Enovix Corporation (ENVX) Earnings Call Transcript & Summary

Well, good afternoon, everyone. My name is P.J. Juvekar. I cover -- Head of the Chemicals Research here and also getting involved in Fintech space and natural resources. And I cover lithium and some downstream companies as well. Co-host in this call is Itay Michaeli, who is our auto analyst and covers electric car companies as well as some charging stations, et cetera. And for our next battery road map panel, we have 2 companies that are involved in silicon anode, we have Kirk Kelly -- sorry, Kurt Kelty from Sila Nanotechnologies and Cam Dales from Enovix Corp. So what I would like to do, gentlemen, is if each of you can go through your company and take 5 or 10 minutes going through walking us through the story. And then we'll come back for the Q&A session. Kurt, do you want to go first?

Sure. Yes. Let me pull up the slide. Can you see my slide?

Yes, we can.

Okay. I'm just going to show 1 slide just to give folks an idea of what Sila is all about. We make a black powder silicon material that replaces another black powder. It's graphite. So we're a material manufacturer. We do not make battery cells, we make battery materials, specifically an anode material, it's the silicon anode material. We were founded 10 years ago coming out of Georgia Tech. One of the founders, Gene, is former employee #7 at Tesla. I was employee #50 or #60 at Tesla. So we've got some roots there and there's several others from Tesla as well. We're headquartered in San Francisco -- actually in Alameda, right across from San Francisco. We've got over 300 employees, a real heavy focus on [ PSUs ] and engineering. We've raised a lot of money to date. We're the most successful company in raising money in terms of battery materials. No one's ever raised as much material -- this much money as a battery material company before. You can see what our core strengths are here. In terms of our IP situation, we've got roughly 200 patents that are either issued or pending. We offer what is -- what you call a partial replacement where you can partially replace a graphite with our material or you can completely replace it. So until now, silicon has been a material that you replaced partially -- like Panasonic uses about a 5% silicon solution for cells that go to Tesla. What we do is instead of having 5%, we can replace it, so it's 100% our material instead of any graphite in there. And the reason that we're able to do that is because we solve the swelling issue, and I can talk more about that. What we do is with our material, we can get 20% more energy density, which is fabulous, as many of you know that follow the industry. Right now, we're in that period where we're getting incremental improvements every year of 1%, 2%, 3% increase. And here overnight, you can get a 20% increase in energy density without changing any of their equipment, it's just a drop in replacement, just replacing one black powder for another. And then I do want to emphasize, as far as the IP is concerned, we do own the core IP for low swell silicon composite materials. So if anybody else wants to do something like this, they're most likely going to have to license from us. We've got partnerships out there. We're in market today. So this is a fitness tracker from Whoop. And we introduced this last year. We've probably got 0.5 million of these in the market already. So it's been a big success for us. And as many of you know, that have taken a material from lab scale to production, it's a huge jump. And we've made that jump. And now this week, we added another big jump in that we had an announcement with Mercedes. Mercedes is going to use our fuel and material in the G-Wagon coming out later this decade. So that's really exciting. It's the first silicon material where you're going to get it, where we've had a contract, somebody's committed to this, going to market with it. So it's really quite exciting for us. So hopefully, that gives you a little background and looking forward to diving into more details. But that's a rough idea of where we're coming from.

Kurt, thank you. Cam, do you want to go ahead?

