The battery company that’s about to change everything
Sitting down with EP Systems CEO Nate Millecam
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The battery company that’s about to change everything
Not many people have heard of Logan, Utah. Even many of us who live in the “big city” of Salt Lake only vaguely know Logan as somewhere up north. I recently embarked on the two-hour drive to the idyllic farming community and college town—something I should have done long ago. In the winter, Logan is the postcard of a European village. In the spring it sits nestled between lush farmland and snowcapped mountains. It’s the kind of place you keep thinking about after you’ve left.
After my road trip I started telling people—often to puzzled looks—that Logan is on the verge of becoming a global hub for cutting-edge aerospace technology. Those who could bear my anxious, fanatical explanation quickly understood: Logan is about to be a big deal.
Nate Millecam, CEO of Electric Power Systems, looked at a lot of cities when deciding where to build his company. Should he put it near the headquarters of Lockheed or Boeing? In an aerospace hub like Los Angeles? Near a national laboratory like Argonne?
No, he chose a quiet college town, an early Mormon settlement in the American West, best known for an underrated university and the birthplace of Crumbl, a national chain of cookie stores.1
The EP Systems headquarters stands in contrast to Logan’s open farmland. During my visit, I compliment Millecam on his state-of-the-art facilities. “My wife was the mastermind of the design,” he shares. The aesthetic is consistent throughout the offices and factory floor: grey and industrial, with a hint of brutalism. In Millecam’s office, a floor-to-ceiling window frames the snowy Wasatch mountain range. Taking in the stunning view, I’m suddenly thinking that any other city seems like the wrong place to build a battery company.
Advances in battery technology are what allow us to enter into a new era of carbon-free aviation. Thanks to the proliferation of electric vehicles, the world enjoys a supply chain of lithium and other metals to produce batteries at scale. Cars went battery-electric, providing a template for everything else to go battery-electric.
But Millecam isn’t following a template—he’s making it up as he goes. Earlier in his career, he worked on the aviation industry’s first major lithium battery, which supported the flight control electronics on the Boeing 787 Dreamliner. Through a series of acquisitions and spinoffs, he ultimately co-founded EP Systems to produce not just batteries, but battery systems, for aerospace and defense.
The company has built these systems for all sorts of customers, including NASA and Diamond Aircraft. The latter recently partnered with Lufthansa to launch an all-electric flight training program, powered by EP Systems.
Now the company is gearing up to provide systems for most of the leading eVTOL developers.
EP System’s fundamental strategy is as close to perfect as it gets. In the long run, they’ll win for three reasons: (1) they know how to certify batteries with the FAA, (2) they can be hyper-focused on safety by offering a full-stack power solution, and (3) their product is designed to scale.
The last part—scale—is key. I asked Beckett Jackson, an investor and board member at EP Systems, why he finds the company compelling. One reason, he remarked, is their modular, scalable approach, which allows for a broad range of applications and significant cost savings through economies of scale:
In the process of delivering certifiable batteries at scale, EP Systems is capturing tons of data, and all that knowledge and research goes into their product. It’s tested and proven across so many different applications, which you can only do with a modular product that can be leveraged across any platform.
The alternative to EP Systems’ approach would be to vertically integrate a single battery design into a single aircraft platform. Jackson doesn’t think that’s the right way to do it: “Bespoke solutions mean high unit costs and could prevent emerging electric air platforms from operating profitably.” By building battery systems in a way that benefits everyone, EP Systems could carry the entire aviation industry forward.
Based on what I saw in Logan, the team appears comfortable with that weight on their shoulders. Keep reading for a fascinating Q&A with CEO Nate Millecam.
Q&A with Nate Millecam
What is the scope of the technologies that you're working on at EPS?
We characterize ourselves as a full-stack power solution company. When you think about full-stack products, they're really valuable when they're all connected together. But each product within the suite can stand on its own and be compelling. If you look at a battery module, which is one product that we sell, it's very energy dense and it's very power dense—it's best-in-class in those areas. It's also best-in-class in cycle life, thermal management, and the containment system that allows you to certify it.
Building our systems means properly stacking these things together. An electric aircraft doesn't need one battery, it actually needs hundreds of batteries. And not only does it need hundreds of batteries, it needs protections to keep them safe, and ways to communicate. That means software, battery management, power distribution, and power management products that you bolt around this offering. You can buy any one of those individually, but they work really well together.
