2 Billion Euro Bet On Electric Batteries Isn't Going So Well

(Bloomberg Gadfly) -- Vincent Bollore is infamous for his corporate raids and boardroom coups. Yet the Breton billionaire has a less bellicose side hustle: he's spent more than a decade developing electric batteries for cars and buses, as well as energy storage systems.

Financially, he hasn't got much to show for it. More than 2 billion euros ($2.25 billion) has been spent and no profit generated. The technology it's using, known as a solid-state battery, is promising: experts see it as a successor to today's lithium ion batteries. But family-controlled Bollore SA has chosen to go it alone, which might doom its own product to irrelevance.

Bollore makes the batteries at three French factories, installs them only in cars and buses of its own design, using them in vehicle-sharing and transit schemes in French cities. Given the massive cost and the need to fix some profound technical problems -- the batteries have to be heated to keep a charge -- he should think about partnering up.

The Asian companies that dominate the market for electric car batteries, Panasonic Corp., BYD Co Ltd. and LG Chem Ltd., have economies of scale that Bollore could never match. Even if Bollore proved it had a great battery, success wouldn't be automatic.

Bollore has no illusions about challenging Renault or Tesla in the mass car market, but argues that his tech is well-suited to car-sharing, buses and energy storage. He may be right, but Uber's rise has changed the game on car-sharing, while the Bollore Autolib business doesn't make enough money to cover the cost of battery production.

As for storage, it's still a small market. Meanwhile, the big Asian producers will be fearsome competitors in all the Bollore-targeted categories, not least on price.

Still, Bollore's tech has some potential advantages over the Asia-produced lithium ion batteries that dominate the market. Its solid-state battery uses lithium metal polymers to conduct electricity instead of liquids. Such batteries can hold more energy in smaller, lighter packages -- something that would cut the cost and weight of electric cars. Plus they're less likely to catch fire or explode.

Along with Robert Bosch GmbH, Bollore is one of a handful of companies making such batteries. In Paris, people have been driving Bollore's Bluecar for more than five years. Samsung, Panasonic Corp., and Toyota Motor Corp. are pouring R&D money into solid-state batteries but don't have products out yet, preferring to focus on lithium ion.

The big predicament for Bollore is that its battery needs to be heated at all times to at least 60° Celsius or it will lose power and empty, so a vehicle needs to be plugged in when not in use. Carmakers have stuck with lithium ion batteries as a result.

The Bollores are working on a fix but it might take years and who's to say whether they'll crack it. It's a dilemma faced by all solid-state batteries, and means lithium ion will be the standard for a while yet. 

The tycoon understands that investors might not want to share the huge risk. He's offered to buy out minorities in Bollore Group's battery unit, Blue Solutions SA, for 17 euros a share -- about 75 percent above where they were languishing.

That's a pretty generous escape route given that Blue Solutions is on track to miss every target it set at its October 2013 IPO.

I'm not the greatest fan of Bollore's European empire-building. But his battery punt is noble enough, with the Bollore Group investing up to 250 million euros a year. It may just be time to admit he needs a partner's help to avoid draining his own resources.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Leila Abboud is a Bloomberg Gadfly columnist covering technology. She previously worked for Reuters and the Wall Street Journal.

To contact the author of this story: Leila Abboud in Paris at labboud@bloomberg.net.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net.