Absolutely. Great. Thanks for starting us off, Kurt. It's great to be on the panel here with what I consider the 2 leaders in silicon nanotechnology, taking kind of different approaches to get to market, but both, I think, big believers in where the industry is going with silicon really being the next big leap in battery technology. So I'm the Chief Commercial Officer of Enovix. We are also located in the San Francisco Bay area. Founded in 2007. And in contrast to Sila, which is really a materials company working on the material that goes into one component of the battery, Enovix is a full battery cell company. And we were founded to take advantage of a different approach to making the cell itself. People have essentially been using the same architecture of cell construction since back in the days when Volta invented the battery hundreds of years ago, really rolling up long strips of the materials and packaging that in various different ways. So Enovix was founded with the idea that you could reinvent that basic cell architecture. And in doing so, you could take advantage of some really interesting properties of the cell. So we have what we call a 3-dimensional cell architecture. It's basically instead of a rolled up cell, it's a number of parallel small strips that are cut in pattern by a laser processing system and then ultimately put together into a compact stack. And that architecture leads to several advantages at the cell level, one of which is it allows you to use some of these newer, very high-energy materials like silicon that have significant challenges around their usage. For instance, silicon expands quite dramatically, 2 to 3x, when it's charged to lithium. And so one way or the other, if you're going to make this material work, you need to accommodate that problem. We don't do that at the material level. We do it at the cell level, where we build in, we engineer in the capacity to accept that expansion/contraction inside the cell and allows us to be materials agnostic. So we're currently using a commercial-grade low-cost silicon in our product. And we're getting fantastic results with it, both in terms of quite high energy densities, but also the ability to do fast charge. So from a company perspective, we've been through 15 years of R&D. Kurt mentioned that Sila has been around for quite some time as well. This is pretty much par for the course in the battery space. We're solving very difficult deep technology problems. We're happy to be on the other end of that. We have products that have been validated by leading customers. We have a huge IP portfolio around our cell architecture in particular. And Kurt -- from a business model perspective, I think it's quite interesting, both Kurt's team and mine believe in starting in the premium part of the market first. And in batteries, that's really the consumer electronics space or maybe more broadly, the portable electronics space because it's not all just consumer-based. This allows a company to introduce products directly into the market in a reasonably short period of time. It allows us to scale our company and our manufacturing process and refine it over time and get to really the low cost points that we want to be in, in the future. And it allows us to do that profitably while we go through those learning curves. So we think that's a great place to start in the consumer space. And we're at the stage now where we have our first factory is up and running and shipping batteries to a number of customers in qualification. We expect to have first products on the market second half of this year. And we've got a huge funnel of business with over 60 customer programs that we're working on. So we think that this is a fantastic period for the company in terms of its growth. This has, of course, quite a lot of interest on the EV side, and we're not neglecting that either. At this point, having proven the technology, having started the ramp in the premium segment of the market, we've now started making significant investments into the EV product category as well. We just recently announced a dedicated business unit called Enovix Mobility to go after the EV space. And in contrast to the consumer market where we are a manufacturer of cells directly, we have our first factory up now and are in the planning stages of a second larger factory, in the EV space, we expect to be a technology provider and work in partnership with OEMs and existing cell manufacturers. So that's kind of the quick overview of Enovix. I think it will be a really great panel here today. We've got 2 fantastic silicon companies who are really going at it in kind of different approaches to solving the problem, one on the material side and one on the cells side.

Fantastic. So let me start with a couple of questions for each of you. And then, Itay, jump in as you can. A question for both of you. And you guys can step in -- as we make a move towards silicon anode, one of the things that keeps coming up with silicon anode is the swelling. And how do you -- and sort of retention of lithium inside silicon. Can you just generally talk about what are your approaches there and kind of how do you see that issue being resolved?