That extends into what we do on the ground and the infrastructure side: on the ground we’re mostly focused on charging management. We have the ability to transition our battery modules from the air to the ground in a secondary life application. But the fundamental battery management system serves both the onboard and offboard use cases, extracting the most life out of these assets to really close the business case for our customers.
What do you mean by secondary life on the ground?
What people may not know about battery technology is a battery's capacity is constantly degrading. You may have experienced this phenomenon with your cell phone: you buy a new cell phone, it lasts you two days, and you're really happy. But you leave it in a hot car and the next thing you know you're charging it three times a day. That's capacity degradation: you're not able to extract the same amount of electrons compared to when you first bought the asset. All batteries are prone to that.
When you think about this problem in aviation, it translates to how long and how far you can fly. Because we have set missions and requirements, as soon as the battery degrades to a certain point, you have to pull it off the aircraft. It’s a really expensive asset that still has some life in it, so then the question is what do you do with that asset? What our technology allows you to do is to repurpose that battery into a ground-based application such as a microgrid.
Are ground-based applications necessary because you can’t pull electrons straight off the grid? Do they need to go through a system first and then into the aircraft?
You can actually do both. It depends on how much you're asking for in terms of power and at what time of day. A storage device integrated with the grid allows you to do what we call peak shaving: when you have high demand at a certain period, instead of trying to keep sizing up the pipe that's coming from the utility, you can have a battery that essentially offloads that energy. You’re essentially not paying for more electricity or capacity than you need.
So let's take that one step further: if the capacity is degraded to a point where it’s no longer useful in any scenario, how is EPS thinking about that full life cycle of a battery?
We would work with some of our partners to have it recycled.
How do you feel about the current state of recycling technology? I imagine there’s a long way to go since we're still at the beginning of this broader emissions-reduction revolution that’s highly dependent on lithium-ion batteries.
I'm an optimist, so I'm just grateful we have the capability to repurpose those materials economically. There's a lot of growth in that area, no doubt, particularly if you look at supply and demand at the macro level of where batteries are going. Certainly more to come, but a baseline capability exists that works and I see a promising future for it.
Taking us back to the beginning of that life cycle, do you have any concerns about the availability and supply of the materials you need for EPS products?
There's always a big question on the macro level of whether there is enough supply for where demand is going, given the broader play in EVs. That’s always a concern. There are some interesting things that the automotive folks can do to switch their materials that allow some flexibility on the supply side. So there are some solutions there. There are other issues in the supply chain related to where we’re sourcing materials from. Are we sourcing responsibly? Are there friendly nations that we know can provide continuous supply? So you're always looking at that. Because it's new and it's such an important resource, it's got a lot of attention to it, probably similar to oil 50 or 100 years ago as that became the predominant fuel source. So it's great that we're having these conversations. It's great that our government is very actively engaged in assuring continued supply. Undoubtedly there are challenges to the supply chain, but we have some of the brightest minds in the world working on this problem, and we have paths to resolve these things.
Do you think Utah has any role to play in terms of mining materials for batteries? Do you think there's more of a domestic capacity that we should be building?
We very much like domestic capacity, just given the macro level of supply demand, and speaking selfishly as a company that's planning to build batteries here in Utah. You spend so much on logistics moving these things around, so there's a lot of value to having co-located supply chains that are not only close to the mining source but to the manufacturing plants—to where you're actually going to consume these elements—that brings down the cost of the whole system. That being said, a flow from multiple, global sources is always the wisest thing when you're designing a supply chain.
How are you thinking about the environmental issues associated with mining lithium and all of the carbon emissions associated with the supply chain?
The common concern that we hear is a question of whether we should scale what I call the “consumption side.”
What I mean by the consumption side is if vehicles go electric, we are now consuming electrons instead of combustion fuel. But when you trace your way back through the supply chain, you say, well, where do those electrons come from? They come from some generation source, but how sustainable is that generation source? Rightfully so, a common criticism is that our generation is not clean.
So when people step back and they look at the macro problem, they ask: is it worth it to make consumption clean if the generation's not gonna be clean? This is a fundamental challenge and question for society.
