Denis Phares, CEO of Dragonfly Energy DFLI, was recently a guest on Benzinga's All-Access.
Dragonfly Energy is a leading green energy storage company. The company reports that it develops some of the most popular Lithium-ion battery products in the RV and Marine industries today, through the Battle Born Batteries brand. Dragonfly is committed to pushing the industry forward and helping onshore manufacturing back to the U.S.
Mr. Phares spoke about the company's process and how it could help Tesla TSLA solve its production woes.
Dragonfly Energy is a leading green energy storage company. The company reports that it develops some of the most popular Lithium-ion battery products in the RV and Marine industries today, through the Battle Born Batteries brand. Dragonfly is committed to pushing the industry forward and helping onshore manufacturing back to the U.S.
Mr. Phares spoke about the company's process and how it could help Tesla TSLA solve its production woes.
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NewsTranscript
00:00We are speaking to a very exciting company, Dragonfly Energy, trading on the NASDAQ under
00:09ticker DFLI.
00:11I'm joined today by CEO Dennis Farris.
00:15Dennis, how are we doing today?
00:16Doing great.
00:17And you did not shove me out of the way.
00:19That was okay.
00:20Very friendly.
00:22So Ryan, you hear that?
00:23It was not a shove.
00:24It was a friendly nudge, if anything.
00:25So Dennis, before we hop into Dragonfly, what are you doing in Detroit?
00:31We're at the Battery Show.
00:32Okay.
00:33The Battery Show here in Detroit.
00:34Great opportunity to be able to visit your studios here.
00:37So a live interview in person.
00:39Very exciting.
00:40Yeah.
00:41We're excited to have you.
00:42So what is the Battery Show for those who are unfamiliar?
00:45Well, you know, over the last decade, storage and batteries and electric vehicles has become
00:51bigger and bigger and bigger.
00:52And this show, which used to be a Novi, grew so fast, it outgrew Novi last year, so moved
00:58into the city.
01:00Any particular like themes or anything that you foresee being a strong point at this year's
01:07Battery Show?
01:08Well, I think manufacturing is a big theme, you know, onshoring.
01:12I think that that's, you know, hopefully we can talk a little bit about that today.
01:16But onshoring manufacturing is very important.
01:18Yeah, we're all about bringing good, good, high paying manufacturing jobs back to the
01:22United States.
01:23Love that.
01:24All right, Dennis.
01:25Well, let's hop into it.
01:26Give us an overview of Dragonfly.
01:28Well, obviously, onshoring manufacturing is a big part of what we are trying to do here.
01:33So we actually assemble batteries, battery packs today.
01:37We serve a number of industries, primarily for storage rather than propulsion.
01:43But most of the technology that we develop is centered on how do you improve the manufacturing
01:48process to make it more streamlined, more efficient, so that you can compete domestically.
01:54Got it.
01:55And I know you guys recently just signed a deal with Highway Transport, a leading liquid
02:01chemical transportation company, to use your electric APUs.
02:05Walk us through this deal and what it means for Dragonfly.
02:08Well, this is one of those downstream industries that we are providing storage solutions for.
02:13So we're most well known for providing the house battery bank for RVs, for Thor brands,
02:20for Airstream, for Tiffin, Forest River, that sort of thing.
02:24As it turns out, we've applied a very similar storage solution, house bank solution, for
02:29the trucking industry, so that fleets can allow their drivers to not have to idle while
02:34still powering all of their house loads, their air conditioners, CPAP machines, coffee makers,
02:39whatever.
02:40So Highway Transport was one of the first fleets, because we've been piloting this system
02:44for years now, for a couple of years anyway, to announce that they're turning over their
02:49fleets to this electric APU solution.
02:52So very exciting for us.
02:53Wow.
02:54Yeah.
02:55It sounds like an exciting deal.
02:56And I know you guys also recently completed another deal worth $30 million with Stryton
03:01Energy to license your Battle Born brand.