Yes. I mean when you talk about silicon, you really got to address the swelling because that's always been the issue. I mean, silicon anodes have been around for 10, 15 years now. People have known that, that is where we got to go. We've got to get rid of the graphite for the silicon, but the problem has always been it swells too much. And what happens when you swell is you break the SEI layer and you get reduced cycle life. So you can always -- you can put the silicon put in there, but you just get crappy cycle life. So what we've done is we've just accepted the fact that silicon going to swell. You're not going to do anything about that, but we're encapsulating it in another material. So there's a material, there's a particle. Within that is the silicon. So the silicon swells, contracts within that particle. But the particle swells very little. There's very little change in that. And what we've developed is this material where electrolyte is not able to penetrate it; the lithium ions are. So lithium ions go through the particle, bind with the silicon, silicon swells, but it's within this particle. And so by doing that, what we've been able to do is enable the cell manufacturer to achieve the 1,000 cycles or whatever it is in that particular application. It's all about -- you've got to be able to control the swell in order to get to the cycle life. And whenever new materials are developed for batteries, there's usually a trade-off involved. You can either have -- you can get the energy density and sacrifice the cycle life or sacrifice a fast charge or whatever it is. But the beauty of using silicon, if you solve the swell issue, you can have your cake and eat it too. There is no -- there's nothing that you lose. The only levers you have to play with is do you want to maximize your energy density or do you want to maximize -- you want to get a little bit more on fast charge, because you can get both of those with silicon. All -- everything else being the same, you can get the same cycle life, same high temp performance, low temp performance and what you're going to get is an improvement in energy density and fast charge performance. Those are the two advantages you're going to get. So it's -- once you figured out the swell, then it just opens up the -- all sorts of opportunities.

Cam, do you want to talk about it?

Sure. Yes, absolutely. So Kurt's absolutely right. One of the key challenges of making the silicon anode work is managing this contraction and expansion property as you charge and discharge the cell. So, conceptually, Enovix has a similar approach except we do it at the cell level as opposed to at the individual particle material level. So we use essentially commercial-grade low-cost silicon -- nothing special to it. And then we basically build that into this 3-dimensional architecture of the cell, and we have what we call a constraint system on the exterior of the core of the cell, which then manages that expansion and contraction. Essentially, allows us -- it's a practical way without taking too much overhead of putting a significant amount of stack pressure on the battery itself. And so the end result is similar to what Kurt is describing, is a battery that has very high energy density and can meet commercial cycle life requirements. It means you're a cell producer, not a material producer. And so all the inherent challenges of manufacturing batteries, we've taken that challenge on. We think there are some advantages to that approach, including direct relationship to the end customer. We think we can take full value of the cell product. And I think we believe our approach allows us to basically be materials agnostic, choose the lowest cost materials that basically exist out there, and we can make them better. At some point, maybe we'll use Sila's silicon material as well. We think we could make it better in our architecture.

Great. And just a sort of a dumb question because I don't know, but when you constrict the swelling, does that have an impact on the safety of the battery or material?

I don't think that the swelling necessarily causes any additional safety issues. That's not really the point. One thing, though, we take -- we spend quite a lot of time working on is we think that if you continue to build more and more energy into the cell and you increase the energy density, the end user one way or the other needs to take that into account from a safety perspective. So one of the advantages of having a different architecture like we do is it allows us to implement some innovation there right at the cell level, in terms of the safety of the cell. So we have a technology that it's in R&D today. We'll launch it in our products next year, called BrakeFlow, which really takes advantage of this parallel structure of the cell. And in the case of an internal short, which essentially is the root cause of most thermal runaway events, allows the cell to essentially discharge in a controlled manner without overheating the cell and ultimately going into thermal runaway. So we think as the industry continues to push the boundaries of performance in terms of energy density, in various ways people are going to have to address the safety issue.

Kurt, do you want to comment on that?

I mean for us, the swell -- I mean we don't swell any more than graphite, and we've got all sorts of data that shows how much we swell. And so it's really not -- a nonissue. I think what -- if you do swell too much -- going back to your question, like a very safety issue, One of the things that we've seen in the consumer market is if you swell too much like your cell phone, you'll break off the back of it or your watch that -- we obviously don't want it from a quality side of things. It's more quality than a safety issue. But regardless, the swell issue, we've addressed it, and we're less than graphite, so we're in a good spot.

Okay. And Kurt, just a question for you. You know, you use nanosilicon. Why nano silicon? And how does building an engineered silicon material solve that issue for you? Can you just explain the basis of it?