I would advocate for people to look at the whole picture. These are big, complicated issues and we’re dealing with legacy energy, legacy consumption, and legacy supply chains that have been around for a long time. It’s non-trivial to change them, and it doesn’t happen overnight. So when you step back and you say: “Hey, I want to solve a macro-level problem,” well, we have to start somewhere. The consumption side—with EVs—is a really great place to start.
Cleaning up the consumption side forces us to ask the hard questions about generation: what do we do with coal? Is nuclear better? Can we really put enough wind farms or solar generation to meet demand? It’s forcing the right conversations and those conversations can drive positive change. What I would caution us as a society to not do is simply avoid cleaning up the consumption side just because we don’t see a perfect generation story.
What is the current status of your fixed-wing business and how does that play into what you plan to do with eVTOLs?
Our fixed-wing business is in development right now, and we are thrilled to be partnered with Diamond Aircraft as our launch customer. Diamond has emerged with a great solution that has become a predominant platform for flight training. For a lot of reasons, it’s a great place to start for electrification. Not only does it have a great sustainability argument, but it also has a compelling economic argument. That’s important because we’re facing a pretty significant supply and demand problem at a macro level when it comes to training pilots to keep our existing air transport system going—let alone expanding it into new applications. It's a great place to start and will eventually help us train eVTOL pilots. Whether you're operating eVTOLs on the ground or in the cockpit itself—you can have that debate—you still need an operator somewhere.
We do see fixed-wing expanding further beyond flight training: as battery technology gets better and the range starts to expand, we see fixed-wings starting to be used in what we would term a micro-regional use case. The electric powertrain changes a lot of the paradigm of how aircraft are developed and certified. Typically we fly big jets because that's the most economical way to do it: you have a lot of seats, so you can amortize development costs over a lot more passengers and flight hours. That's essentially how the business case closes. The reason we don't see 4-to-19 passenger commercial transport aircraft that go from Logan to Provo, for example, is that the propulsion system is very expensive to develop and certify.
But the minute you start to go electric, you can reduce the range and now start to close the business case. Then we’ll see a four-passenger DA40 class aircraft actually competing with ground-based forms of transportation. That's when you get excited because you say, well, if I can move two to three people 150 miles in one-third of the time using existing airframe technology, existing airport infrastructure, etc., then I don't have to go build new infrastructure like vertiports (even though we love vertiports and we want to get there). What a great place to start! That’s how we see fixed-wing enabling eVTOL: by gaining a ton of flight time and experience with existing airframes, existing air traffic management, and existing airports.
Then you look at the really ambitious, paradigm-shifting transportation mode of eVTOL. A colleague of ours, CEO of VoltAero and former CTO of Airbus Jean Botti says that revolutions happen through evolution, which essentially means that we build one step at a time. To achieve this grand vision of eVTOL, we have to take meaningful steps as an industry to gain confidence and then show the consumer that we can do this reliably, safely, and at a low cost.
How many eVTOL developers are you working with?
We have a really good market share of the top 20 eVTOL platforms.
In your opinion, are eVTOL developers generally looking at battery systems in the right way?
I would say all the OEMs that we've interfaced with recognize the criticality of the energy storage system and what an enabling technology it is to their platform. They do have their own unique approaches to how it enables their platform and what problems are in the perimeter of the energy storage system. They’re all thinking about it the right way of how important it is, but you will see some differences between how they design their platform and what generation of battery technology they want to adopt. There are some who are very aggressively trying to get a product to market with existing technology; others are looking more broadly and long term to say, well, where are things going and how do I design for the future?
So I don't know if there's a right or wrong answer. We see it as our mission to support all of the eVTOL developers. We ask: what problems are they trying to solve? Who are their customers? In some ways, we are both the problem and the solution to a lot of their issues, so we take their feedback. We want them to be successful.
EVTOL developer Lilium and battery developer Ionblox have an exclusive partnership and claim to be employing next-gen cell technology that can provide higher energy density. Do you think they will be successful?
We applaud investments in battery technology anywhere that it's made. Lilium has raised a significant amount of capital and they have some very smart people. They have a unique mission set, so they're pushing cell technology in the direction that best enables their platform.
That being said, it’s also good for the entire industry. Any time you see more use of a technology developed into an application, you learn something. It usually benefits the whole industry when somebody matures their technology in that way.
What next-gen battery technology are you excited about at EPS?
