Base Power raises $1B Series D at $13B valuation and opens Texas battery factory

Speaker 1: rounds Back to back. With another back to back billion dollar round. We have Justin Lopez from Base Power Company. Justin, how are you doing?

Speaker 8: Good. How are doing? Good to see you. Good to What see

Speaker 1: happened today?

Speaker 8: Raised raised a bunch of money and

Speaker 1: Dang. Not

Speaker 2: just a capital raise, though. Break it down. But but first for anyone that's been living under a factory, reintroduce base power, what you're working on, why it's important, and then I wanna talk about the news under the headline from today.

Speaker 8: Yeah. So, welcome to Factory One. Good to see you guys. Thanks for having me on. Today, we're announcing three different things. Number one, launch of the factory that I'm sitting in right now. It's behind me that builds batteries. Number two is $1,000,000,000 raise at $13,000,000,000 post money valuation. And the third thing is base core is our custom fully custom designed engineered installed manufactured here in Texas. We do is we design batteries. We manufacture them here. We hold them on homes, and then we own and operate them as a distributed fleet, distributed power plant. That's the business today.

Speaker 2: Incredible. Talk about the decision to not announce the factory or talk about the factory very much until it was actually producing products. Yeah.

Speaker 8: You know, it's like, I I I put this on x, but, you know, a lot of factories get announced with a bunch of people in suits and hard hats shoveling, an ounce of dirt. And that's cool. It's groundbreaking. That's exciting and all that. But, like, factories are meant to make stuff, and Yeah. We wanna make stuff beforehand. So, we're we're doing that today. We're just getting the line ramped up. The the station behind me is starting to build some modules. You'll see some come through, as we talk here. But, yeah. Look. You wanna have you wanna have the real deal ready before you talk about it. That's right. And when did you when did you guys actually break ground on this site? Because I imagine So the site yeah. The site was already here. So this is actually the old printing press of the Austin American Statesman Building. We started building the equipment behind me about five months ago. So it hasn't been a super long time, and we started warehousing here about eight months ago. Previously, we had a smaller facility just north of here in Austin. But, yeah, we're we're we're live and running now.

Speaker 2: Very, very cool. Talk about talk about the state of the business overall, you know, how the how the market in Texas is evolving, what what people can expect from base over over, you know, the next couple years in terms of new markets and things like that.

Speaker 8: Yeah. So as I mentioned, look, we install batteries on homes. Turns out there's a lot of homes, not just in Texas. So we recently launched our Chicago market, and we've also launched, I think it's six or seven utility partnerships now, here throughout the state of Texas. You'll see us announce a few new states and a few new utility partners hopefully by the end of this year as things get signed and and under contract and it allows us to go into more states here in Texas. Texas has got a partially deregulated market which means that we can go to market without having a direct relationship with the utility in other states like California where I'm originally from in Michigan. Those are regulated states so they require deals with utilities. So, we have two go to market motions regulated and deregulated both work in various different states in the country and look, the goal is to have a battery on on on every home in The US and eventually internationally. We've started here in Texas. We're in all the major markets now also in Chicago, but we'll be launching new ones here pretty soon. Alright. As a if somebody's a homeowner

Speaker 2: in Chicago or Austin or Texas broadly, give us the the elevator pitch for why they should install

Speaker 8: Yeah. Look. So we we make your power more affordable and more reliable. So if you're in a place like Houston or Dallas where you can choose your power providers, you sign up with us. We sell you electricity every month at a very affordable rate. We also put a battery on your home that is only typically a few $100 depending on exactly where you live that provides you backup protection if the grid goes out and also supports the grid when the grid's up and running. That's how we monetize and how we make money is that grid support function. And so it's affordable, reliable power. That's the simple pitch. Is there an element of,

Speaker 1: price savings from drawing power from the grid at low rates, storing it, and then reusing it in the house when rates would be higher and just sort of load balancing at the house level?

Speaker 8: That's exactly right. That's basically how it works. K. So we charge the battery when energy is abundant and available, when there's not a lot of stress on the grid, and then we discharge it into the home. And sometimes if we decide to spin the meter backwards, push back onto the grid. There's

Speaker 1: when there's some stress on the grid or when there's peak demand times. That typically happens, you know, in the dead of winter and in the height of summers. Okay. What what about throughout the day, throughout the week? Like, when are typical peak load times? Because during the day, it's hot. People are running air conditioning, but at the same time, that might be when solar panels are collecting energy. So, like, what what is the actual reality of, like, a typical grid, the the Austin grid? Does this vary grid to grid? How how like, what what is the the the differences and the nuances of load balancing?

