The Powerhouse: Inside the Invention of a Battery to Save the World (28 page)

Kumar continued to dwell on the potential for a buyout and hence a big payday for investors and employees. July, he said, would be “a fork in the road” when Envia would have to make its decision on its new owner.

Goldman Sachs returned with gloomy news—as of now, no one was prepared to acquire Envia. LG and Samsung had declined almost instantly. Asahi Kasei, the most likely buyer, had also said no. One problem was that the word seemed to be out regarding Envia’s underperforming cells. Another was the general malaise hanging over electric cars—even if a big company might previously have been prepared to take a gamble, it was now less inclined given slow vehicle sales.

Kumar had three months of grace time.

A
mid the drama at Envia, President Obama paid a visit to Argonne. When the plans were announced, Lynn Trahey said to Gallagher, “I’m going to find a way to meet him.”

“Oh yeah?” Gallagher said. “Can I meet him, too?” He figured Trahey was blustering. But that evening, she e-mailed Matt Howard, Argonne’s public relations chief. The subject line was “I volunteer.” Trahey went on:

To spend as much time with Obama as you need me to next week. I know, I know, this is so selfless of me. I think he’d love to meet me! I am 100% available.

Howard replied: “Bribes.”

Trahey added rationale for putting her before Obama.

I’m a female in a land of men. He has daughters so seeing women in STEM will be very important to him. If Argonne is seen as a sausage party we’ll be in BIG trouble.

I’m in the Hub

I’ll blackmail you on bribes

I’m short so he’ll look tall and powerful in pictures.

“All good reasons,” Howard replied. Send me a biography and a photo, he went on. But no promises.

Gallagher received an e-mail from Howard, too. Isaacs had endorsed both Trahey’s and Gallagher’s participation in the Obama visit. They would demonstrate the lab’s battery work in a quick two or three minutes as Obama walked through the premises.

Isaacs added Thackeray’s name, which was natural. The only problem was that Thackeray was in Barcelona, being feted by the global battery community.

Two months earlier, he had undergone the surgery to remove his spleen. Now fully recovered, he had flown to Spain with Lisa and their three grown daughters, with whom he planned a subsequent vacation around Barcelona and on to London. Thackeray’s abdomen was flatter, his smile brighter. Flanked by his daughters, he watched at the Casa Convalescència as, one by one, the world’s battery geniuses took the stage to recall his achievements and his friendship. Goodenough, now ninety and caring for his ill wife, could not make it but wrote the frontispiece for the symposium program.

Thackeray took the stage. One thing he wanted to make clear was that this was not a retirement party. “You’re not getting rid of me yet,” he said. He choked up, talked a little bit more, then, along with Chamberlain, caught a flight back to Chicago. His family would go on without him to London. He wanted to be there for Obama.

The Argonne orchestration machine was in motion. For three days, it subjected Trahey and Gallagher to dry runs before fake Obamas starting with Elizabeth Austin, Isaacs’s staff speechwriter. They were coached on where to stand, what to say, and how to say it. The White House advance team showed up and ran Trahey and Gallagher through their lines again.

The morning arrived. Accompanied by Crabtree, Obama bounded across the lab and up to the waiting young scientists. “These [are the] two hotshots here?” Obama asked. “That’s them,” Crabtree said. Trahey wore her blond hair down. She and Gallagher both dressed in their usual khakis. Each shook the president’s hand before Gallagher led off. He pointed to a battery, the Volt’s, which he said “was invented right here at Argonne,” then mentioned five-five-five, an account straight out of Crabtree’s Hub introduction. To create the kind of breakthroughs intended in the Hub, Gallagher said, “you need engineers like me working with materials scientists and chemists like Lynn Trahey.”

“My job is on the discovery side of things,” Trahey said, picking up the narrative. She handed Obama a coin cell while speaking of chemistry, and herself gripped an atomic-scale model of Li
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MnO
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made of multicolored plastic beads. They exchanged some chit-chat. Then Obama was gone.

Minutes later, the president stood before a small, noisy crowd near the beam line. With a refrain on the global energy race, Obama unveiled a new long-term fund for energy research. “I want the next job-creating breakthroughs, whether it is in energy or nanotechnology or bioengineering . . . to be right here in the United States of America,” he said.

This was about standing behind inventions that might otherwise not happen. Obama said, “Two decades ago, scientists at Argonne led by Mike Thackeray, who’s here today. Where is Mike?”

A deer-in-the-headlights freeze crossed Thackeray’s face as he rose slowly up and out of his seat.