03:04How does this licensing model fit in with your larger strategy?
03:08Well, look, this sort of emphasizes the fact that we're a pretty unique technology company.
03:14We've got product that we already sell.
03:16We've already disrupted a number of industries, including RV, working on trucking here.
03:21This is a brand licensing deal.
03:23We're actually licensing our Battle Born batteries name to Stryton Energy, because Stryton, which
03:28is very well known as a lead acid battery manufacturer, wants to get into the lithium
03:33ion battery space.
03:35They recognized they had to do it with a very well-known, reputable brand, and they identified
03:41our Battle Born batteries brand as the one to license.
03:44Yeah.
03:45Sounds like a very natural fit there.
03:49Let's talk some Tesla real quick, Dennis.
03:51So Tesla is attempting to develop new batteries for its RoboTaxi program.
03:57They've hit some snags and are struggling to create a process that's cost and energy
04:02efficient.
04:03What do you know about these problems that Tesla is encountering right now?
04:07Well, Tesla obviously is a pioneering company, and they've done a lot not just to drive the
04:13whole electric vehicle market, but to bring a lot of the manufacturing back home domestically.
04:19And part of that was bringing Panasonic in to Nevada to produce lithium ion battery cells
04:25here.
04:26But what they did that was very forward thinking back in 2019 is they acquired a company called
04:31Maxwell.
04:32Maxwell makes advanced capacitors, but they have a very unique what's called a dry electrode
04:38process to make their advanced capacitors.
04:42And Tesla applied it to make lithium ion battery electrodes.
04:47So the difficulty that they've been having recently that's been reported is this extrusion
04:55process is difficult to scale.
04:59And of course, Tesla is all about scale.
05:01And once you have a new process to make a battery, there's one thing to determine, well,
05:07we can make a battery that works this well, and this is the performance characteristics.
05:11But now you have to go back and say, well, how can we make many millions of these at
05:14a time?
05:15And so that's where Tesla is right now is how do you take this dry electrode process,
05:19this extrusion?
05:20They're basically extruding out electrodes and then laminating them onto the foil that
05:27collects the current in the battery.
05:29And they're having trouble scaling that process.
05:32Got it.
05:33So could Dragonfly's tech help solve these scaling issues for Tesla?
05:37And if so, how?
05:38Well, as it turns out, we've been working on this for decades.
05:42Actually, Dragonfly Energy did not start as a pack assembler.
05:46We didn't start as the Battle Born Batteries brand.
05:49We started the company started around dry electrode manufacturing technology.
05:55And our process is different.
05:56Our process is not an extrusion process.
05:59We're actually powder coating the electrode grains directly onto that foil current collector.
06:04And so it solves basically the scaling problems.
06:08We don't have to worry about the lamination, which is very difficult to do at scale.
06:13We don't need very expensive equipment.
06:16We can use off-the-shelf equipment basically to apply processes that we already know scale.
06:23So what we started with is, what processes do we know can scale, we know can mass manufacture,
06:31and then from there, how good a battery can we make?
06:34And what we've determined to date is that we can apply these scalable processes and
06:37produce batteries that meet or exceed the performance of current industry standards.
06:44Got it.
06:45So if you already have this process perfected down, you guys have been doing it for a while,
06:49how do you go about getting a deal with Tesla?
06:54That's a great question.
06:55You know, that's, you know, look, we're getting some interest in what we're doing now.
06:59It's not just Tesla.
07:00Dry electrode in general is kind of a hot topic these days that a lot of cell manufacturers
07:05are looking at.
07:07We have been approached by a number.
07:10And it's really for us, it's a question of capital.
07:14Because as a small cap company, as a D-SPAC, obviously the last couple of years have not
07:20afforded us with unlimited amounts of capital to deploy the technology that we want to deploy.
07:25We'd actually have to focus on regrowing our revenue drivers.
