MOSES LAKE, Wash. — The forces creating a new American electric vehicle manufacturing industry are apparent in the cornfields here, where two factories are rising 1 mile apart.
Sila Nanotechnologies and Group14 Technologies both make black powders, known as anode active materials, that improve the performance of EVs. Both got federal grants for the same amount, $100 million. Both are ardently courted by luxury automakers in Germany.
It’s no coincidence. Supply chain requirements in the Inflation Reduction Act, European carbon regulations, U.S. rivalries with China, South Korean investments and a critical minerals squeeze all are converging to remake this town and surrounding county, which historically was best known for its potatoes and apples.
“Moses Lake is becoming this phenomenal little hub,” said Chuck Sutton, the vice president of marketing for REC Silicon. His company sits next to both of the startups, and will soon start production of silane, a gas that infuses the black powder with silicon to make a battery product that could outperform what’s coming out of China.
What’s happening here echoes a transformation playing out across America that could influence the outcome of President Joe Biden’s energy and climate agenda. A cumulative $165 billion of investment since 2015 in EV and battery factories is translating into concrete-and-steel reality and shaping 20th-century communities like Moses Lake, which sits on the flat edge of the Columbia Plateau in view of the snowcapped Cascade Range.
The locations for emerging hubs like Moses Lake are chosen in part to take advantage of regulations in the District of Columbia and Brussels and business decisions in Seoul, even if the locals could care less about EVs. They reveal the strains on the EV industry’s potential — in its voracious need for energy and limits on how much of it can be generated and moved through transmission lines.
Moses Lake also has a large supply of hydropower, which makes it an attractive option for companies looking for low-emissions electricity to ensure their exported products meet Europe’s carbon stamp of approval. Under standards passed in June, Europe requires EV batteries — including exported ones from the U.S. — to verify their carbon footprint.
The two companies use materials produced in America, making the town a prime spot to meet climate law requirements mandating that beneficiaries of EV tax credits use domestically sourced materials. In a time when critical minerals are becoming as important as oil, the town is one of the only domestic sources of silane, giving it an edge in the EV manufacturing boom.
Since the Inflation Reduction Act passed a year ago, plans to build EVs and their batteries and components have sprung up across the country like weeds after a spring rain. The law’s incentives have spurred $56 billion of investment at 97 projects, according to an analysis this month by E2. Some cities, like Reno, Nev., and Atlanta, seem on their way toward becoming big industrial centers for EV and battery production.
According to Jay Turner, an environmental studies professor at Wellesley College who maps new North American EV production, Moses Lake shows the potential for “places with great resources to be transformed by the clean-energy supply chain.”
At the same time, it may foreshadow the limits of America’s ability to make the tens of millions of EVs that must be sold to reduce carbon emissions and slow climate change. One of its biggest draws — its cheap and clean energy — might not be able to keep pace with the torrid demands of Sila, Group14 and others gravitating here.
The energy source
Politically, the region doesn’t seem like fertile ground for green energy. Grant County, in which Moses Lake sits, scatters its 100,000 residents over what is mostly farmland, and 66 percent of its voters chose Donald Trump in the last presidential election. Sightings of EVs on its roads are rare.
Highway signs along Interstate 90 , the area’s main artery, call Grant Country America’s leading grower of potatoes — even as it has become in recent decades a center for production of carbon fiber, steel and chemicals and has a growing role in aerospace.
“For a rural county in eastern Washington, we’re extremely diversified in our economy,” said Brant Mayo, executive director of the Grant County Economic Development Council.
The engine of that diversity is the Columbia River, which forms the county’s western border. There, the Grant County Public Utility District (PUD) owns and operates two titanically large dams, called Wanapum and Priest Rapids.
The dams irrigate the cherry, apple and pear orchards on the riverbanks, and can produce more than 2 gigawatts of low-carbon power. That’s equivalent to more than 6 million solar panels, allowing the PUD to offer some of the cheapest electricity in the state.
The big dams were a magnet for new battery contenders like Sila and Group14.
“Hydropower is already priced half of what we saw elsewhere on dirtier grids,” said Gene Berdichevsky, the CEO and co-founder of Sila, who got his start as one of Tesla Inc.’s first battery designers.
