsinchu
Science Park, Taiwan
300+
Development, manufacturing and marketing of both primary and secondary lithium-based
cells
ELECTRIC FUEL
Headquarters in New York, NY.; Lab in Auburn, AL.; additional offices in London and
Israel
164
7

8. Manufacturer and marketer of proprietary ZincAir battery
POLYFUEL
Production facility in Palo Alto, CA.
1,400 employed by parent SRI International, exact number dedicated to Polyfuel spin-off
unknown
Commercialization of fuel cell technology developed at SRI
FULLERENE INTERNATIONAL CORPORATION
Headquarters in New York, NY.; additional offices and production facilities in Tucson,
AZ. and Osaka, Japan
Approximately 26,000
Leveraging U.S.-based fullerene production technology towards volume production
throughout Asia
A Quick Note on Fuel Cells
Fuel cells are a relatively new energy source, which have the potential to revolutionize
the rechargeable battery industry. Basically, the technology uses hydrogen and oxygen to
create environmentally-safe electric power. The cells have been shown to provide
anywhere from 5 to 10 times the energy density of lithium-based batteries. As a
potential competing technology to traditional batteries in the near future, several of the
profiled firms’ activities in this area have also been illustrated.
Specific Energy Comparison With Batteries
This graphic compares conventional batteries, including Nickel Cadmium (NiCD), NIMH, and
LION batteries, with a Methanol Fuel Cell.
8

9. ELECTROFUEL
Technology
Electrofuel, of Ontario, has as its technology core its lithium-ion SuperPolymer brand
9

10. battery. According to the firm’s VP-Marketing, the battery has a higher energy density
than normal polymer cells. This is due to the SuperPolymer’s extreme flatness, which
also allows for a much greater degree of flexibility. Under this brand, the firm currently
has two offerings. It’s PowerPad 160 model is geared towards notebook computer users,
whereas the EF2100 is targeted towards mobile phone consumers.
The PowerPad 160, weighing in at 2.5 lbs, delivers 900 milliamperes (mAh) of power for
up to 16 hours of run time. It currently offers 160 Wh. However the company forecasts a
higher energy density, of 600 Wh/liter and 225 Wh/kg later this year. This battery also
consists of control electronics, which provide information to the user on remaining
battery power and improve battery efficiency.
The EF2100is designed for use in Nokia's 5000 and 6000 series of mobile phones. It
delivers more than 2100 mAh of power, provides 18 to 21 hours of talk time, and is the
thickness of the Nokia ultra slim design. It also offers an energy density of 210 watt
hours.
Markets
Besides the notebook computer and cell phone markets, Electrofuel is targeting its
SuperPolymer brand towards the defense and portable medical devices fields. In the
longer term, the company expects the batteries will also be suitable for electric bicycles,
load leveling for electric utilities, and alternative energy businesses such as solar and
wind-energy storage. All of these fields have potential use for a super-light, super-
flexible battery such as the SuperPolymer.
Strategy
Electrofuel’s Powerpad 160 battery was initially on back order within a few months of its
introduction. Only recently, as of December 2000, was it able to achieve commercial
production of this item. The company had similar problems with the EF2100, which only
achieved volume production at the beginning of April this year.
Hence, the primary concern for Electrofuel is getting product to market quickly. The
firm’s VP-Marketing has conceded that, although Electrofuel’s technology has the
potential to revolutionize the battery industry, the ability to deliver volume production is
critical. While it apparently has reached an agreement with Nokia to distribute its
EF2100 product globally, Electrofuel is currently talking to other OEMs about joint-
venture opportunities so that it has established distribution channels for its future lines.
LITHIUM TECHNOLOGY CORP.
Technology
Lithium Technology Corporation (LTC) produces Li-ion polymer batteries, which are
based on unique fiber-web substrates. This proprietary "web handling" technology uses
high-performance fibers in composite battery structures and continuous-flow fiber-web
coating and handling methods for low-cost manufacturing. The characteristics of the
10