Our strategy is to build power systems and design battery modules that are upgradable when a technology is mature. We’re rooting for everybody in the sense that we don't bet on just one technology; we’re monitoring and testing everything out there. We have great partnerships across the value chain from materials to anode developers, to cathode developers and wholesale integrators. We really value those partnerships.
We're able to provide some unique insights on the limits of the technology and where we see maturation, and we've had some success with a number of key partners building advanced air mobility platforms. You need a solution that’s both energy-dense and power-dense. Oh, and by the way, it has to last forever and you have to be able to build it at scale. And of course, it has to meet all the aerospace quality requirements.
And so everybody's in a different spot: there are some emerging technologies in lithium metal, but most of the innovation is happening on the anode side of things. You can also say solid-state electrolyte barriers are very interesting because it opens up an anode technology. Silicon-based anodes have always been an interesting idea. There are pros and cons to each approach, so we look at all of them, try to work with everybody, and then provide them with feedback. When we start to see something mature, we integrate it and use it.
Can you share your thoughts on the timeline for electric fixed-wing aviation, as well as eVTOLS?
The timeline is something that we talk about continuously. I grew up on the wide-bodies; when the A350 and the 787 were being developed, it took us a lot longer to certify and it was a lot harder than we ever thought.
Were we right about how those aircraft would impact aviation? We were spot on. That's where the market wanted to go: a smaller passenger count, kind of like the Southwest model, but at a global scale. It opened up worldwide travel and brought the cost point down. And they're incredible aircraft! But it was harder than we thought when we first scoped it. Every military or space program I've ever been a part of seems to follow that pattern.
So will eVTOLs happen? Absolutely. I don't think it's a question of if—it's a question of when. It’s also a question of how they get deployed. In terms of our timeline at EPS, we get to work with everybody and we view our role as to enable everybody. We see fixed-wing as a great place to start, particularly when you start to retrofit things.
Ampaire is a fantastic customer of ours. I just love what Kevin Noertker and his team are doing: taking an incremental step forward, taking a legacy airframe and making it hybrid. They’ve put it in a use case that closes economically. When you have that success, you can continue to build on it.
Some of these new platforms that are coming out are really interesting. I love what Jean Botti is doing at VoltAero. A lot of efficiency gain in that platform. There are some early adopters; Joby, for example, has been doing this for a while. I think everybody is watching and rooting for Joby to be successful. Wisk has been doing this for a very long time and has a lot of flight time. The second-generation aircraft will learn from the first-generation aircraft, as well as from fixed-wing applications.
When will we see your electric training aircraft being used?
We will let Diamond speak specifically to their schedule and their timeline, but we're building flight-qualified hardware right now for them to fly.
Does it help that on a flight training aircraft you only need space for one or two people, allowing you to dedicate more space to hardware?
That helps tremendously just from a weight and balance perspective. Generally, most flight training markets only require two passengers. There are some unique cases in Europe where because of the high cost of flight training, they like to have a third passenger. That’s maybe something to look at in the future enhancement for flight training, but most of the market only needs space for two passengers, and that allows you to transfer some of that payload into energy storage, which then brings down the cost to do the flight training.
In terms of aviation batteries, is this a competitive space? Are you going head-to-head with others in the US or abroad?
There's definitely competition anywhere where there's a market. We approach it a little differently in that we're looking at the whole power system. There's a reason why we call it the company Electric Power Systems; we see the storage block as a very important part of a broader capability that's needed to enable the electrification of aircraft.
We've emerged as the leader in this space, which is mostly a matter of experience—who has been doing this the longest? We've done over 500 different designs. We've taken 50 of them through some level of flight qualification—most of them on manned applications. We have eight aircraft that are flying right now with our batteries onboard. We've had zero failures, and zero safety incidents in the field. We can't take that for granted. It’s a great start and it’s something you have to build on, but it's a technology that brings a lot of challenges with it, as many people know who tried to adopt lithium back in the mid-2000s on the Dreamliner and some business jets. There were definitely a lot of issues to get that technology to work.
When you say “issues,” do you mean thermal events?
Yes. You can do a Google search on Japan Airlines and the 787 Dreamliner battery. It was really interesting being a part of that in my career. Unfortunately, it set back the adoption of that technology by a decade. And it was not because the technology wasn't necessarily the right technology, it was because we didn't know how to deploy it correctly and safely. If we have one concern with competitors, it’s that we see some of them trying to argue for less safety, ignoring some of the hard lessons we learned from the mid-2000s. If this advanced air mobility idea is going to take root and really transform our society, we need to do it safely. We’ll lose the public trust pretty quickly the minute we have an incident.