Zero-carbon energy has become crucial to his calculations. Forward-leaning industries like those in Silicon Valley have long considered clean energy a nice-to-have benefit. But for new battery makers looking to play in the automotive supply chain, it’s a must-have, because of carbon rules that are already in place in Europe and are possible in the U.S. in the future.
“Renewable sources of power for production of raw materials is really critical for the direction that the auto industry is trying to go,” said Rick Luebbe, the CEO and co-founder of Group14.
For Sila and Group14, zero-carbon products are demanded by German customers.
One of Group14’s biggest investors is Porsche, the German sports car maker, which led a $614 million funding round early last year. Meanwhile, Sila’s partner is Mercedes-Benz, the German luxury car maker. When Sila’s factory comes online in 2025, its product will be shipped for integration into Mercedes’ new G-class electric SUV.
Porsche and Mercedes, in turn, are under pressure from Europe’s regulators.
The regulation passed by the European Parliament in June requires every EV battery to carry a label declaring its carbon footprint. It includes a “battery passport” system to digitally track batteries through the supply chain.
German automakers will pay a premium for supplies that help them meet those regulations, even if they are situated far back in the supply chain. This mechanism is sparking an industrial revival — much larger than that of Moses Lake — in Bécancour, a village in the Canadian province of Quebec, which is building a huge battery supply chain based on hydropower dams on the St. Lawrence River.
So by the magic of regulations — specifically carbon limits written in Brussels — dams in the Pacific Northwest have become a sought-after part of the supply chain for German luxury cars.
“They’re part and parcel,” said Berdichevsky of the relationship between Moses Lake’s hydropower and the markets to which he sells. “The cleanliness of the power you’re using is intimately related to the price of your product.”
Explosive and essential
While the dams go a long way toward explaining the battery makers’ presence in Grant County, a different force nudged them onto this particular cornfield.
Both of their factory sites lie just outside the gates of a third factory that has produced nothing for the last four years.
Called REC Silicon ASA, it could be mistaken for a miniature oil refinery, with its maze of tubes and tanks that can be seen from miles away. But instead of petroleum, it will soon start producing silane, which is highly explosive with an overwhelming smell of vinegar.
Silane is the starting point for startups’ key offering, of anode active materials based on silicon. The anode, or negative, side of a battery holds electrons until they travel across to the battery’s cathode, or positive side, and create an electric current. Active materials are the ones that make the battery capable of storing a charge.
So important is silane to Group14 that it established a research lab inside REC Silicon’s gates, even while the factory was still in a state of suspended animation.
“We really, really want to help them get Moses Lake turned back on,” said Grant Ray, Group14’s vice president of global market strategy.
REC Silicon’s trajectory — barely surviving economic ups and downs in the last decade — illustrates another facet of the emerging clean energy economy.
Starting in 2002, REC Silicon’s owners made ever-larger expansions of the plant and a sister facility in Butte, Mont. The company’s original and biggest proposition was to make silicon, the base material of solar panels.
REC Silicon assumed an American solar manufacturing boom was imminent. But those plans shriveled in the 2010s as American manufacturers died and China took the mantle as the world’s leading solar fabricator. In 2019, the Moses Lake plant was mothballed on the expectation that demand would revive one day. The smaller Butte plant stayed in operation.
With the passage of last year’s Inflation Reduction Act, the revival of the Moses Lake plant may be at hand.
REC Silicon plans to restart operations late this year with the help of the law’s tax incentives. Along with solar-grade silicon, it plans to make silane gas. That’s a valuable proposition, as REC Silicon Butte plant is currently the only domestic silane supplier, and the Moses Lake facility is larger and could produce far more.
The Moses Lake factory is hiring 150 people, including many previously laid off. Sutton, the vice president of marketing, has worked at the company for 31 years, and during a tour of the plant, couldn’t stop smiling.
“For us, I think the future is looking very bright and promising,” he said.
How silane and energy come together
To understand how Moses Lake’s two products — Grant County’s hydropower and REC Silicon’s silane — will join to make batteries, consider Group14’s factory in Woodinville, a suburb of Seattle on the other side of the state. The Moses Lake plant, when it comes online, will be far larger.