“Here he is right here,” Obama said, fixing a gaze on Thackeray. “Mike started work on a rechargeable lithium battery for cars. Some folks at the time said that the idea wasn’t worth the effort. They said that even if you had the technology, the car would cost too much. It wouldn’t go far enough. But Mike and his team knew better.” So went the story of the NMC and the Volt. Thackeray, still stone-faced, slid back into his seat.

Obama closed: “We don’t stand still, we look forward. We invent, we build, we turn new ideas into new industries. We change the way we can live our lives here at home and around the world. That’s how we sent a man to the Moon. That’s how we invented the Internet. When somebody tells us we can’t we say, ‘Yes we can.’”

It was hokey. A big cheer went up.

Afterward Trahey, cheeks crimson, said, “He stood this close. This close.”

“I’m on cloud nine,” Gallagher said. “It was an incredible experience.”

K
umar said his team was “going crazy” attempting to meet the GM specs. The carmaker’s aim, he said, was to eliminate its development risk early in the production process so that after August 2014, its sole challenges would be to engineer the remainder of the car and sell it to a tough-minded public. But “it seems we overpromised,” Kumar said. “I have never built a team in a rush. It’s a recipe for disaster.” He thought he could reach 310 or 315 watt-hours per kilogram. That would involve blending the materials from the Volt cathode with those of the materials announced at ARPA-E. If GM wanted to do that, he could have the system ready for the 2016 model. But if the company wanted more, such as the promised 350 watt-hours per kilogram, that “will take another six months or a year,” Kumar said. At the higher 4.4 volts, the battery was still cycling just three hundred times. In other words, it would not be ready for the big launch.

He would raise this trade-off with GM when he had the chance. Kumar continued to sound hopeful about Envia’s general prospects. The payoff was only a matter of time. He said, “Most likely somebody will buy us out this year.”

GM and Envia held their second quarterly review in July. Kumar had again missed the milestones on both the Volt and the two-hundred-mile car batteries. He still could not get the 400-watt-hour-per-kilogram material to perform as advertised. The ARPA-E Summit was a long time back.

The GM men were furious. “The anode material is not Envia’s,” said Matthus Joshua, the automaker’s purchasing executive. Envia had “misrepresented the material.” Larry Nitz, the lead engineer, said Envia had earned “a failed grade for this quarter.” The meeting ended in acrimony.

Two weeks later, on August 7, a letter from Joshua arrived at Envia. Envia’s product claims prior to the contract “appear to have been inaccurate and misleading,” he wrote. The anode was represented as proprietary but was actually bought “from a third party.”

“Following Envia’s admission that it misrepresented the composition, origin and intellectual property content of the 400 wh/kg prototype battery, Envia requested that GM provide additional time for Envia to replicate its 400 wh/kg battery test results. . . .”

GM had provided that time. But, he wrote:

Envia has failed to move the project forward or replicate the results on a timetable that could conceivably support the vehicle development process. In fact, Envia was unable even to replicate prior reported test results even when utilizing the third party anode that had purportedly been utilized in the Arpa-E test battery.
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Joshua meant that even if Kumar could somehow later comply with the promised spec, even if he could later reproduce the ARPA-E result, GM lacked reasonable confidence that it would be ready in time for the 2016 launch. He did not speak of any fallback position for GM. Kumar’s private suggestion that they go to a 310- or 315-watt-hour-per-kilogram battery as an intermediate stage went unmentioned in his letter. Given the facts, he wrote instead, the automaker was entitled to terminate the contract. Toward that possibility, it was conducting an internal review—“necessarily re-evaluating its commercial relationship with Envia.” GM would notify Envia when the review was complete.

The deal was unraveling. GM said it wanted back the $4 million it had paid out. Envia itself was in turmoil: just eight months after the signatures, Kumar, Kapadia, and leading board members were at each other’s throats. The start-up had $2.1 million left in the bank, less than four months of operating expenses.

 • • • 

On August 29, 2013, Kapadia and Iyer caught a red-eye to Detroit. They would try to salvage whatever goodwill remained.

The next day at GM’s offices in the Detroit suburb of Warren, they met with a “visibly and justifiably angry” Joshua and Nitz. Kapadia tried to appeal to their sense of decency. Envia had committed mistakes, but the two companies should try “to mitigate the employment and immigration risk on the hardworking scientists at Envia who were likely to be adversely affected” if the start-up collapsed, Kapadia said. The GM men listened. There was no going back, they said—the carmaker was relinquishing the license for the 400-watt-hour-per-kilogram material. But they relented on the more onerous threats. Envia could keep the cash paid. They also signed a legal release—GM would not sue. That was the best they could do.

Kapadia and Iyer flew home, relieved. At least they would not end up in court. Nor would they be forced somehow to scrape together the $4 million.

