Death of a Sodium-Ion Battery Startup

It wasn’t too long ago that the battery world was abuzz over sodium-ion batteries and their potential to be a cost-effective domestic competitor to the Chinese-dominated lithium-ion industry. The prevalence of sodium and the early-stage sodium-ion supply chain seemed to give the U.S. a shot at developing the next big battery for electric vehicles and energy storage systems.

But this past weekend, a promising sodium-ion startup called Bedrock Materials announced that it was shutting down and returning most of its $9 million seed funding to investors. The reason, according to CEO Spencer Gore? Its business model no longer made sense.

“We were responding to a very unique moment in the history of the battery industry,” Gore explained to me about his decision to start the company, which made cathode materials for sodium-ion batteries, in 2023. “Lithium prices had gone up about 10-fold, and so had other battery minerals by lesser degrees.” Experts predicted that the world was in for a long-term lithium shortage. Then the opposite happened: Lithium producers rapidly ramped up supply at the same time EV demand growth slowed, leading to oversupply and a 90% drop in price.

Before all of that happened, Bedrock saw the EV market as a good bet. Automakers were telling Gore that their first priority was lowering costs, and sodium-ion batteries seemed well positioned to help with that. The EV industry was also orders of magnitude larger than the battery storage market, and stood to benefit from the $7,500 consumer tax credit in the Inflation Reduction Act, which incentivizes the use of domestic minerals and battery components.

The election of Donald Trump threw the future of that tax credit into sudden doubt. The cratering raw minerals market, on the other hand, didn’t immediately translate into falling prices for lithium-iron-phosphate cathodes, the chemistry Gore saw as Bedrock’s main competitor, he told me. So long as this lasted, he thought, Bedrock’s business would be viable. But it didn’t.

“LFP prices have now crashed down to the point where it would almost be a viable business to extract the lithium from them and sell it on the open market,” Gore told me. “The active material producers are running single-digit margins. And so when that happened, it just became clear that the economic case for sodium had collapsed.”

Not everyone agrees that the domestic sodium-ion industry is doomed. Bay Area-based Peak Energy, for example, is still chugging away, and the company’s president and chief commercial officer, Cam Dales, told me he doesn’t expect to face the same headwinds as Bedrock. For one, Peak is targeting the sodium-ion energy storage market rather than the EV market, which means that energy density — sodium-ion’s weak point — is not as important a factor. Secondly, Peak is not in the business of producing battery materials, which Dales sees as an inherently risky and low-margin proposition. Rather, the company plans to produce battery cells domestically by 2028, while sourcing cathode and anode materials from other, ideally domestic, manufacturers.

So while the economic benefits of sodium-ion batteries have certainly diminished, Dales told me that the potential performance benefits — longer cycle life, greater efficiency, and ability to withstand high temperatures — are exceeding his initial expectations. Specifically, Peak is developing a cathode chemistry composed of sodium iron phosphate powder, which Dales claims will save customers money over the 20-year lifetime of a storage project, even if the upfront cost of sodium-ion battery cells is now higher than LFP. “System-level and project-level economics vastly outweigh smaller differences at the cell level,” Dales claimed.

The two industry leaders know each other well, as they used to work together at the lithium-ion battery manufacturer Enovix, where Dales was the chief commercial officer and Gore led the EV products team. Dales said he was bummed to learn of Bedrock’s closure, but not surprised. For domestic battery materials producers such as Bedrock to thrive, Dales told me, he thinks temporary policies that protect and nurture their growth will be necessary to ensure they’re not instantly outcompeted by Chinese incumbents.

“Absent that, it’s hard to see how you build a new materials company in the U.S. and compete against a fully scaled supply chain in China,” he told me.

Indeed, when I asked Gore if there was anything he wished he had done differently, he responded without hesitation, “I would have gone to China the very first day that I founded the company.” When he did visit months later, he said his main takeaway was that “most of the sodium-ion companies in China were producing material at scale, but losing money doing it,” even though they were “essentially producing sodium-ion materials on the exact same production lines that they had been using for lithium-ion materials.” The interchangeability of the two production processes made it crystal clear to Gore that Chinese battery giants such as CATL and BYD already had a tremendous advantage over the U.S., which doesn’t have scaled-up battery facilities.

This is why Gore now rejects the notion that the U.S. could win the race to scale up sodium-ion. “If you lost it for lithium-ion, you’ve already lost it for sodium. It’s the same thing, same equipment, same process.” Now he’s more interested in figuring out a way to facilitate a “once-in-a-generation” transfer of knowledge and technology between the U.S. and China. As it stands, he told me, “they’re 20 years ahead of the rest of the world, and we can’t even tie our own shoes.”

Ironically, bolstering domestic industry was the primary rationale behind Trump’s “Liberation Day” tariffs, which have since been put on pause for every nation except China, which will now be subject to 145% levies. And while Dales thinks tariffs would be a net-positive for his company, Gore told me he doesn’t expect them to help the domestic sodium-ion industry overall.

For one, tariffs will make the price of constructing domestic battery materials and cell facilities even more expensive than it already is relative to China. “So that’s one thing nudging us towards spreading out the factory costs over more energy dense cells,” Gore told me. Another incentive to optimize for energy density, tariffs or not, is the 45x tax credit, which gives cell manufacturers $35 per kilowatt-hour for domestically produced cells. “On a global basis, there’s a strong incentive for the most energy dense cells to be produced in the U.S.,” he argued.

While Peak will also have to contend with higher construction costs due to Trump’s tariffs as it builds out its sodium-ion cell production facility, the company’s customers are independent power producers and utilities that can pass cost increases onto ratepayers. This will mean higher electricity costs for Americans, which Dale acknowledged is not ideal, but he also told me, “I don’t think it actually affects our business that much.” While the company wouldn’t publicly disclose its partnerships, Dales said it’s “working with the majority of the large IPPs in the country,” as well as “a number of” utilities.

Gore thinks it’s possible that the sodium-ion performance advantages Peak is betting on will prove to be compelling for customers and investors in the energy storage space. It’s just not a bet he was willing to take. While Bedrock did explore pivoting into the energy storage market, Gore said he concluded that LFP batteries could likely be engineered to achieve the same cycle life, efficiency, and operating temperature benefits that Dales thinks makes sodium-ion stand out.

“Ultimately, we failed to find a niche where we thought that sodium was the best product,” Gore told me. Some investors were initially reluctant to accept that. They encouraged Bedrock to keep going, to pivot, to place a different bet. They had certainly never had a founder try and give back money before, Gore said. But to him, it just made good sense.

“It’s still possible that we would have succeeded,” he told me. “But I think that the likely size of the success and the likelihood of a success, given everything that we’ve now learned, is considerably smaller. The best expected value for us and for our investors was to simply return their money.”