I went down to the underground parking lot with Taek-gyu.
“Why did something come up right after returning to Korea?”
“I originally planned to contact you sooner, but I waited until I returned.”
“What’s going on?”
“Apparently, he has something to show.”
As I was about to pull out the car, Taek-gyu got into the driver’s seat first.
“Don’t drive for a while. If you need to, hire a driver.”
I nodded.
“That would be better.”
There’s no guarantee I won’t faint again like last time after seeing Oracle. If it happens while on the highway, it could lead to a serious accident.
Not only driving, but it seems I won’t be able to partake in extreme sports for a while either.
“You never wanted to do that kind of stuff anyway.”
“That’s true.”
I sighed.
“I’m not some narcoleptic…”
I haven’t really worried about such issues until now. But after sleeping for a week and waking up, I’m a bit concerned.
At least there are no direct issues with my body, so that’s a relief?
The OTK Company’s battery research institute, known as OTK Research Institute, is located in Yongin. It’s not far from Gangnam, and the Seosung SB Institute is also nearby.
Yongin isn’t too far from Dongtan either.
If I had known this would happen, I should have gone down with my mother.
While Taek-gyu was driving, I made a call to check if my mother had arrived safely.
“By the way, what kind of research is being done at the institute exactly?”
“They’re developing new battery materials.”
When I was busy creating the OTK Research Institute, Taek-gyu was similarly occupied with establishing the professional gaming team OTK Magicians. As a result, I had never met Professor Kim Ho-min and knew little about the institute’s circumstances.
I gave a brief explanation.
“Most batteries currently used in the market are NCM batteries.”
“Is NCM an abbreviation?”
“Yes. It’s short for nickel, cobalt, and manganese. They are blended together, which is why it’s called a ternary battery. But the problem is that cobalt prices are very high.”
“Why is it so expensive?”
“Because it’s a rare metal. Half of the world’s reserves are buried in Congo, and supply is unstable due to civil war.”
Basically, the price of goods is determined by supply and demand. If supply exceeds demand, prices fall, and if demand exceeds supply, prices rise.
“There are also some manipulations in between.”
Cobalt ore usually contains only about 30 percent cobalt mixed with impurities like arsenic or sulfur. Extracting cobalt from it requires advanced processing technology.
“However, this processing market is a monopoly of three companies.”
Typically, the bear does the work but the human takes the profit. The profit margins for processing companies are greater than those of mining firms.
Speculative demand is also rampant.
“Do they buy it even though they won’t use it?”
“What won’t they do if it makes money?”
Similar situations have occurred countless times in the past.
Before the financial crisis, when oil prices skyrocketed, speculators and hedge funds began hoarding oil. They bought large quantities of not only futures but also physical oil, leading to a shortage of storage facilities. Eventually, they even rented tankers to store the hoarded oil on the sea.
Lucky for gold and oil, their massive trading volumes mean speculative effects on price fluctuations are limited.
However, with cobalt, supply is restricted, and prices fluctuate wildly due to speculative demand.
In just a few years, prices have more than quadrupled, and it’s unclear how much higher they will rise.
“So you’re trying to create a new material that can replace cobalt.”
“Correct.”
Not just us, but all battery companies are in the same situation. Everyone was actively researching to reduce the cobalt content used in cathode materials.
***
“Companies are like living organisms, never standing still for a moment.
FaceIt and MPizza generate significant profits each quarter, but they reinvest nearly all of it to grow the market and increase market share. Since they don’t distribute dividends, there was no money coming into OTK Company either. Most of the other companies we invested in were the same way.
On the other hand, OTK Games was a bit different.
Ichikawa Shigeru, the head of development, is someone who has been with the history of RPGs. He understood the progression and enjoyment of RPGs more deeply than anyone else, including how to encourage microtransactions.
As a result, Lost Fantasy M has consistently held the top spot among mobile games since its release and has also achieved huge success in Southeast Asia, Europe, and the United States after its launch in Korea and Japan.
While the operating profit margin in manufacturing hovers around 10% on average, it can exceed 50% in the gaming industry.
Manufacturing costs primarily consist of labor and marketing expenses, which are fixed costs unrelated to sales volume. Therefore, once sales exceed a certain level, everything else becomes net profit.
Thanks to the success of Lost Fantasy M, OTK Games gathered immense wealth. They decided to allocate dividends quarterly, leaving only the development costs for new projects.
Originally, OTK Games was 100% owned by OTK Company, but after the game’s success, Ichikawa Shigeru and the development team exercised stock options, taking 12% for themselves. Thus, OTK Company now holds 88%.
We have already collected tens of millions in dividends, and I generously invested that money into the battery research lab.
A research lab is similar to a money pit if it doesn’t yield results. If it weren’t for OTK Games, I wouldn’t have even dared to establish it.
Thus, we can say that Taek-gyu played a significant role in the establishment of OTK Research Institute.
I visited once when it was first established, but I hadn’t been able to visit again due to my busy schedule. This is my second visit, while it’s Taek-gyu’s first.
When I contacted him that we had arrived, Professor Kim Ho-min came out to greet us at the institute. Just like the first time, he looked quite shabby.
“Hello. It’s been a long time.”
“You look healthy. Are you okay now?”
I smiled.
“I just collapsed for a bit; the news exaggerated it. That’s how media often is.”
“I’m relieved to hear that. I was very worried.”
Professor Kim Ho-min also greeted Taek-gyu.
“Let’s go in now.”
We followed Professor Kim Ho-min inside.