The following day, the pair reported to the board. Hearing that the threat of a suit was lifted, the directors fired Kapadia, along with Iyer and Rohit Arora, the company’s chief financial officer.
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Purnesh Seegopaul, the Pangaea Ventures investor, assumed Kapadia’s duties. In a meeting with Iyer and Arora, Seegopaul said the business team had done “a poor job negotiating the GM agreement.” “The milestones in the agreement were very demanding and . . . no company in the world could achieve them,” he said. No one mentioned that nine months before to the day, all three men had been awarded stock options and promotions for a deal well negotiated.

Seegopaul told Kumar to get back to the lab, but under fresh marching orders—he was to make no further public announcements. No one outside GM, Envia, and its board—certainly not the Department of Energy or any reporters—was to know that the doubters about the little Newark start-up had been right all along.

K
umar blamed the mess on Kapadia, his first investor and the man with whom he had seemed to collaborate so well. During the entire negotiation, he now said, Kapadia and Iyer had run “a black-box operation.” Within Envia, they and only they were privy to the details of the deal. The business team had obligated Envia to unrealistic milestones and Kumar to an unattainable time line. The chance for an IPO was likewise squandered.

Kapadia’s team included “extra people we never needed,” Kumar said, his arms crossed. They were individuals “with a free mind doing nothing” who were responsible for “bad things.” Meanwhile, Kapadia had basked in the spotlight. “When something gets achieved, you see the CEO on CNBC. When it goes wrong, you blame the technology guys,” Kumar said. “They get the commission, we get the blame. It’s always like that.”

Thankfully, he said, the board understood what happened and sided with him: “I have a very good board. [Now] people are gone and I can get back to my technology.”

And the letter from GM’s Joshua and the claims of misrepresentation?

“GM is a large company,” Kumar said. “Even if you have one guy who says a bad thing, you can have twenty guys say good things.”

Kumar’s explanation was all but entirely false. The e-mail record showed that he approved the technological commitments and time line. When he spoke of having “overpromised,” the company truly had. But he led that act. All were eager for the deal and guilty of exuberant self-promotion. But Kumar—the company’s founder and the discoverer of the NMC in the Argonne catalogue—was the sole executive who knew what was possible. Kapadia and Iyer, in no position to offer expert opinions, checked the dates and material commitments with him. Kumar passed the judgment on which all relied.

Was Kumar a con man? Was he looking to cash out before he was found out? The Argonne guys—all of them skeptics from the time that Kumar began to boast about his big breakthrough—could not decide. Thackeray said Kumar was not a swindler but that, given the temptation to stretch the truth, a battery guy had to “know the difference between right and wrong.” Kumar clearly did not. Chamberlain said the truth was obscured by bad blood at the top, but that, if he had to choose who was more at fault, he would not blame Kumar but Kapadia. In his opinion, Kapadia did run a black-box operation, assuming haughty airs while providing no supporting data and demanding that a big American company buy his start-up. Gallagher wouldn’t really respond when you asked how he felt. He simply looked sad. “I told you so,” his expression said. Envia had fooled many, many people who should have known better. “What is it about humans that makes hype irresistible? Some sort of fundamental desire to dream?” Gallagher said.

At the ARPA-E Summit, Kumar and Kapadia had led a small news conference that included a slide with the first Crane results. Any journalist, if sufficiently acquainted with cycle testing, could study the slide and write the dismal truth about the Envia cathode. But none appeared to be so informed and, absent Kumar or Kapadia calling attention to the plunge in energy density, it went unreported. Kumar’s sin of omission crossed the line into explicit deception the same day, when Envia distributed a news release on the 400-watt-hour-per-kilogram breakthrough. This announcement excluded the Crane report entirely and skipped its description of the plummeting energy density. Instead, it published charts that were not part of the Crane evaluation at all. These charts described the anode, which, the illustrations said, continued to work at 91 percent of capacity after three hundred cycles, a very impressive number. The chart was deceptive not only because it displayed data on which Crane did not report, but because it suggested that the cell as a whole was relatively stable.

The trick was the chart’s subtle substitution of the metric
capacity
, rather than
energy density
, what Crane measured. Capacity is a measure of how many electrons flow in a single discharge of the battery cell. It can be maintained for numerous cycles even as the cell’s energy density is plunging. Capacity was precisely what had deceived Thackeray and Johnson when they were touting their invention of NMC 2.0. The energy of each individual electron—in essence what the voltage measures—was lessening each cycle. This was another way of describing voltage fade. At the three hundredth cycle, the Envia cell’s
energy
was at 60 percent of its original level and dropping, nowhere close to the 91 percent of
capacity
that was registered.
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For twenty months—from the time of ARPA-E until the fallout with GM resulted in public release of the Crane report—Envia released detailed charts depicting only the capacity. It allowed the impression to persist that it was achieving energy density of 400 watt-hours per kilogram for hundreds of cycles. Again and again, Kumar created the appearance that the cell was fine when the energy density was going haywire. Only when the news of the fallout with GM went on the Internet did he change the company Web site, pull down the charts on capacity, and post the second Crane report. He never released the complete first Crane report—the one on which the ARPA-E announcement was actually based.