Yes. So the nano part is really to make it really strong, the particle; the silicon is there for the capacity. So -- and so it's an engineered silicon that we use. And so we're just like -- from what Cam is doing, it's a little bit different approach. We're putting engineering into that material and he's putting the engineering into the cell side of things. But yes, so we can really tailor our material such that you're getting -- that we can enable it such that electrolyte is not going to penetrate but the lithium ion will go through, and you can do things like that, that are really attractive by having some of these levers that you can use in the manufacturing process. So -- we've also -- by what we've developed -- so in the beginning, we set out some limits on -- some restrictions on ourselves that when we develop this material, we wanted to make sure that we were using commodity materials and bulk manufacturing processes. So we -- our materials are available all around the world in really -- at very economical prices. So that's something that really was important when we designed this particle to have that as some of the characteristics of it. So a big [ value add ], because what we've got to do is we've got to do is we've got to ramp this up into volumes that are just massive. We announced last month our first production facility in Washington. It's 10 gigawatt hours. But that's a good size. It's a really good size. But when you think about it, I mean, the Gigafactory in Reno that Panasonic is producing cells at with Tesla, I mean that was originally started with 35 gigawatt hours. That's what they started with. But we're going to do 10 gigawatt hours, they've got 35. Now, there are over 300 gigafactories on the drawing board right now. So just to put it in perspective, we're a tiny player out there. Even with our first massive factory, we're considered a massive factory, but we're going to expand that quite quickly. . The -- so the -- what we've got is a particle that can scale quickly. So once you get that first factory up and running at 10 gigawatt hours, we're going to quickly use a cookie cutter approach and just copy that, expand that and then we've got plans for a European factory and an Asian factory right after that. But because we've got the particle really well engineered and understood, we can ramp really quickly. And the commodity materials enable us to do that at a fairly low cost.

Great. And my second question for you, Kurt, is I mean you're focused right now on some of the smaller consumer variables and smaller -- when you go to a bigger battery and then eventually to the EV battery, one of the challenges is scaling up different form factors.

Yes. So we start internally with a single-layer [ house ] film, and that's what we do our basic testing on. And then once we've optimized around there, then we go to a multilayer power cells, usually about 1 amp hour, that's kind of our work horse to do a lot of our testing. And then when we go externally with our cell manufacturing partners, then they make all different form factors. So they'll do a cylindrical cell like a 21-70 or they'll do a pouch cell. We've got some of our partners that are doing 20-amp hour pouch cells. We've got 70 amp-hour pouch cells. And then for the prismatic size, I think we've got a [ 1670-amp ] hour we've made. So we need all different sizes. And it correlates quite well. What you do is a single-layer pouch cell correlates quite well with the 1-amp hour and then the 1-amp hour to the larger. What we've seen so far correlates quite well. And our material is agnostic in terms of the form factor. You're going to have -- the design in the cell will be adjusted. Your loadings may change. There's things that you may change in there, in the cell in terms of materials or how things actually -- but our material is used with the same equipment for pouch cells, for prismatic cells and for cylindrical cells. And likewise, for different cathodes, it can be used with an NCA -- some of our partners use NCA, use NMC, LCO. We haven't done work really with the iron phosphate, but there's no reason to indicate that it wouldn't work. It should work with iron phosphate as well. So it's agnostic with any cathodes as well.

And who are these partners who are making these cells for you?

So it's all the major cell manufacturers you can think of. So the big ones on the list are Panasonic, Samsung, LG, SK and CATL are kind of the big 5 and then Northvolt is kind of the one after that, that they will get in the top grouping once they start producing, we hope. And we're dealing with all but one of them. So it's -- yes, we really deal with the whole industry out there. And we'll be dealing with all of them by the end of the year.

And then, Cam, a similar question for you. Last time we chatted, the company was more focused on consumer electronics. How has the company evolved in the last 1 year? And are you more focused now in the future sort of EV type batteries?

