Battery industry veterans are coming together to launch Peak Energy, which aims to mass-produce giant batteries to even out production fluctuations from renewable energy sources, like wind and solar power generators.

Because Peak Energy is focused on scaling up production of battery technology that already exists, they don’t think of themselves as a traditional “startup.”

“A normal Silicon Valley startup is 10 years in the lab, come up with a better mousetrap and go to market. We’re completely the opposite,” Cameron Dales, president and chief commercial officer of Peak Energy, told CNBC in a video interview Friday.

Peak Energy hopes to partner with a technology company (yet to be selected) that is already an expert in battery technology but does not have the capacity to scale manufacturing.

“In the battery market it turns out the rarest commodity is not the technology — there are many excellent ideas out there at academic labs and startups — but rather the ability to scale to manufacturing,” CEO Landon Mossburg told CNBC. “The difficulty of manufacturing scale up is one of the reasons you see so many ‘breakthrough battery technology’ announcements but very very few companies who actually reach market.”  

Peak Energy launched in June and is coming out of stealth on Wednesday, announcing a $10 million funding round lead by Greg Reichow at Eclipse Ventures, a Silicon Valley venture capital firm. Before joining Eclipse, Reichow worked at Tesla for more than five years, where he was responsible for battery, motor and electronics manufacturing and then led global manufacturing. Also joining the funding raise is TDK Ventures, the corporate venture capital arm of the Tokyo-headquartered multinational electronics company TDK.

“The No. 1 issue we face as it relates to expanding renewable energy sources is storage,” Reichow told CNBC. “This problem must be solved, but the existing approaches using lithium-ion and other technologies are not yet at a price point that enables the kind of scaling that society needs across sectors.”

Demand for grid-scale storage will continue to grow. The United States Energy Information Administration has projected that battery storage capacity will grow from 9 gigawatts in 2022 to 49 gigawatts in 2030 and then to 247 gigawatts in 2050. That’s a baseline projection that includes the Inflation Reduction Act and assumes no additional changes in U.S. policy throughout the projection period.

It’s an aggressive and expensive buildout plan, but Mossburg has done this kind of rapid production scale up before when he worked at Northvolt, a battery manufacturing company that launched in 2016 in Sweden. Northvolt was founded by Peter Carlsson, who was the global head of sourcing and supply chain at Tesla from 2011 to 2015, and Mossburg joined 2017. After 18 months, Northvolt had 300 people, and grew to 4,000 people by the time Mossburg left four years later.

Of course, Peak Energy will have to raise more money to fund this kind of expansion. A lot more.

“We’re running a playbook which I and the rest of the executive team initially demonstrated and deployed at Northvolt,” Mossburg told CNBC. Northvolt also started with a small seed round of funding and ended up raising more than $9 billion in a combination of equity and debt. Mossburg was involved with securing all of that financing except for the most recent $1.2 billion announced in August.

Dales has similar experience. He co-founded a material sciences innovation company, Symyx Technologies, which went public in 1999, then joined the battery company Enovix.

“I thought naively, ‘Well, how hard could batteries be? It’s just a plus and a minus, everybody has a Duracell. How hard could it be?’ Little did I know, 14 years later, I would still be there,” Dales told CNBC. Enovix was making very high energy density batteries at a battery factory in Fremont, California, and is building another one in Penang, Malaysia. The company went public in a billion-dollar-plus SPAC deal in 2021.

“Peak Energy’s team comprises of two industry veteran leaders who have scaled a battery company before,” Raphel Finelli, who lead the investment for TDK Ventures, told CNBC.

So, too, for Eclipse Ventures.

“Landon and I worked together at Tesla and I know what he’s capable of delivering,” Reichow told CNBC. “After leaving Tesla, he went on to build a battery company as an executive at Northvolt. Similarly, Cam was a core part of the founding team at Enovix and was instrumental in helping them build the business. These are proven executives that have built battery companies in some of the hardest spaces and that makes them unique.”

It’s too early for Peak Energy to commit to a specific price for its battery systems, but a Tesla Megapack battery system costs about $1.3 million without installation, and Mossburg says he thinks Peak Energy can be at roughly half of that cost with its system.

In addition, lithium-ion batteries can be a fire hazard and the electric vehicle makers are eating up all available supply, Dales told CNBC. The problem utilities have is “the minute Ford or GM needs more batteries, basically their contracts for lithium ion just get canceled and the suppliers just go for the car, because it’s today the largest market,” Dales told CNBC.

Also, China dominates the battery market and supply chains right now. “They’re the dominant player in batteries generally — by far — they are massive in terms of battery production,” Mossburg told CNBC. “And they’re positioning to do the same with sodium.”

While Mossburg says he thinks it is a benefit for the world for the United States and China to continue to trade, and Peak Energy is willing to work with Chinese partners, there are geopolitical risks associated with depending on China completely. Peak Energy’s plan to manufacture in the United States is a geopolitical advantage, he says. (It’s also more climate-conscious to make these giant batteries in the U.S. as opposed to making them in China and shipping them to the U.S.)

“You don’t want to be in a situation where a critical component of the energy infrastructure of your entire economy, which batteries are increasingly becoming, is principally sourced from a party that you can’t be sure you’re going to be friends with,” Mossburg told CNBC. “If the U.S. wants to continue to have a robust economy, especially an economy that can make things like cars or even like high-tech things, ceding an entire industry that’s this important to any other player — doesn’t matter if it’s China or anyone else — is a dangerous prospect.”

The first real gigantic battery factory in the world was the Tesla/Panasonic Gigafactory in Nevada, and Reichow led the development of that, Dales said. The second generation “arguably” was the factories that Mossburg built with Northvolt and that Dales helped build at Enovix, Dales said. Peak Energy is “taking that learning and the people who developed those factories and we are going after the third generation of factory design,” Dales told CNBC.