11. composite formula include improved conductivity, stability, resistance to shorting, and
reliability. The lightweight fiber web construction also improves energy density. Perhaps
most importantly, the company claims this method results in lower costs and higher
yields in its production process.
Markets
Lithium Technology’s original target had been the portable-product OEMs, in particular
notebook producers. Lately, through a series of mergers and acquisitions, it has been
looking to obtain a foothold in the emerging market for hybrid electric vehicles (HEVs)
in the U.S. and Asia as well.
Strategy
In October, Lithium Technology started negotiations to merge with Pacific Lithium Ltd.
(PLL), an advanced materials supplier to the battery market based in Auckland, New
Zealand. The newly formed company, Ilion Technology Corporation, is slated to offer
Lithium Technology several benefits. The company is planning to combine Pacific’s
experience with Lithium materials technology and Lithium Tech’s knowledge of battery
manufacturing processes to carve out marketshare based on volume production. With a
steady supply of Lithium battery materials secured, LTC can focus on designing Li-
polymer batteries for the HEV market. Pacific Lithium believes its manganese cathode
materials are indispensable to hybrid electric vehicles due to their layered structure and
temperature stability. Lithium Technology’s CEO has also publicly stated his desire to
pursue the HEV market due to higher margins as compared to the cell phone industry.
Through Pacific Lithium’s recent agreement with Energy Ventures Incorporated (EVI) to
manufacture and sell EVI’s Lithium-ion battery cathode material technology under
license, Lithium Technology has gained access to previously proprietary expertise.
Perhaps more important, the company also profits as EVI is looking to focus on
developing its unique Direct Methanol Fuel Cell (DMFC) technology. All parties
involved, Lithium Technology, Pacific Lithium, and Energy Ventures agree that this
particularly emerging technology has potential applications for HEV as well as portable
devices and may soon supplant Li-polymer in terms of energy efficiency and price.
VALENCE TECHNOLOGY INC.
Technology
Valence's own internal Li-polymer technology is based on research with primarily two
substances, manganese oxide and phosphate. According to recent press releases, the
company states that structuring its polymer technology around manganese oxide is safer
than existing lithium-cobalt systems. It also is more environmentally friendly compared
to equivalent methods. The material allows the firm to receive a 30% cost savings as
compared to cobalt-based polymer technology as well. Its work with phosphate is
11

12. expected to further lower its polymer technology costs.
Markets
Valence is currently targeting its proprietary technological process towards the higher-end
GPS and digital phone markets. In addition, it’s eyeing possibilities in the military and
aerospace fields, to include satellite applications.
Strategy
Valence’s strategy is simple: world domination through licensing. The company plans to
buy all the rights to lithium-polymer technology that now are held by Telcordia
Technologies Inc., formerly known as Bellcore. By all accounts, Telcordia’s patented
lithium-ion technology, known as PLiON, is recognized as the leading-edge technology
in the field of polymer-based batteries. It then plans to combine this newly acquired
technology with its own manganese- and phosphate-based designs and license this hybrid
know-how internationally. As analysts have likened this process to the Qualcomm
licensing model with its proprietary CDMA technology, Valence’s leadership has justified
the strategy by stating, “The market is growing at such a dynamic rate that there is no
way one supplier can fulfill all the demand." By proliferating its technology through
licensing agreements, the firm hopes to continually be alert to new market opportunities
through its worldwide licensees, particularly in the niche market areas. By making any
potential competitors their customers, the firm is projected to significantly expand its
licensing and royalty revenue base.
To put more teeth into the strategy, Valence intends to restructure itself into a holding
company containing three business units. The first unit will develop licensing and
consulting relationships for the PLiON battery design, factory set-up and material
fabrication processes. The second will handle the sale of materials and components
required for battery cell construction and assembly. The third will focus on strategic
market development, including the sale of niche Li-ion batteries.
TOSHIBAAMERICA ELECTRONIC COMPONENTS, INC.
Technology
Toshiba America Electronic Components Inc. (TEAC) has developed its own proprietary
li-polymer cell known as the Advanced Lithium Battery, or ALB. Key attributes of the
ALB when compared to other li-polymer batteries include a higher drain rate, better
temperature ranges, higher discharge capabilities, and a reduction in swelling. The
swelling factor is significant in that it lessens the chance of the cell rupturing. These
cumulative traits combine to give the battery a theoretically higher energy density
(capacity) as well. Toshiba scientists also assert that ALBs and traditional li-polymer
batteries are direct replacements for each other because the technologies offer the same
form factor and charge regime
Markets
12