Since the research facility is highly secure, various security devices, including surveillance cameras, are installed, and X-Cop security guards work in shifts 24/7.
I granted the director of the research institute the authority to purchase expensive equipment and hire necessary personnel. Of course, salary and purchase negotiations were all handled by us.
When Professor Kim Ho-min moved to the institute, all the researchers who worked with him followed.
The professor enjoyed a high social status and reputation and earned a good income, but most assistants and researchers suffered from low pay and job insecurity.
I provided them with salaries higher than those of large corporations based on their years of service and guaranteed employment for at least ten years.
Additionally, Professor Kim invited those he met during his PhD and postdoctoral studies at MIT to the institute.
They appreciated that there would be no interference with their research areas or achievements.
In domestic universities or government-funded research institutions, researchers must conduct studies assigned by superiors rather than pursuing their desired research. If they fail to achieve results within the designated time frame, support may be stopped or they may have to move.
This approach cannot be deemed entirely wrong, as quickly developing necessary technologies is also essential. It’s true that several successes have been achieved through this method.
However, depending on the research project, some outcomes can only be evaluated in the long term, rather than just yielding short-term results.
Well, even if I say this, my true motivation for supporting Professor Kim is that I believe he will win the Nobel Prize in Chemistry.
Professor Kim guided us to the laboratory, where researchers were already gathered.
When one thinks of a research institute, one usually imagines elite researchers in cutting-edge facilities like those in movies or dramas.
However, the actual research institute was no different from an ordinary building, and the researchers were all dressed in training clothes and Crocs. Their hair looked like it hadn’t been washed in days, and their white lab coats were stained.
If they weren’t wearing lab coats, one might think they were homeless.
Yeah, this is the reality.
Contrary to their shabby appearance, they seemed to have a triumphant look and spark in their eyes.
“What’s going on?”
In response to my question, Professor Kim Ho-min replied casually.
“We’ve created a new material that can replace cobalt.”
At those words, both Taekgyu and I were taken aback.
“Is that really true?”
We had expected results within a few years, but this seemed too fast.
Currently, cobalt accounts for more than 30 percent of manufacturing costs. If we could create a lithium-ion battery with materials other than cobalt, we could significantly reduce battery prices.
In other words, we would have a tremendous competitive pricing advantage over other companies.
Professor Kim scratched his head.
“Don’t get too excited. There are some issues.”
“What kind of issues?”
“We still need to do more research, but for now, the cost of producing the same amount of the new material is 20 percent higher than cobalt.”
“……What?”
We were left dumbfounded.
Taekgyu blinked and quietly asked me, “How is this different from needing $120 to make a counterfeit $100 bill?”
“…….”
Yep. It’s the same.
I had encouraged the development of an alternative to cobalt because it was expensive, only to find they had developed something even more costly!
I felt disappointed, but then reconsidered. Although it’s more expensive now, wouldn’t the situation change if cobalt prices rise further in the future?
Thinking about it, shale gas was a similar case. The method of extracting gas and oil from shale formations had been developed long ago, but before the economic conditions were favorable, attempts were not made. Later, with sustained high oil prices, it gained attention as a new technology.
Above all, the ability to secure raw materials stably without supply instability is a significant advantage. We might also find ways to lower costs through mass production.
Upon seeing our expressions, Professor Kim Ho-min smiled.
“It’s still too early to be disappointed. There’s one more thing.”
“What is it?”
Professor Kim Ho-min held up two circular batteries in both hands. They are the same size, but the left one is red, and the right one is blue.
“Do you know what this is?”
I nodded.
“It’s an 18650.”
“Correct. It’s a versatile battery used in smartphones, tablets, laptops, drones—anything you can think of.”
“It’s also used in electric vehicles.”
The reason is that it’s cheap. Nearly 10,000 of those circular batteries are used in a Nikola electric vehicle.
“The left one is the existing NCM battery, and the right one is a battery using new materials. Generally, an 18650 has about 3000mAh. So, how much do you think the capacity of this battery with new materials is?”
“Well…”
Professor Kim Ho-min spoke nonchalantly.
“This blue battery in my right hand is 7000mAh.”
“Really?”
I was even more surprised than before. But his words were not finished yet.
“The charging speed is also four times faster than the existing ones. In other words, even if you double the capacity, you can reduce the charging time by half.”
“……”
I was left speechless.
Currently, electric vehicle batteries have three major issues: first, price; second, capacity; third, charging speed.
Yet, a solution has been found for two of these problems!
Professor Kim Ho-min smiled awkwardly.
“Well, theoretically, that’s true. To achieve fast charging, batteries need to be made with suitable materials and appropriate chargers; however, the actual speed can vary somewhat in that process. But the real issue is…”
Professor Kim placed two batteries on the table. He then picked up a thick textbook from one side and lightly slammed it onto the red battery. Nothing happened.
He did the same with the blue battery.
Boom!
In an instant, an explosion sound erupted, and flames shot up from the battery’s surface. The fire then quickly engulfed the entire battery.
As if accustomed to such incidents, a researcher nearby nonchalantly sprayed a fire extinguisher.
Hiss!
The flames were quickly extinguished.
“As you can see, it’s extremely unstable. With just a little impact, it can explode immediately. If we rate the stability of an NCM battery as 10, this one is not even 1.”
I recalled something I had heard before.
In tri-metallic batteries, capacity and stability are inversely proportional. Since the capacity has more than doubled, it’s natural for instability to increase.
“Can this be solved?”
Professor Kim smiled.
“Well, I guess we’ll have to start figuring that out now.”
Go