Is Adden Energy the Next Big Energy Stock?

Adden Energy is a startup headquartered in Waltham, Massachusetts, that was founded to revolutionize electric vehicle (EV) batteries. They have developed an innovative solid-state lithium-metal battery designed for fast charging and commercial deployment, which can help bring EVs to the mass market.

The company's cutting-edge solid-state battery technology features high energy density, material stability to address safety concerns, and excellent capacity retention over 10,000 cycles in its lifetime. This significant breakthrough led to a seed funding round that raised $5.15 million.

Adden Energy completed its latest Seed funding round on February 25, 2022. While competitors like Natron Energy, Solid Power, and Wildcat Discovery Technologies will put up a fight, Adden has a good chance to quickly reach a higher valuation based on current funding and a trend in favor of ESG companies on the Nasdaq.

Adden Energy was founded in 2021 by a team of Harvard scientists, alumni, and venture capitalists, led by Professor Xin Li. In 2015, doctoral students William Fitzhugh and Luhan Ye began the initial research and development on solid-state batteries at Li's group at Harvard's John A. Paulson School of Engineering and Applied Sciences.

Fred Hu, a Harvard economics Ph.D. and Founder of Primavera Capital, then joined and advised the team on the commercialization of this technology. In 2021, it was incorporated and later received its first round of venture funding in early 2022 from Primavera Capital Group, Rhapsody Partners, and MassVentures.

Adden Energy's goal is to scale the battery from a coin-cell prototype to a palm-sized pouch cell, and then upward toward a full-scale vehicle battery in the next three to five years. That's about three months worth of charging for a typical EV driver.

It has been granted an exclusive license from Harvard University’s Office of Technology Development to scale up batteries for future use.

Organizations such as Harvard’s Climate Change Solutions Fund, Harvard’s Physical Sciences and Engineering Accelerator, MassCEC Catalyst Program, Harvard Data Science Initiative, Harvard FAS Dean’s Competitive Fund for Promising Scholarship, and the U.S. Department of Energy have invested in this technology.

According to Adden Energy, the world is facing a climate change challenge and the transition to clean energy through zero-transmission transportation is highly important.

Developing an improved battery technology that provides convenience, and high performance will enable the mass adoption of electric vehicles and push Adden Energy further toward its goal of contributing to cleaner modes of energy storage and transportation.

Batteries

Adden Energy's introduction of solid-state lithium-metal batteries—developed by Dr. Xin Li at the John A. Paulson School of Engineering and Applied Sciences—holds the potential to revolutionize the electric vehicle market.

Offering fast charge rates of three minutes and over 10,000 cycles in a lifetime to users, the battery also boasts high energy density, stability, and safety. This technology can make electric vehicles more accessible, encourage mass adoption of zero-emission transportation, and contribute to a cleaner global economy through sustainable green energy solutions.

What are solid-state batteries? 

Solid-state batteries utilize a solid electrolyte instead of a liquid one, offering enhanced safety and higher energy density, making them ideal for space-efficient, high-capacity electric vehicle battery units.

To predict and design more powerful solid electrolytes, Professor Li and his team use machine learning and high-throughput computational chemistry algorithms. Adden Energy intends to focus on scaling its innovative battery technology to the EV market.

As of now, Adden Energy remains a privately-held company and does not have publicly tradable stocks, and it's hard to tell when companies will go public—especially in the Seed and growth stages. 

There is a chance Adden will stay private and instead sell the rights to its technology to companies like Tesla and Ford Motors. The company might take this route if that’s the best way to pursue its mission of a cleaner future.

Nevertheless, the company getting $5.15 million in a seed funding round is a sign it may continue to see the growth needed to attract funding from more investors in the future. Only time will tell what their target valuation will be before going public.

Environmental, social, and governance (ESG) investing has seen considerable expansion, with global ESG assets projected to exceed $50 trillion by 2025. And despite its many advantages and popularity, ESG investing also poses potential risks and obstacles.

One of the primary issues with ESG investing is the subjectivity of ESG measurements, which can make it hard to accurately evaluate a company's actual ESG performance. This problem is underlined by a study from Columbia University and the London School of Economics, which discovered that companies in ESG portfolios had poorer compliance with labor and environmental regulations than those in non-ESG portfolios.

Investors should also be mindful of the potential underperformance of ESG investments. A recent Journal of Finance article found that sustainable funds with high ratings did not outperform those with lower ratings, implying that investors may have to accept a trade-off in terms of returns.

ESG investing might limit portfolio diversification because it excludes certain companies and industries. However, a 2019 Morgan Stanley study revealed that the total returns of sustainable funds were on par with traditional funds between 2004 and 2018, indicating that well-chosen ESG investments can produce competitive returns despite the potential risk.

It's also crucial to be aware of possible greenwashing—a study by the University of Northern Iowa and the University of South Carolina discovered that underperforming managers often emphasized their ESG focus. This implies that some companies may use ESG to mask weak financial results.

While ESG investing presents optimistic prospects and an opportunity to align investments with personal values, investors should be conscious of the potential risks and challenges.

By utilizing credible third-party evaluations, conducting comprehensive due diligence, and examining both financial performance and the actual impact on ESG factors, investors can better steer through these risks and make well-informed choices about their ESG investments.