13. Toshiba is currently ramping up ALB volume and steering it towards the next generation
of handheld portable devices such as higher-end cell and digital phones. Personal Digital
Assistants (PDAs), scanner-type devices and E-books and Web pads will also be given
top priority. Of course, since Toshiba is not only a supplier of batteries, but also an OEM
of notebooks such as the Satellite, Satellite Pro and Tecra series, it’s looking to
incorporate its ALB technology into these products as well.
Strategy
Toshiba is currently setting its sights on only next-generation technology. Research into
emerging li-polymer technologies such as ALB is seen as driving the firm’s future in
battery development. It’s also an offshoot of its corporate-wide marketing strategy,
which emphasizes product differentiation and premium items over low-cost leadership.
This was the impetus behind the firm’s decision last month to transfer one of its
conventional Li-ion and NiMH plants to competitor Sanyo. It realizes that while it may
lose short-term market share in these older technologies, it will gain in the long-term with
its ALB foothold. Toshiba also realizes that these newer chemistries will be more
profitable for the firm over the long haul. Loyal Toshiba customers’ willingness to pay
more for higher-end products and services is not the only factor in the profitability
analysis. The company foresees accelerating price erosion in these older technologies in
the near future and wants to divest itself from them incrementally.
ULTRALIFE
Technology
Ultralife is a specialty battery manufacturer that produces both primary and secondary
cells. Its major product is the lithium “Pouch” cell that consists of lithium anode and
manganese dioxide cathode electrodes. These are folded in a flat configuration and
sealed in thin, lightweight laminated aluminum foil pouches. This lithium manganese-
dioxide chemistry results in a power source with nearly twice the energy of cylindrical-
cell lithium sulphur-dioxide batteries, which are currently in widespread use by the U.S.
Army and NATO countries. The lithium manganese-dioxide configuration is also used in
the firm’s commercial batteries.
Markets
Ultralife’s primary focus tends to revolve around military and industrial markets for its
products. In terms of consumer markets, however, it appears that the firm is reaching
beyond the portable device market to grab a slice of the medical applications market. It
is also much more focused on a global marketing strategy, having recently opened a new
13

14. li-polymer production facility in Taiwan to serve the Asian marketplace. It’s also
formed, with other Asian players, a joint-venture firm called Ultralife Taiwan Inc. The
venture will also produce li-polymer batteries, thereby expanding the firm’s Asian market
territory.
Strategy
Ultralife recently entered into two agreements with the U.S. Army, which will enhance its
marketing position. As part of the U.S. Army’s Communications-Electronics Command
(CECOM) and Land Warrior programs, the firm is under contract to complete the
development and engineering of its “Pouch” batteries. The U.S. Army desires the firm to
have the production process streamlined as soon as possible so that it may fulfill its
mission requirements more efficiently. The military foresees the portable cell as
enhancing its mobility and logistical requirements and also sees the manganese-based
chemistry as not only safer, but also more environmentally sound than older sulphur-
based chemistries. Through these contracts, Ultralife not only solidifies its reputation as
a supplier of quality cells to the military, but also enhances its global marketing strategy
as U.S. allies in NATO and Asia customarily find themselves buying similar equipment to
the American military to maintain ease of interoperability and systems integration in joint
exercises.
ELECTRIC FUEL
Technology
Electric Fuel is a U.S. firm with its roots in the Israeli military-industrial complex. Its
contender in the battery marketplace is the ZincAir, first produced in 1998. ZincAir
batteries are related to alkaline battery technology that uses the controlled oxidation of
zinc to produce electrical energy. The difference is that instead of storing oxygen inside
the battery in manganese dioxide, ZincAir batteries draw their oxygen from the
atmosphere. As a result, the battery’s casing has miniature air holes to allow the oxygen
influx. Electric Fuel says the ZincAir offers from three to five times the capacity of most
rechargeable batteries, including Li-ion and Li-polymer.
Markets
Due to the firm’s origins, Electric Fuel is targeting its product initially toward specialty
applications in the military-industrial sphere. It is not known if they have plans to enter
the portable device marketplace.
Strategy
Electric Fuel’s strategy seems to be two-pronged. Initially, its focus was on signing as
14