Well, so I guess what I would say is that over the last 18 months, we've been incredibly focused on really getting our first factory up and running, right? And that's been the focus of the company. We've integrated the first production lines, we started shipping completed batteries out of that factory early this year for qual. And now we're moving into the production ramp with first commercial revenue this quarter. So that's been the focus through the lens of kind of looking backward. At this stage, we feel that we have a very successful product with a lot of demand in the commercial space, the consumer space. We're well on our way towards scaling that up in that market directly. And it's time for us to start to make some investments on kind of like the front end of the R&D side and on the business side to focus more on the EV space. And we think that our cell architecture in addition to the silicon anode, we talked a little bit about the safety aspects of the cell. There's also some very interesting properties around fast charge, both intrinsic to silicon anodes, which are intrinsically from a physics perspective, excellent materials for fast charge. But if you look at our cell architecture, it's kind of built like a heat thin, right? So one of the limitations on really going fast is getting the heat out of the cell, rejecting it out of the cell and then out of the pack as you charge. And we think that our architecture brings some really nice capabilities in that area. So we're very excited about what our technology can do in the EV space. We announced that we created a dedicated business unit to it just a couple of months ago. We've got some leadership that we brought on from the automotive space. And we're trying to move that part of the business forward in discussions with some potential partners. So go back to our strategy question. We think the right way to scale a new technology, particularly a battery like ours, is start in the consumer space, become a world-class manufacturer with low cost and high quality. And I can tell you the consumer market, making components for cell phones, it's one of the most brutal markets in the world. It's a great proving ground for the technology and for the manufacturing team. We think that's a fantastic platform from which to then move into the EV space, which we're doing now.

Let me turn over to Itay to talk about some of his questions.

Sure. Yes. So a couple of automotive focused questions. Maybe, Kurt, starting with you. Just maybe first walk us through the journey of the recent wins you announced with I think 2 automakers, and the milestones from here to getting to kind of automotive production? Maybe how you got to this point and then the path ahead.

Yes, a good question,. So we -- BMW and Mercedes are our 2 partners we've had for quite some time. Mercedes invested about $100 million in us about 3 years ago. So they're investor -- and the -- we've been working with them in the validation. So both Mercedes and BMW have the ability to make cells in their own facilities so that they're not relying on anybody else. The -- so we've been working with them, making cells and the -- we've been going back and forth to get results. It's really a very close relationship. We're sharing results with one another. The -- and then the way we sell our material -- and Cam put it very well, you want to be close to your customer. It's really important. And what we found is if you work with the cell manufacturers and you rely upon them to sell your material, you're not going to do well. I've been on the other side. I've worked for the cell manufacturer. I've also worked with the OEM because I worked for Panasonic Batteries for 15 years. And I worked for Tesla for 11 years. And the thing is that the battery, cell manufacturer is still on $1 dollar per watt hour basis. That's all they got in their head. It's the $1 per watt hour and -- rather than the value that you're bringing to the table. And so we deal directly with the OEMs, and we talk with the OEMs and not just with the two of them. We're talking with pretty much all of the big guys right now. And we established a discussion with them, like what kind of value would you get out of the 20% increase in range? If you're going to go from 300 miles to 360 miles, what value is that? And we heard the discussion there. So the discussion takes place with the OEM, trying to contract with the OEM, and then we figure out who the cell manufacturer is going to be after that. And so that's the process that we use with each one of our commercial arrangements. And it's been very successful for us today. Of course, it's a very challenging discussion with the cell manufacturer because they're like, "Oh, wait a minute. We want to be involved in all this part of it." But yes, we found that it works better to go to the end customer first rather than going through the cell manufacturer.

That's super insightful. Maybe one follow-up on that. So in your current discussions with other automakers today, you mentioned sort of how they think and then the value of 20%. What else comes up at these meetings? What are they worried about? What do they want to see? Just maybe walk us into what one of these types of meetings might look like in general.

