Can Eos Energy be Tesla Energy's New Rival?

Can Eos Energy be Tesla Energy's New Rival?

This year, Tesla has seen a few competitors raise their heads in the EV industry and now a new publicly traded entity is entering as a rival in the battery-based electricity storage business. On Monday, Eos Energy Enterprises (EOSE) completed its merger with a special-purpose acquisition company, and started trading on Tuesday. Both Tesla and Eos companies offer the ability to store power generated by renewable power. And this is something Tesla CEO, Elon Musk confidently feels will be big business. 

In July, during the EV company’s second quarter earnings call, Musk said: “I can’t emphasize enough, I think long term, Tesla Energy will be of roughly the same size as Tesla Automotive.”  With recent news of Tesla’s value sky-rocketing, Tesla Energy will have big shoes to fill and Musk has great ambitions to see his energy business expand.

Tesla Energy’s battery-storage technology is built on lithium-ion batteries whereas Eos uses zinc-based batteries. While zinc batteries aren’t sufficient for electric vehicles, they work perfectly well for storage, but lithium-ion batteries can hold double the amount of energy than zinc. Yet, zinc does have advantages over lithium-ion such as better thermal-management and power-discharge properties, and being cheaper with the ability to be recycled whereas lithium-ion have to be incinerated or piled in landfills.

Eos CEO, Joe Mastrangelo expects production costs will decline as the business grows and sees zinc being a big competitor: “At low production levels, under 100,000 batteries a year, we are competitive with lithium-ion technology today.”

Mastrangelo hopes to grow the market for an alternative to lithium-Ion batteries, which has been dominating the energy storage industry. The energy storage market is still in its infancy and pales in comparison to the capacity produced by electricity. But Eos also has big ambitions to grow the company by estimating $50 million in revenue in 2021 and a whopping $269 million in 2022. Eos went public via a merger that raised $175 million and gives Eos approximately $150 million in cash after expenses and redemptions from SPAC shareholders. The Eos CEO plans to build out a commercial team while expanding its battery-manufacturing capacity and they will look at building an international factory that may be part a joint venture. Mastrangelo said the company has a production facility operating in Pittsburgh and has been designed to scale up as demand grows. He said, "We've designed a process that's quickly scalable and highly capital efficient. Instead of having to build a massive factory with highly complex processes, we build it out in phases and grow our production capacity as our revenue stream and orders book grows."

After its first trading day, Eos shares closed at 0.9% at $10.59. This is a 4% increase since the merger was announced on 8 September.

Joe Mastrangelo has an impressive background in the power industry with time spent as Vice President at General Electric Oil and Gas, President and CEO of General Electric’s Power Generation Product division and the Power Conversion Business before joining Eos as CEO in 2019.

Musk has never been one to get spooked by a bit of competition and in this case, he may not see Eos as a threat to his lithium-ion battery production. This week, the Tesla chief who is just 49-years old has hit the big league as number 3 on the list of the world’s richest people. This year alone his fortune saw an increase of $90bn.