15. many distribution partners for its ZincAir as humanly possible. These included partners
in the U.S., including CompUSA and InTouch USA, Canada, Mexico, the U.K. and Asia.
However, it soon found itself ill equipped to deal with the high demand from its
expanding distribution network.
To compensate for this, the firm switched from manual to automated production last June
at its Israeli production facility. The exchange allowed the company to expand from its
initial 30,000 units per month capacity to 500,000 per month by December 2000. It’s
anticipated that this facility will allow the company to produce sufficient volume
production for the foreseeable future.
POLYFUEL
Technology
Polyfuel is a spin-off from Stanford Research Institute (SRI), based in Palo Alto, CA.
The firm aims to commercialize the research performed at SRI in the field of fuel cell
development. It already has developed a membrane for use in a direct methanol fuel cell
(DMFC). These cells are similar to proton exchange membranes (PEMs) currently being
designed for the automotive market, but obtain hydrogen directly from methanol. Since
the cells consume methanol rather than hydrogen gas, they can be refueled quickly and
inexpensively, making them more suitable for the portable devices market. Polyfuel is
looking to supply products by the end of 2001, which will supply five times as much
continuous power as today’s Li-ion and Li-polymer batteries.
Markets
Polyfuel is looking at the entire portable device field, but for right now has cell phones
and PDAs as its top priorities. The company has stated that once it becomes larger, it
may also look at methanol fuel cell applications for the automotive as well as household
markets, scheduled to emerge around 2005 and 2010, respectively.
Strategy
In addition to its technological edge, Polyfuel stands to benefit from its relationship with
an, as of yet, undisclosed chemical producer which will manufacture its cell membranes.
This relationship is significant in that the chemistry industry, for the most part, has
displayed a lack of interest in manufacturing membranes for the portable devices market.
It seems that the industry is more concerned with possible fuel cell applications for the
automotive and household markets for the near future.
15

16. Polyfuel plans to use this advantage to beat larger firms, such as Motorola and Samsung,
to market. Motorola, in particular, is looking at portable fuel cells based on liquid
methanol technology, which it says will outperform Li-ion and Li-polymer batteries by a
factor of 10 to 1. The technology is expected to be commercially available in the next
couple of years. However, since it has faced the lack of interest from chemical producers
with regard to the necessary membrane material, it has been forced to turn to Los Alamos
National Laboratory (LANL) to develop its membranes. Since LANL’s core competence
may lie more in design and not necessarily volume production, Motorola says it is
unlikely to introduce fuel cell battery substitutes until at least 2003. Polyfuel, conversely,
is set to begin volume production at a million fuel cells per month beginning the end of
2001.
FULLERENE INTERNATIONAL CORPORATION
Technology
Fullerene International Corporation (FIC) is a joint venture formed to commercialize
fullerene materials. The FIC partners are Mitsubishi Corporation (MC), Materials and
Electrochemical Research Corporation (MER), and Research Corporation Technologies
(RCT). MER, the partner who originally started the fullerene production, claims
fullerenes can store five times as much hydrogen as the metal hydrides used in nickel-
metal hydride batteries. Compared to lithium-based batteries, fullerenes are said to
provide higher performance and to be lighter, safer, and better for the environment.
Markets
The partners foresee many different applications for fullerene-based materials such as
field election displays (FEDs), fuel cells, superconductors, capacitors, and electric
vehicles. However, they are targeting the rechargeable battery market as its first
commercial endeavor.
Strategy
FIC plans to use Mitsubishi’s extensive experience with marketing and business
development contacts to form alliances with several Japanese firms to explore
commercial applications for fullerenes. The venture is a new path for partner Mitsubishi,
which has realized that leveraging advanced, emerging technologies into new ventures
keeps the firm abreast of the latest technological developments in the long term. One of
the initial successful contacts has been with the Honjo Chemical Corporation, a specialty
chemical company in Osaka.
The partners have found the fullerene commercial potential limited by the ability to
produce in volume, thereby yielding a lower cost. The problem was attacked by initially
opening a production facility in Arizona, based on MER's process technologies. To
increase production capacity further and to provide a logistical support base to its
16

17. potential customers in Japan and throughout Asia, FIC has helped Honjo build a reactor
and separation system at its facility in Osaka. The plant came online and started
producing material in December 2000.
To summarize:
Firm
Technology
Markets
Strategy
ELECTROFUEL
Lithium-ion SuperPolymer
Portable devices, defense, medical
JVs with OEMs
LITHIUM TECHNOLOGY CORP.
Fiber-web substrates
HEVs, portable devices
Lithium stockpile, cathode material licensee, fuel cell partner
VALENCE TECHNOLOGY INC.
Manganese oxide and phosphates
GPS/digital phones, military/aerospace
Licensee of PliON technology, licensor of hybrid technology
TOSHIBA (TEAC)
Advanced Lithium Battery (ALB) based on
Li-polymer
All portable devices, including its own proprietary brands
Leverage ALB toward future, divest older technologies
ULTRALIFE
Pouch cell based on lithium manganese-dioxide
Military-industrial sector, medical applications
Global markets through U.S. Army contracts
ELECTRIC FUEL
ZincAir cell based on alkaline technology with oxygen influx
Military-industrial sector
Global distribution network, automated production
POLYFUEL
Direct methanol fuel cell (DMFC)
Portable devices, automobiles, households
Exclusive relationship with membrane producer
FULLERENE INTERNATIONAL CORPORATION
17

