Dakota Lithium: The Story Behind This Practical Sustainable Energy Product Company

Dakota Lithium is a company that creates practical, sustainable energy products to help people across the planet with affordable transportation and long-lasting energy storage. Dakota Lithium batteries use a lithium iron phosphate chemistry, which is extremely stable and not prone to thermal runaway. Pulse 2.0 interviewed Dr. Yong Hou, vice president of research and development at Dakota Lithium, to learn more about the company.

Dr. Yong Hou’s Background

Dr. Hou moved to the United States in the 1990s from China to pursue his PhD in engineering from the University of North Dakota. And Dr. Hou said:

When I lived in China I worked for one of the first lithium battery companies in the world, designing cathode and anode materials. In the 1990s, lithium batteries were very new, and there was a very limited market. As an engineer, I saw how much potential the lithium battery chemistry had for changing the world. So when I completed my PhD in Grand Forks, North Dakota, I knew I wanted to do something with lithium battery technology, but I didn’t know the US market and needed a friend and business partner. That is why I feel lucky to have met Michael Shope and Ryan Ellison. We started Dakota Lithium together.

Formation Of Dakota Lithium

How did the idea for the company come together? Dr. Hou shared:

“Michael Shope trained as a pilot at the University of North Dakota, along with Ryan Ellison, who went on to fly F-16s for the military. Michael did business school along with his pilot training, so he knew how to run a business. When I explained the potential of lithium iron phosphate, we brainstormed ideas of what products to start with. We decided to start by making electric bicycle batteries. This was in 2008 and there were very few electric bicycles, the e-bikes that existed used lead acid batteries and were very heavy, slow, and only could go a few miles. We thought electric bikes were something that people would be open to a new battery technology because the bike could go faster, climb big hills, and go further on each battery charge. And they would last longer. So, we focused on lithium-iron phosphate batteries for bicycles. They sold out very quickly. Actually, you can still buy them. We sell them as the brand Hilltopper Electric Bike Co. “

“Soon, other people were buying our batteries, and the company really took off. Since we are in North Dakota, it gets really cold in the winter. One day a customer came to me and said “my battery is dead, I heard you make a better battery.” So I asked them what they were doing, and they said they use 12V SLA batteries for their fish finder so they can ice fish. I showed how lithium iron phosphate does not lose capacity or power in cold weather. The customer showed their friends, and Dakota Lithium became the top battery in ice fishing. The company grew like that. A new customer would tell me their problem. Michael and I would invent the battery to solve their problem. Now, we are so big the customers who are telling me about their problems are wind farms and solar farms, and we are making batteries the size of houses. Crazy!”

“Funny story, that customer taught me to ice fish. I now go ice fishing every winter on my snowmobile. And deer hunting in the fall. My friends tell me I am more American than they are!”

Favorite Memory

What has been your favorite memory working for the company so far? Dr. Hou reflected:

“It is funny; the first memory that comes to mind is from tough times. I think that is because my favorite memory is overcoming tough times. In 2018, the company, Dakota Lithium, was struggling. We did not have any investors or capital, but the demand from customers was very big. Customers had to wait a long time for their order and would get very angry. So Michael, Ryan, and I talk through ideas. We ended up working together to raise capital from a network of friends and family in Stockholm, Sweden, where Ryan lived. We used the money to hire a sales and marketing CEO, Andrew Jay, and to expand our factory. We almost didn’t make it, but with the capital and talent, we were able to turn demand into revenue. I think it’s perseverance that is my favorite memory. It is so easy to give up when you are running a business.”

Core Products

What are the company’s core products and features? Dr. Hou explained:

“Dakota Lithium makes the longest-lasting batteries. I focus on making the technology better. Which means I focus on making long-lasting batteries last even longer. Since I am a chemical engineer, I focus on making our batteries better at the chemical level. Dakota Lithium batteries last a very, very long time. This is because I focused on developing cathode and anode materials where the molecules do not break.”

