As demand for electric vehicles ramps up, the high cost of producing lithium-ion batteries at scale becomes an increasing concern. But a relatively new technology that promises to slash energy consumption and capital expense stands to revolutionize battery design and manufacturing.

Founded in the Boston area in 2016, AM Batteries is a pioneer of the dry battery electrode method of manufacturing. A key component in batteries, the electrode is a type of metal foil that facilitates the flow of electric charge. The traditional means of production involves coating the electrode in a toxic chemical slurry which subsequently must be removed through drying under high temperatures, requiring vast amounts of factory space and expenditures of energy.

The dry alternative applies electrode material to the metal foil in powder form, eliminating the need for toxic materials, huge ovens and the space required for drying. The result, according to AM Batteries, is 75% less energy consumption, 30% lower production costs, and a factory that’s one-fifth the size of traditional plants.

Tesla pioneered and commercialized the first dry electrode production process, which remains the most popular method among battery makers rushing to adopt the innovation. But AM Batteries believes it has found a better way. In 2023, the startup hired Hieu Duong, lead inventor of the process, away from Tesla to become its chief manufacturing officer, and Lie Shi, former president of battery separator maker Celgard, as its chief executive officer. Instead of Tesla’s method of squeezing dry powders onto the metal foil, which raises issues of application uniformity, they employed a sprayer.

“Everyone is trying to break into the dry battery electrode space,” Shi says. “They may intuitively follow Tesla.” But he considers Tesla’s approach to be less stable than that of AM Batteries, and “very difficult to work with.” His company’s method, he claims, results in a thicker electrode with better energy density, providing longer driving range and shorter charging times.

The newer method could have the additional advantage of boosting domestic production of batteries in the U.S. Lower overall manufacturing costs — a constant concern, given the higher wage scale for American workers — are one reason. Another is the avoidance of toxic solvents that could run afoul of Environmental Protection Agency regulations on new factory construction.

Even if battery makers successfully set up domestic battery factories using the new process, it will still require the importation of some raw materials, Shi says, which could result in higher production costs if affected by President Trump’s on-again, off-again tariffs.

AM Batteries’ technology remains in early development, having only begun to prove its effectiveness in small-scale lab testing. For one thing, the company needs to build a larger sprayer to facilitate full-scale production. It hopes to complete engineering this year, move into the pilot stage next year, and possibly be in production by 2027.

Scaling up is “our major challenge right now,” Shi says. “We still need to go through many engineering breakthroughs.” But as to AM Batteries’ eventual ability to match the scale and quality of traditional battery production, “we are 100% confident.”