On the concrete floor in Woodinville, a different base material of the battery supply chain is sitting in big clear plastic bags. Luebbe, the company’s CEO, picks one of them up. It rustles loudly, even against the hum of the machines. The contents look like especially plump charcoal briquets, as if Group14 were preparing for a giant cookout.
“This is probably the purest carbon in the world,” he said.
The secret sauce of both Group14 and Sila is this carbon and its particular structure. Silicon is a tricky battery material because its molecules fluctuate in size depending on their charge. The startups have created custom carbon scaffolds to accommodate them.
The briquet-like balls are a middle step of Group14’s process. They began as blocks of polymers — a form of plastic — that spent about 10 hours inching along a conveyor belt through a kiln that heated them to 1,000 degrees Celsius. Hydrogen and oxygen burned off. Remaining were the carbon lattices that the company custom-designed for use in a battery.
“We take these into the powder room and we crush them, and then we mill them,” said Luebbe.
Then the powder, created from the crushing and milling, enters a reactor. A canister of silane — from REC Silicon’s plant in Butte — is piped in. The gas infuses what Luebbe calls “micropores” in the carbon lattice. With that final step, the black powder is vacuum-sealed in foil bags and sent to customers.
Here is where Grant County’s hydropower will come in. “This whole system runs on electricity,” said Luebbe.
When Group14 moves into its Moses Lake plant, electricity from Grant County PUD’s dams will provide the heat to power the entire process. In this way, the final product will have the low-carbon footprint demanded by the company’s customer, Porsche.
REC Silicon plans to produce a total 22,000 metric tons of silane a year, for Group14 and others. Sila, the other silicon startup, also bases its process on silane but hasn’t committed to buying it from REC Silicon. It has hinted at the prospect.
“The biggest silane producer in the country is right across the street from our facility,” said Berdichevsky, Sila’s CEO. “Certainly it’s very helpful.”
REC Silicon’s product is indisputably American.
That’s important because the EV subsidies for car-buyers in the Inflation Reduction Act — $7,500 per vehicle — requires critical minerals to be sourced either from allies or domestically. For this reason, U.S. automakers have a powerful incentive to seek out battery components made with silane from Moses Lake.
China and graphite
Looming behind the business plans of Sila and Group14 is the EV supply-chain dominance of China.
China, like the two startups, makes anode active materials, but with two major differences.
First, it relies on graphite rather than silicon. Graphite is the world’s default anode active material, present in virtually every lithium-ion battery, and in tremendous quantities, making up 60 percent of a battery’s volume.
Benchmark Mineral Intelligence, a mining consultancy, estimates that China produces 61 percent of the world’s naturally occurring graphite and refines 98 percent of finished graphite material. It is the battery material most dominated by China.
Silicon is an up-and-coming alternative. Silicon-active anode materials — like those made by Group14 and Sila with silane — offer denser energy storage and faster charging times than graphite. It can be either used in pure form, or blended with graphite. Because silicon is an abundant and cheap material, it could play a role in dramatically lowering the cost of batteries, and thus EVs.
Those benefits are among the factors leading to the U.S. Department of Energy giving the two companies each a grant for $100 million last October. That is the lowest amount DOE could bestow under the program, which was established by the bipartisan infrastructure law.
“We saw a need in the future to produce silicon oxide for the battery supply chain,” said Dave Howell. He played a role in choosing Sila and Group14 for the DOE’s grants as principal deputy director of the DOE’s Office of Manufacturing and Energy Supply Chains. “It’s the role of innovative technologies, and that’s really where silicon plays.”
South Korean cameos
While hoping to out-innovate China, the companies in Moses Lake are deeply partnered with another Asian power. South Korea has become a foundational actor in America’s EV industry, starting up almost $17 billion of projects in the last year alone, according to E2.
Three of Korea’s largest electronics makers — LG Electronics Inc., SK Inc. and Samsung Electronics Co. Ltd. — are America’s leading battery partners. They are in joint ventures with General Motors, Ford Motor Co. and Stellantis NV to build huge North American battery factories, from Ontario to Kentucky.
One of these giants, SK, is a leading investor in Group14. Like other battery companies, SK is motivated to locate and develop input materials for its next-generation products.
In 2021, SK and Group14 announced a joint-venture factory in South Korea.