18. Fullerenes
Batteries, FEDs, fuel cells, superconductors, HEVs, etc.
Keiretsu contacts, Asian production base
STRATEGIC RECOMMENDATION
In order to successfully penetrate the world market for rechargeable batteries, NanoLab must
fully exploit its core competence of large-scale, customizable carbon nanotube (CNT) production.
The firm’s patented chemical vapor deposition (CVD) manufacturing process is also an
advantage in that it lends itself more readily to full scale production when compared to the arc
vaporization and laser ablation methods.
It is recommended that NanoLab collaborate with several research-based institutions that are
currently investigating future battery and fuel cell technologies. This academic collaborative
research effort will not only satisfy the goal of keeping NanoLab’s research cutting-edge, but will
also enable the firm to keep abreast of research activities performed by potential competitors. As
this collaboration proceeds, it’s also suggested that NanoLab become an eventual licensee of any
technologies emerging from these groups.
NORTH CAROLINA CENTER FOR NANOSCALE MATERIALS
It’s highly recommended that NanoLab team with Otto Z. Zhou in his efforts to design an iron-
polymer nano-composite battery. The battery hypothetically offers twice as much specific energy
as today’s competing Li-ion batteries. This technology might suitably complement NanoLab’s
technology if a licensing agreement were pursued.
NORTHEASTERN UNIVERSITY CATALYTIC AND NANOSTRUCTURED
MATERIALS
Terry Baker and Nelly Rodriguez have collectively done extensive research in the area of
hydrogen storage in graphite nanofibers. Although many in the scientific community have
debunked the pair because of unsuccessful attempts at reproducing their results, the potential
ramifications of their findings with regard to fuel cell technology is simply to great to ignore.
Additionally, the couple may welcome advances by NanoLab to work in partnership simply to
substantiate the validity of their earlier work.
DEPARTMENT OF MATERIAL SCIENCES AND ENGINEERING, M.I.T.
Dr. Ann M. Mayes of M.I.T. has also performed considerable research in her efforts toward the
development of new electrode and electrolyte nanostructures for Li-polymer batteries. Her group
is expected to have a prototype battery based on this technology very shortly. It’s also known that
they’re considering starting a commercialization firm.
After cooperation with these groups, NanoLab can then combine these technologies with its own
proprietary CVD-based production expertise Valence-style and sublicense the resulting efforts to
interested parties. This will also enable NanoLab’s licensees to achieve volume production
themselves, which is the key success factor in the battery industry. For example, LANL is a
potential licensee as it’s currently under pressure from Motorola to produce membrane materials,
which will enable the giant to enter the portable device fuel cell market quickly. Under this
scenario, the lab would gain priceless volume production know-how and consequently enable
Motorola to remain competitive with smaller, aggressive firms such as Polyfuel. NanoLab’s
CVD patent is the key to this strategy because under the patent’s terms, NanoLab has an
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19. unrestricted sublicensing clause. This is the foundation to the firm’s global expansion in the
battery marketplace.
References
1”
Ion dominates lithium battery market”, Purchasing, February 10, 2000
2
“Lithium-polymer market taking shape: The technology is out of the lab and is entering
the commercial realm”, Electronic Buyers’ News, December 4, 2000
3”
Expect lower prices for lithium batteries”, Electronics Purchasing, February 22, 2001
4
“Global rechargeable battery-pack market is expected to grow from about $4.4 billion in
1999 to around $5.8 billion in 2004”, Electronic Buyers News, September 18, 2000
5
See 2
6”
Battery makers ramp lithium-polymer units”, Electronic Buyers News, February 1,1999
Note1: Linear regression was used to forecast sales for 2008, thereby yielding the 150%
growth figure between 2007 and 2008
Note2: In “Valence Buys Battery-Technology Rights From Telcordia for $50 Million in
Stock”, Wall Street Journal, November 09, 2000, Valence predicts the polymer-battery
industry will grow from $1 billion/yr to $8 billion/yr by 2005, although it is unclear
whether the prediction has the year 2000 as its starting point or the year 2003.
7
”Batteries”, Electronic Buyers News, September 18, 2000.
Note1: Linear regression was used to forecast costs for years 2001 through 2003
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