So first of all, one of the things they want to see is they want to see proven production. So that's -- I mean, to have some confidence that you can produce. That is -- they have a lot of questions on that. So having this out in the market, it's not so much that it's big volume, but it's just you're producing something, you have to deliver reliably. You've got to get -- if something changes in the process, you've got to work with a customer, notify them and go through this change control process and all that. So there's all these little things that have to be established. Eventually, you have to get to the PPAP process. And that PPAP process is a long drawn-out process to get that final approval. You got to think about, okay, we're manufacturing this on the consumer line in Alameda, but ultimately, what they are going to be buying is from a whole different line. So what's the difference between this material and that mass production line? How do you get the OEM comfortable with that? How is it that you can qualify the material for the same one that's on this line, so it qualifies A, B, C? Or is it just good for A and B or just for A? And these are the kind of conversations you need to have with the customer to make sure they're comfortable with it. At what point do you start your PPAP testing? Do you start it like when that first powder comes off the line? Or do you start it when your SoP gets started, when it's all validated. So these are a lot of -- and then what do you do about dual sourcing? -- you're single source, how do you deal with that? And there's different ways to get around that. These are the types of -- and you can get around it with, for example, if you have a long shelf life, you can potentially store it at another location. There's things like that, that you can do. So there's -- these discussions that we have with the OEMs, they're asking all these questions, and I'm sure Cam's getting it on the consumer side as well. I think with the auto guys, they're just -- I think the auto guys and Apple are probably in a category that are probably pretty similar to one another. And then there's the rest of cell phone guys that are not quite as strict with all that. But yes, some of the -- and then there's Tesla, which is also in a different category than the rest of the OEMs. Tesla just goes so damn fast. But the -- yes, it's -- these discussions are, when you deal with the OEM, they're asking a lot of these questions.

Terrific. That was super insightful. Cam, maybe similar question for you. You mentioned the mobility division. Curious, how large is that division currently? And what are the goals there over the next, say, 12 months or so?

Yes, sure. And just to follow up on Kurt's point, and then I'll get to your point. Yes, absolutely, I think it's all about demonstrating that you can manufacture at scale and with quality, right? And the beginning of the process for us is always just send people batteries right away. There's so much vaporware in this industry. All of the markets are just incredibly skeptical of any claim that you might make and so we don't even bother with that. I mean we start -- we lead with a product sample. And then from there, it becomes a business discussion. And then as you go through the qualification process, it's really all about crawling through the production factory, quality audits, making sure your process controls are in place, et cetera, et cetera. So just to echo kind of Kurt's point of view there. In terms of mobility on our side, it's -- we're building off of the initial foray into the EV space, which was with the DOE program which we won a couple of years ago. We've demonstrated now some really exciting results around cycle life and some other stuff coming later this year around the viability of the product for meeting automotive requirements, which is fantastic. So we started there and at this point now, we're in the process of building a dedicated team. And it's -- the leadership team is in place. We're borrowing technical resources from the core of the R&D business within Enovix. And over the next, let's call it, several quarters, that will become more and more independent. Because I think it really is quite a different business actually working in the automotive space versus the consumer space. So what to watch from Enovix on the EV side? We'll continue to publish our results as they come out on the DOE program. And so far, they've been really outstanding, I think. And then stay tuned for partnership discussions and some additional programs that we're working on.

Maybe I'll sneak one last one for me. You mentioned the concept of vaporware -- a lot of companies have different claims. I'm just curious on an industry level for you, given the current macro backdrop -- and who knows where that's going to go -- but if we were to have a downturn, you think that would change the competitive environment perhaps in terms of a lot of players -- potentially, to your point, that maybe kind of crowd out some of the others? Or just kind of your thoughts on how the competitive environment may or may not change, frankly, depending on whatever economic outcomes we see.

Okay. Maybe I'll jump in, I'm sure you've got your opinion on that, too, Kurt. I mean, I think that the battery industry is defined by the time scale it takes to conceive of, develop and prove a product. And it's a 15-year journey. And so I think it's quite well understood among the technical community which companies are at the product level. There's not very many of them. And how far along is the rest of the industry in terms of kind of their technology development. I personally don't see a huge amount of new start-ups and black swan guys coming out of the woodwork just because it takes so long to really get to a credible stage. And it's easy to make claims. This industry -- I mean, I've been in the industry for 15 years. But when I got here, I was shocked at how much kind of noise pollution there is in the communications of various players talking about the latest breakthrough blah, blah, blah. So I don't see not changing much. I think that dynamic is based on the science. It's a very difficult problem. And even when you have something in the lab, there's a massive learning curve that goes into then ultimately getting to scale. Even if you have theoretically the best lowest cost solution to a problem, you don't get there by magic, right? It takes years and years of learning and iteration at scale to hit those cost points. And so this kind of drives the strategy of getting started now and getting up that learning curve. Kurt, what do you think?