Yet that was not the total picture. There was more to Kumar, and when you looked at everything, his behavior did not resemble a pure confidence game. His pursuit of Jason Croy did not square with a picture of a con man. His frustration with the national labs also lacked the appearance of a scam. Kumar genuinely thought he could parlay the Argonne material into a blockbuster new battery and enable the electric-car industry. History is filled with single-minded entrepreneurs with outsized notions of their prospects. He also was chasing an outsized payday. Along the way, Kumar understood that he was in over his head. But he had made too many public and private claims. If he just held on, the payday could come. In the end, as the wreck was approaching, he hoped that somehow everything would work out. Even if he could not reproduce the 400-watt-hour-per-kilogram super-battery, nor the lesser 350-watt-hour-per-kilogram version, perhaps GM would accept something less.

As for Kapadia, he claimed he had known nothing until the end, but he clearly had. He knew of the Crane results, which he himself described to journalists. He was prepared to live with the deceptive anode: at least twice in the GM crisis, he offered his resignation but never walked out the door. His team, too, wanted to stay on despite the faulty performance, the swapped anode, and the lost GM contract, but were not permitted to.

The board, made up almost entirely of investors and executives, had personal incentives to stay quiet and hope that Kumar somehow still managed to win so that they could cash out. Which is what they did.

As Gallagher indirectly suggested, GM was party to this excessive enthusiasm. Disregarding its engineers, its VC and technology sides thought their long, painstaking vetting of Envia’s coin cells was sufficient precaution against product risk. But it wasn’t. The carmaker, presumably in possession of the conclusions from the Crane report, decided that in just twenty months Kumar could solve electrochemical problems that were vexing some of the best labs in the world. That was a lot of hope to hang on Envia.

Arun Majumdar, the showy ARPA-E director who had acclaimed the start-up to the industry and the world, left the agency and joined Google. In early 2013, he also became a member of the Envia board. After it all fell apart, Majumdar said the attempt to put Envia’s work into a commercial vehicle was premature. “Envia is not ready for prime time in terms of product. That’s been the realization,” he said.

As for why Lauckner and the rest of GM elected to stay mum and maintain the appearance of a relationship with Envia after the fallout, that was understandable as well. There was no profit in going public with a fiasco. The news could discredit the Volt and tarnish GM’s reputation for developing new technology. Wall Street could pummel the stock. Politically the fallout would also be uncomfortable, as the Republican Party would rub both GM’s and the Obama administration’s nose in what it would call a waste of millions of taxpayer dollars on useless stabs into clean energy.

Wan Gang was still out there, as were Japan and South Korea. The big stakes remained. So even in a circumstance of misrepresentation, exaggeration, sleight of hand, and general slipperiness, for GM there was a case to be made for sending Kumar back to the lab. He was a scientist. The remote prospect remained that some time in the future, by a miracle, Kumar actually would succeed.

 • • • 

In the weeks after, Atul Kapadia and his two lieutenants asked the Envia board to issue a short press release explaining their departure as a change of corporate strategy and thanking them for their work. If Envia could not see fit to do so, they attached a fifty-two-page civil suit they intended to file in the Alameda County Courthouse against Envia and Kumar personally. It alleged fraud, wrongful termination, and retaliation for their trying to right the false representations about the anode. When the company was slow to respond, the men filed the suit, divulging many of the previous six years of corporate secrets. It was yet another Envia blunder. The mission of keeping the final, sorry year under wraps was blown.

Kapadia’s lawsuit borrowed extensively from the legal complaint filed the previous year by NanoeXa, the company where Kumar and his cofounder Mike Sinkula had worked prior to Envia. When examined together, the suits alleged that Envia, while claiming to be marketing proprietary technology, relied almost entirely on IP that it either stole or appropriated without attribution from NanoeXa and Shin-Etsu. In terms of the cathode, the suits, relying on the work of a private forensic investigator, alleged that Kumar secretly downloaded ninety-nine files from the computers at NanoeXa, many of them in a flurry over his last days and hours at the company. Without these files, the suits asserted, there would have been no Envia as it came to be known. Envia flatly denied the NanoeXa assertions. About this time, Kapadia’s wife suffered a relapse of cancer, and he and the other two former Envia executives dropped the lawsuit.
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