“When you charge a battery, electrons move between the anode and the cathode. The stress of the electrons moving can cause the molecules to break apart. Once enough break the battery loses capacity, it no longer holds as much power as before. I have been able to make stronger particles, and as a result, Dakota Lithium batteries last even longer than other lithium batteries. That is why we have an 11-year warranty. That is how long our batteries lasted in field testing on average. Our CEO also loves Spinal Tap and tried to convince us people would get the joke. I don’t get the joke. I have not seen the spinal tap.”

Challenges Faced

Has Dr. Hou faced any specific bottlenecks in your sector of work recently? Dr. Hou acknowledged:

“Lithium prices have gone crazy! Last year our cost of batteries doubled because the price of lithium had gone up 5X in a year, but we could not increase our prices. It was tough. But now prices are back to normal.”

Evolution Of Dakota Lithium’s Technology

How has the company’s technology evolved since launching? Dr. Hou noted:

“Every year we work to make our batteries better. We made a Battery Management System that balances cells perfectly. This makes them last longer. We made better cathode and anode. This makes them last longer.”

“Dakota Lithium now makes batteries for every application. We make batteries for electric tractors, electric boats, very big batteries for factories, and small batteries for ice fishermen like me. We learned CANbus programming so Dakota Lithium batteries can talk to electric vehicles, and we developed our own automotive battery management system so we can start trucks, cars, and other vehicles. One customer even uses Dakota Lithium batteries to start his diesel armored tank that he drives around his farm. I don’t know why you need a tank on a farm, but it is cool product testing.”

Significant Milestones

What have been some of the company’s most significant milestones? Dr. Hou cited:

“Wow, milestones come so fast I don’t see them until they have passed. First was when we opened our factory in Grand Forks, ND in 2016 and started making our own Dakota Lithium batteries in the US. The second was when we landed our first very big electric vehicle customer. We can’t talk about them because of NDA. But they make drive trains for very big brands. We make the batteries for them. It has been a very successful partnership. The third was when Brock Mosely won the Bassmaster Championship. He started fishing for Dakota Lithium in 2020, he is a very big name now and Dakota Lithium is now a big brand. It is cool to see both of us grow. Last is this interview. I have not been interviewed before. We didn’t talk to the press for a long time because we wanted to keep our trade secrets secret. Now we are big enough that it feels good to tell this story.”

Customer Success Stories

After asking Dr. Hou about customer success stories, he cited:

“Yes! Our goal is to test Dakota Lithium batteries in the most rugged and extreme environments. That is why we sponsor many big expeditions. One was paddling the margins, a sea kayaking expedition from Alaska to Seattle. They used our batteries to power their film equipment entirely off the grid. Another is Ryan and Sophie Sailing. They crossed the Atlantic Ocean three times and used our batteries to power their boat on the crossings. Actually, we have found customer stories to be so helpful that we built an overland truck that drives across the country to meet customers and help solve their problems. You can tour the truck here. “

Funding/Revenue

After asking Dr. Hou about the company’s funding and revenue information, he replied:

“Dakota Lithium is a privately held company. The founders own it. We haven’t taken any new investors since our friends and family investment group in 2018.”

“Revenue has grown quickly. Since our CEO joined in 2018, revenue has grown 30X.”

Total Addressable Market

What total addressable market (TAM) size is the company pursuing? Dr. Hou assessed:

“That’s impossible to answer. Everything. If it is powered by a gasoline engine, then we make a battery for the electric version.”

Differentiation From The Competition

What differentiates the company from its competition? Dr. Hou affirmed:

“Dakota Lithium batteries last longer. This is because of chemistry and engineering. We focused on building better cathode and anode chemical materials. This helps the battery last much longer. Our electrical engineers focus on battery management systems. This helps the battery last much longer. Plus it makes Dakota Lithium batteries very safe. “