Yes, we just got -- thanks, Cam. You covered that well. I would just add a little bit more on getting the product to market is just huge. It sounds like yes...

Exactly, it's validation.

It's just a huge validation. And for us, having to go out there having -- it's a 17% increase in energy density compared to the previous model. Having that out there and producing it reliably is huge because it's no longer just a bunch of claims. And so yes, this startup is claiming 20% -- you're out there, you're shipping product and it's been validated. And then for auto, it was just going to take longer. The reason we're going after consumer is it's -- they'll pay a lot more. The validation periods are a lot shorter, and they use a lot less material. And all of those are really key for us. We -- there's a limited amount of material we have right now -- and we want to get to market quickly and get some validation points. And we've got another product coming to market later this year, can't wait to talk more about that. But the -- so there's a lot -- but getting it out there is just really critical because there is so much noise as Cam talked about. There's just -- there's a lot of fluff out there of these companies that are making claims that just -- and like Cam, I've been in the business for a while, 25 years over, and it's yes, it's frustrating. I get these articles sent to me every day about, "Oh, what do you think of this?" And I write, "Oh, yes, they're definitely leaving out a few metrics in their evaluation here." Like, they've got great energy density, but it has zero cycle life or things like that. So, yes. Hopefully, we'll be able to cut through that as we get more products out there.

Absolutely. Very helpful. PJ, back to you.

Yes. One last question for both of you. How do you think about the cost competitiveness of your technology compared to conventional technologies? You talked about performance, but can you talk a little bit about cost and competitiveness on the cost and how much costs have come down in silicon anode and yourselves at the cell level and the pack level?

I'll go first, Cam. Just for us, we're going after the premium market initially. Our material is going to cost more than graphite. We all recognize that. We're going to start there and then work our way down to the mass market. At some point, later this decade, we're going to be lower on a dollar per kilowatt hour basis at the pack level and at some point at the cell level. But yes, it's going to come down the cost curve pretty dramatically. We're going to have a big step function when we open up our factory in Washington, and then there'll be another step function when we really -- when we take that cookie-cutter approach and then just do that 10x the times. So yes, our costs are raw material -- raw material is the biggest cost for us going into this, and we've got some really creative ways to lower that cost.

Yes, sure. So I could address it from an Enovix perspective. I mean, the way we look at it is, look, at scale, 70% to 80% of the battery cost is materials. It's the bill of material, right? And if you look at our cell, almost all of it is exactly the same as a lithium-ion battery. The two exceptions are the anode material itself. And we are agnostic from a silicon perspective, so we can use the lowest cost silicons that are out there. We let the architecture do the work. And then there's a little bit of overhead around the architecture piece. There's a constraint system that goes around the outside of the cell. But this is like a couple of hundred microns or less -- 100 microns of stainless steel, so it's kind of like a razor blade factory. So if you look at the cost structure of our product at scale, the material costs are about equivalent, but you get significantly more energy density out of the product. And from a process perspective, this is a very high-speed kind of mechanically oriented process. This is not nothing -- anything that's exotic. And so on a per watt hour basis, we'll be below the traditional lithium ion battery costs as well.

Great. Well, those were some of our questions. I really appreciate you guys taking the time to explain to us your company, your technology. Really appreciate it. Itay, thank you as well. And for all the investors who have dialed in, thank you again for your time, and thank you for making the busiest conference a big success. So with that, we will end the session and end our conference. And thank you, and have a great day.

Great. Thanks, PJ. Thanks, Kurt. Always good to see you.