Now nearly complete, that factory is expected to produce 10 GW of active silicon anode material a year. By comparison, Group14’s plant in Washington state will be twice the size. Its 20 GW of battery material could enable more than 152,000 Ford F-150 Lightning long-range electric pickup trucks.
The other Moses Lake connection involves yet another Korean industrial conglomerate, Hanwha Co. Ltd. Last year, Hanwha became REC Silicon’s largest shareholder.
In January, Hanwha’s solar subsidiary, Qcells, struck a deal to buy all of the silicon to come out of REC Silicon’s Moses Lake facility for the next decade for its solar panels.
The captive product, 16,000 metric tons of polysilicon a year, will earn REC Silicon $3 a kilogram in tax credits from the Inflation Reduction Act. Then the material will be shipped from Moses Lake as an essential raw material for Qcells’ massive new solar factory complex in Georgia.
“Oh, my gosh, it’s massively important,” said Marta Stoepker, a spokesperson for Qcells, of REC Silicon’s polysilicon. “When we’re producing out of our new factory, we’ll know it’s made in America.”
‘Busy as hell’
Eventually, the expansive dreams of Group14 and Sila will have to navigate the crowded desk of Louis Szablya, 66. He came to Grant County PUD five years ago and is head of its large power solutions team. Szablya saw it as an edging-toward-retirement kind of job. It hasn’t turned out that way.
“I figured I’d have a quiet time here,” he said, “and it’s been busy as hell.”
The reason Szablya is so busy is that the battery companies aren’t the only new suitors for Grant County’s electricity. Szablya is in charge of the largest power customers, and there are 50 of them, including energy-hogging data centers and chemical plants.
When REC Silicon restarts later this year, it will become one of the most power-hungry customers in the region. Between them, these big enterprises use more than half of the PUD’s power.
Cheap, reliable power has been the county’s welcome mat for decades. But meeting the need is not as easy as it used to be. Szablya estimates that the county’s formidable dams could be just one to three years away from bumping up against what is known as the resource balance limit.
That limit looks at the worst-case scenario in a bad snow year. “You can only plan on what you have for sure,” Szablya said. “That’s where we’re right on the edge of.”
Hydroelectric scarcity or not, both Group14 and Sila plan to grow their industrial footprint, and with it their energy consumption. Sila moved into an existing building; Group14 is constructing a new facility.
Both consider these plants just the first phase.
“We’re envisioning having a lot more demand than capacity for a long time,” said Luebbe of Group14.
With the hydro limits in sight, the PUD is looking to new sources of energy. Szablya said the utility is considering small nuclear reactors as a zero-carbon source of electricity. Or perhaps the local hydrogen hub, which is seeking federal funding and could be either a consumer or a producer of electricity, depending on how it’s designed.
But the problem isn’t just making electricity.
Grant County is a miniature version of a national problem: It doesn’t have the infrastructure it needs to move new batches of electricity around. Sila, Group14 and REC Silicon sit in an industrial artery in Moses Lake called the Wheeler Corridor. Szablya is unsure how soon he can build the transmission wires to meet the growing demand.
“We’ve always installed our equipment before the customer had the need,” Szablya said. “This might be the time when things change, when we can’t build fast enough. We’ve turned into a construction company, basically, constructing as much as we can as fast as we can.”
Building a new transmission line to the Wheeler Corridor may take seven years, he said — slower than battery companies in a hurry might want. “We expect we will be able to meet their needs,” he said. He added: “Maybe not on their exact time frame.”
Asked about this potential lag, Group14 said it already has the power it needs for its first phase. Sila said in a statement that “a seven year timeline for power will require us to consider other locations.”
Meanwhile, new companies keep moving into Grant County, some of them aspiring, like Group14 and Sila, to be part of the new clean energy economy.
Right next to Group14’s site, a company called Twelve is building a factory designed to convert carbon dioxide waste into jet fuel. Andy Stevenson, the vice president of projects, said that one of the main benefits of the site, a former sugar-beet processing plant, is that it’s already wired for the company’s big electricity needs.
“It’s the chemical reactions that are taking place inside our electrolyzer,” he said. “To convert from one molecule to another, you need a lot of energy.”
Corrections: A previous version of this story misstated the dollar amount in the funding round for Porsche and misspelled Hanwha Co. Ltd.