Tesla deal is opportunity for Nevada; now we must step up

By Raymond Verhelst

Thursday, Sept. 25, 2014 | 2:03 a.m.

News that Tesla Motors will establish a sprawling lithium battery manufacturing plant outside Reno — and receive more than $1 billion in benefits from the state at Gov. Brian Sandoval’s urging — triggered a flood of commentary on the value of the deal as well as the benefit for Nevada.

What also warrants discussion is how Nevada will embrace the challenge and fully capitalize on this opportunity to define and integrate this new industrial base in the Silver State.

Nevadans certainly should not squander this opportunity. We boast the only working lithium mines in the nation, and now there is reason to explore for more deposits. We also mine copper and process manganese dioxide, both of which are critical components in the Tesla battery cells.

But we need to look beyond the initial announcement because of how Tesla’s presence here can trigger a new pillar of our state economy: the manufacturing of high-tech batteries — an industry the United States ceded more than 25 years ago to Japan, Korea and, finally, China.

Lux Research, which studies emerging technologies, estimates the global lithium battery industry will generate $37 billion annually by 2018. Nevada’s gaming business, by comparison, generated $11 billion in 2013.

I mention the worldwide sales because Tesla has made the commitment to construct not just a test or prototype facility here but the world’s largest lithium battery manufacturing facility.

Tesla’s operation will involve not only vehicle batteries, but lithium batteries for a host of other applications such as large energy storage for ancillary company Solar City.

Indeed, Sandoval has convinced the state Legislature to invest not only in Tesla but in the lithium battery industry, adding important diversity to potential communities throughout the state. For $1.3 billion, we have bought into the market.

Now the questions are what are the additional opportunities and what do we do next?

Like any large manufacturing industry, there is a food chain of services, suppliers and ancillary providers needed to feed the machine.

For the lithium-ion battery industry, we have needs in material processing from the raw ore in the mines. We have copper that must be processed into rolls. This is then used as a current collector for coating the active cell materials.

Nevada also has chemical-producing needs for the electrolytes that are injected into the cells and activate the battery process. These electrolyte chemicals have short shelf lives, and international shipping logistics can create challenges.

Then there is a separator membrane that is rolled inside the cylindrical cell to separate the anodes and cathodes to prevent a short inside the cell.

Other needs include nickel tabs that are welded to the cells to make packs, wrappers and caps for each cell and extensive volumes of electronic circuitry boards to control the battery management system.

In reality, at least a dozen major suppliers are needed, which translates into another 3,000 jobs just to support Tesla.

Since the Tesla announcement, industry activity has jumped significantly. Within days, it was announced that working in conjunction with the lithium mine operations up north, the German chemical company BASF has committed to building a chemical plant to produce the electrode materials; more recently, Polypore, based in Charlotte, N.C., with its Celgard separator membrane has been selected for the Tesla cells.

Both organizations would never have considered Nevada on their short list for a manufacturing presence.

The real challenge

Resurrecting an industry the U.S. gave up years ago creates a real challenge for compiling a qualified workforce. With 99.9 percent of lithium cells being produced in Asia and only a select number of production centers with large enough manufacturing lines to assimilate the needs of Tesla’s volume (all of which are in Asia), securing experienced chemical, electrical and mechanical engineers will be a real issue.

It’s no secret: Nevada has an education problem. Ranking 47th in the nation does not bode well, and we have a limited timeline to ramp up the delivery of qualified workers to fulfill the minimum of 50 percent within the Tesla facility.

The failure for Nevada would be to have stacks of exception letters showing why Tesla had to look beyond Nevada to build its necessary workforce.

This requires a statewide change to the mindset. It requires a commitment to more students concentrating on STEM disciplines (science, technology, engineering and mathematics) and targeted manufacturing tracks to feed this industry from within. This will require a dedication that starts with the expansion of the magnet schools, the vocational technical schools and dedicated battery research within the university system.

The unfortunate reality for many Nevada residents is that these are not hospitality, long-term construction or service-industry jobs. They are in the technology-manufacturing sector, which requires disciplined retraining. If successful, we could fundamentally change the course of the state.

With batteries being made here, we will draw the attention of countless ancillary industries that will want to be near the nation’s epicenter of rechargeable technology. Just one example is the charger industry.

Every rechargeable battery needs to be recharged. Today’s advancements are in inductive (wireless) charging for devices and eventually vehicles. High-speed charging to safely reduce the time required to get back up and running is a key market objective.

We have needs in new materials that could ultimately supplement or replace components within current lithium cells. Tesla is actively looking at producing synthetic Graphene, which has been shown in the laboratory to increase the storage capacity and overall life cycle of an individual cell.

There are requirements for specialized battery packs for the state’s commitment to UAVs. Both commercial industry and the military need reliable portable power sources for these unmanned flight devices, and Nevada is in the driver’s seat to deliver complete solutions.

This is Nevada’s opportunity to step up and back the rhetoric of diversification. Let’s not disappoint ourselves. It is time to seize opportunity.

Raymond Verhelst, an independent consultant in the rechargeable lithium battery industry, lives in Las Vegas.