In what sounds like a move out of left field, watchmaking mega conglomerate Swatch Group is moving ahead with its plans to develop and sell high-tech batteries for electric vehicles. The strategy actually has deeper roots at Swatch than you’d expect and the seemingly banal story has enough twists and intrigue to make it rather interesting. On the heels of some new reports around the web, here’s a look at what we know now, what we’re still trying to figure out, and why any of us should care.
Starting back in 2015, Swatch Group CEO Nick Hayek started dropping hints in interviews that its Renata battery companyÂ and Belenos Clean Power (a research company in which Swatch Group has a 51% stake) were working on a new chemistry for electric vehicle batteries that would have major business implications. (Renata began life as a movement component supplier in 1952 and was acquired by Swatch in 1982; they now make a huge range of both consumer and industrial batteries for watches, hearing aids, and so on.) According to a Bloomberg report from October 2015, Hayek even considered taking Belenos public in the wake of the Volkswagen emissions scandal, claiming at the time that the Belenos battery would be dramatically superior to those in use by Tesla.
When I first heard about this, I started doing some poking around, digging into the history of the Smart Car (a partnership between Swatch and Mercedes-Benz) and calling up anyone I could find who might know something. Almost universally, Swatch Group representatives would do everything short of hanging up the phone on me the moment I asked about Belenos or Renata by name. I figured I had to give the story some space to develop, and it looks like it’s finally starting to take shape publicly.
I won’t get too into the weeds on the technical side here (you can find those details elsewhere if you’re interested), but the new battery chemistry Belenos and Renata are using is actually a mix of old and new. The battery’s cathodes use a vanadium pentoxide solution, a technology that dates back to the 1980s, but with a new electrolyte composition that Swatch claims offers higher energy storage density, longer battery life, and better recharge rates. In fact, the company has previously claimed that its batteries will have 50% more energy storage capacity than the most advanced lithium-based batteries available.Â
Importantly, Swatch also claims that these new batteries will be much safer than lithium ion batteries; one of the advantages of vanadium pentoxide batteries is that they’re liquid based, and non-flamable. There are disadvantages, though; historically, their greater weight and the addition of pumping systems has confined vanadium pentoxide battery use mostly to backup energy storage in static installations. Additional details on the chemistry and safety will surely come as Swatch gets closer to actual production.
Today’s report from Reuters paints an interesting, if not very optimistic, picture of Swatch’s venture though. Quotes from investors and analytics point to Hayek’s timeline of spinning up a $10 billion per year business in three years as both technologically and logistically impossible. Hayek has run into issues like this before, most notably with his 2014 and 2015 comments about crushing Apple in the smartwatch game. We’re yet to see that materialize in any meaningful way. In the 2015 Bloomberg report, Hayek said, “Swatch will begin production in June through its Renata unit, which makes batteries for timepieces. Initially Renata will produce as many as 200 a day, in various sizes. The technology will be used and tested in e-bikes, drones and electrical scooters in 2016, and it’ll be ready for cars from 2017.” As of now, however, Renata does not appear to have shipped vanadium pentoxide batteries for any application.
The last thing to note is the context for this move. Swatch Group hasn’t had the best year on the watch side of things. Operating profit and net profit were both down over 50% year-over-year for the first half of 2016 and share prices are down 10% this year (after falling over 20% last year). Unlike other groups, Swatch hasn’t made the massive job cuts to reduce costs, and the short term strategy to fix the problem isn’t entirely clear.
You can bet we’ll be following this story closely as it develops and we’ll be reaching out to various sources inside and outside Swatch Group to learn more over the coming week. Stay tuned, this one is bound to be nothing short of strange.
UniEnergy vanadium flow battery storage installation via Wikipedia and UniEnergyÂ Technologies.
Tesla S battery pack image via Wikipedia, byÂ Oleg AlexandrovÂ