07:32And therefore, you know, a lot of this has to do with providing samples that are large
07:38enough that can be evaluated by companies like Tesla.
07:42But in terms of how do you get a deal with Tesla, I will say that that's a longer process.
07:48Yeah.
07:49I mean, that's the goal, right?
07:51To get deals with some of these big companies like Tesla.
07:54Are there any other companies that would be like, you know, dream partners for Dragonfly?
07:59There are.
08:00And we are talking to a number, obviously.
08:01You know, this is the goal for us is to sell batteries.
08:04And I think that the ability to manufacture domestically is a huge motivation for a lot
08:11of companies, because obviously you've got IRA credits, you've got the PR benefits of
08:19saying you're an American-made battery.
08:22So we are really trying to not just manufacture here, but do it in a way that we can compete globally.
08:30So you mentioned the IRA, the Inflation Reduction Act.
08:33I mean, what have you seen so far since that was passed a couple of years ago in terms
08:38of have you seen more companies?
08:40Like the wheels start spinning on companies trying to bring jobs back?
08:44Any new plants built?
08:45Anything like that?
08:46Or is it a slower process?
08:47Look how many companies announced gigafactories in the United States after that was announced.
08:52So I don't know how many are going to come to fruition, but a lot of non-American companies
08:58announced that they're going to build gigafactories in America.
09:02So I think there is sort of an unintended consequence here, because the focus really
09:07should be on American innovation, on deploying American technology, because ultimately you
09:11don't want to be reliant on technology that is developed overseas either.
09:18You want to be able to maintain the technology and lower the risk by ensuring that regardless
09:24of what happens, we always have the technology to produce here.
09:27Yeah, I completely agree there.
09:31I mean, we're in Detroit right now, obviously the motor city in the United States, home
09:36to the big three automakers.
09:37What do you see as just like the general trend right now?
09:40Because I know in the last year, year and a half, we've seen some of the American automakers
09:45like I don't want to say, I guess kind of scale back their EV goals.
09:50Do you think that's just like a snag in the road on this path toward electrifying the
09:57roads?
09:58Or do you think that's like a worrisome trend that we've seen?
10:00No, that's not worrisome.
10:01I mean, this is a temporary thing.
10:04This is the direction that the industry is headed.
10:06And what the American automakers have generally done is partner with Asian battery companies.
10:14There was a report that just came out that said that GM is actually doing a lot more
10:19in-house technology, and they're looking domestically at innovation partners.
10:25So that's something we're looking at, obviously.
10:28But hopefully, we can see more dollars being invested in American cell manufacturing.
10:34Got it.
10:35Yeah, I mean, at the end of the day, you know, it seems like we're still we're heading toward
10:39this electrification journey.
10:42And if I'm buying an electric car, I want the option to buy an American electric car.
10:45Well, you do.
10:46You know, you I mean, the thing is that we have the technology for lithium ion batteries
10:52historically is developed here, and it has been perfected elsewhere.
10:56So we really do have to bring back the notion that we as Americans can deploy on a mass
11:04scale what we developed here, what we invented here.
11:07And I think that, you know, we're so used to getting stuff manufactured elsewhere.
11:11And we're we're so used to as an investment community for a rapid return here for a new
11:15piece of software or app or website or whatever, we've got to get back to investing in manufacturing
11:22on all levels.
11:23Beautiful.
11:24Well, again, I love that.
11:25Bringing those high paying manufacturing jobs back to the United States.
11:28That's what you guys are trying to do.
11:30Well, we've been on the line with Dennis Farris again, the CEO of Dragonfly Energy.
11:34Dennis, thanks for stopping in Benzinga's office today.
11:37Thanks for having me.
11:38Yeah, of course.
11:39And I hope you enjoy the rest of the the battery conference here in town.
11:42I'm sure it'll be exciting and we'll have to stay in touch and you'll have to come back
11:45in next time you're in town.
11:46Anytime.