Swappable batteries for eVTOLs could help with quick turns and therefore economics, but it doesn’t seem to be a priority for eVTOL developers. What’s the viability of swappable batteries?
It’s a great question, and maybe the short answer is we try not to tell our customers how they win. Rather, we try and inform their ideas so they can win.
There are a couple of things you need to look at regarding swappable batteries. The number one question is how much CapEx are you willing to make into the overall ecosystem. What swappable batteries allow you to do is to turn around an aircraft really quickly. The other thing that a swappable battery allows you to do is to manage the life of that asset in a way that you can extend it and use it more. So there's a cost-benefit analysis when it comes to how much money you put into raw batteries that are in the field, charging equipment and people managing them, and the benefit you get from swapping batteries in and out.
There are some logistic challenges as well: what does airworthiness look like when you take one piece of equipment off versus the other? There are pros and cons to each model. We think we can contribute by making things easier and cheaper for our customers. The easiest and cheapest way is to not spend a ton of money on CapEx, work to get the same fast turnaround time, and still have the battery last a really long time.
So most of our products are geared around that idea, but we did design it in a way that if, if you want to integrate it and then swap it out with another system because that's your methodology, we have tried to design it both ways. If you look at precedents in the automotive industry, pack swapping really didn't take off for a lot of those CapEx investment reasons. If you can get the cycle life and you can get the turnaround time where the market will accept it, you don't necessarily need a swappable solution.
You said that you can work with everyone. Can everyone work with you? Can the companies building eVTOL chargers plug into your energy storage systems?
The short answer is yes. We use the common charging standards that are out there, whether that’s CHAdeMO or CCS2. We have the unique ability to control those chargers to do some variable power or variable voltage, and that allows us to get more cycle life. A great example of that is the fast charge cycle we’re doing on our gen-one product.
It’s important to define a cycle because this is sometimes how cell people get you: they’ll ask, how long does your battery last? Well, batteries last depending on how you use them. There are four levers that impact battery life: the depth of discharge (meaning how much you take out of them), how fast you put current back into them, how frequently you do that, and then what environment you are putting it in.
Let’s look at an aggressive scenario: an aircraft is using a fast charge cycle, which we'll define as going from a 20% state of charge to a 100% state of charge. Let’s say we need to do that in 20 minutes or less, which is very aggressive charging—way faster than anything happening in automotive right now. With that big depth of discharge, we'll have to thermally manage that cycle to be able to control it. That will get us about 2,000 cycles if it's just a nominal charger using nominal charge algorithms that anybody can do.
If we add some of our algorithms to it, we're actually seeing 6,000 to 7,000 fast-charge cycles. For our customers, that means lower-cost of operating their aircraft. It also means faster turnaround times: the faster they can turn around their vehicle, the more tickets they can sell, and the more money they can make with a single aircraft.
Where is this company in 10 or 20 years and what is its long-term impact on the industry?
I would hope that we could play a meaningful role in making things truly go electric or hybrid-electric. Something that I think we could all be proud of is if not only we cleaned up aviation, but if aviation became more broadly used as part of our transportation systems, giving people time back in their day. I also hope we can improve the quality of life in urban environments and expand access to urban environments. When you combine the ability to connect remotely and the ability to quickly connect in person, that starts to open up a lot more in terms of hybrid models for living and working.
That could start to expand economic opportunity throughout the United States. Real estate could become more affordable if people can live anywhere they want. You could live 150 miles outside of an urban center and still get to work efficiently and quickly. You could also spend more time at home. That has an extrapolation effect on the supply chains as we learn to move people, goods, and medical services efficiently in that range. You take all the benefits of the city and all the benefits of a rural place and merge them together—and bring that to the entire population. That's incredible. Propulsion technologies really unlock and enable that. All these wonderful customers we get to work with—whether they're scrappy startups like the Ampaires of the world, or they're very thoughtful, strategic visionary thinkers like Supernal or Hyundai—we want to enable their vision and help them achieve success. Our role is to help them get there.
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After publication, a friend very helpfully pointed out that Logan, Utah is the traditional home of the Sihivigoi (Willow Valley) people of the Northwestern Band of the Shoshone Nation.