Speaker 8: Yeah. So you're you're exactly right. Basically, what you care about is the difference between available capacity or supply Yeah. And the amount of demand. Yeah. And so here in Texas and in many places, especially in the South where it's quite hot in the summer, you typically have these peak times in the summer at least in the in the early evening. So kind of like, you know, four to 6PM, 5PM, 7PM where the sun is setting. So supply is coming offline, but people's people are coming home plugging in their EVs, turning on their air conditioners etcetera. Got it. And so that's really the where the where the supply and demand meets. Then in the winter here in Texas and in many places in the North, you have these early morning peaks. Basically, people are waking up using more electricity. Your heaters, your electric heaters are coming on. Yeah. And they're on throughout the night, but the sun hasn't risen yet. And so batteries help fill those gaps. That's at the macro level. And then at the at the more micro level, they're also able to shave peaks off of the lines on the grid. So you might have enough capacity in aggregate in bulk, but one part of Houston or Dallas or Chicago may need support. And so because we've got tens of thousands of these systems out there, we can say, look, in this neighborhood, we need some support. We're gonna discharge just in that neighborhood. And that's the beauty of having a high volume of systems. Mhmm. I see a lot of robots of different types moving around in the background. Where are you guys getting the most leverage

Speaker 2: from robotics? I can imagine as you started the facility, it can make sense to to do to figure out the sort of process using a lot of your your human talent, but where are you guys getting the most leverage and and how how automated can this become over time? Can it become, you know, fully lights out factory? Is that even something to aim for? But what's your view on all that?

Speaker 8: Yeah. You know, robotics is a great is a great place, but it doesn't have a place for everything. There are certain tasks that do not make sense to automate or at least not as a starting point, and then there are other tasks that do. So like what you see exactly behind me, you've got the robots that are driving through the tunnel, and that tunnel is placing these stacks of battery cells that are created also by robots outside of the frame here. That is a great thing to automate because it's relatively heavy, relatively repetitive, and requires a lot of fine precision. Then there are other tasks loading in certain components, testing certain things that require a little bit more finesse, a little bit more dexterity that are pretty hard to not impossible, but harder. And so we've said, look, we're not gonna automate those as a starting point. We're gonna focus on the things that are, you know, either either dangerous or hard to do repeatably or our quality concerns, and then we'll automate more and more over time. So it's just it's a I'd say it's a it's a it's a phase in approach. We're starting with what makes sense to automate, and we'll likely trend towards more automation. But the fundamental thing is trying to, you know, not do tasks that you don't need to do in the first place. You delete the task, then you optimize it, and then you automate it.

Speaker 1: What's the state of blackouts, brownouts, blackout prevention, that feels like a huge selling You're selling a sense of security, a sense of comfort during a winter blackout or summer. But at the same time, how often are they actually happening? It seems like a known problem. Grids and energy providers have been working on this at a at a, you know, higher level than you. So is the problem still broad? How big is the problem of just losing power outright, and how big of a factor is that for you in the sales process?

Speaker 8: So it's huge in the sales process. Right? People wanna have more affordable and more reliable power. Yeah. The reliability reliability is different from from place to place. So typically, coastal regions, so we think of the Texas Coast, Florida, the East Coast, etcetera, where you have a lot of hurricanes, you typically have more power outages. Okay. Also, in more rural areas. So if you're at the end of a line, basically any break in that line all the way up to the substation is is gonna cause you to have an outage. And so if you have more line in front of you, basically, you have typically a lower reliability. Yeah. It totally varies though. So very, very, very rarely is there an outage because there's not enough power. Most outages occur because of a weather events because, you know, a tree falls onto a onto a power line, etcetera because of a storm. But but outages are rising generally across the country. There are places where they're getting better. Okay. It's a factor in the sales process, but if I'm honest with you, the way we think about this is more about portability first, reliability as a as a benefit of having this system on the grid, and it rely it adds reliability to the whole system. Right? It's not just your home. Obviously, it'll back up your home if and when the grid goes out, but it's more about adding reliability and capacity to the whole system so you can have more load and, you know, more EVs, more homes, more data centers, etcetera, on the grid. Got

Speaker 2: it. Got it. Absolutely crushing.

Speaker 1: My my last question is, what what does it actually take to expand to a new market? I mean, I want one of these in California, but it seems like you're yeah. I mean, you're growing the business and the factory and, like, there's there's immense scale, billion dollars raised, $2,500,000,000 raised. And yet, geographically, it feels like a little small. It feels tight. Sometimes you have companies that are, yeah, we're available in every market and all over the globe. We'll ship our thing everywhere, and we're a tiny company. You're sort of the opposite, very focused. What does it take to bring a new state, new city online? Why the measured approach to actual go to market?

Speaker 8: Yeah. So I'll start with the latter point, which is the sort of measured approach. I'll remind you that Texas is larger than most

Speaker 1: Yeah.

Speaker 8: That's true. I got good point. Got more more homes and more electricity load than than than many large company countries that you've heard of in Europe and Us. Okay. Fair. Fair. So so Texas is a big place. But regardless, I'd say the the geographical tightness is a feature, not a bug. Okay. Yeah. Of course. Of course. The reason for that is, like, not only do we have a factory behind me that produces these things Yeah. But more importantly, we have a factory in the field. We've got hundreds of people out in the field installing these things. Okay. And we've got trucks and crews and tooling and all this other stuff. And so having geographic density is very helpful from an efficiency. Now to answer your question though on how do you expand to new markets, there are oversimplifying here, but there's basically two types of markets. There's ones like Texas where you can choose your power provider. Yep. Places in Texas, not all of Texas. Mhmm. And then there are there are markets like you have in California where Yeah. For the most part, especially in residences, you cannot choose your power provider. If you live in Northern California, PG and E is the only game in town. If you live in Southern California, it's so gallivant center LADWB or for other utilities. And so in the deregulated markets, we can essentially go there and start the business and and there's nothing's really stopping us except for a bunch of regulatory hoop jumping to do and setting up of a warehouse and hiring people and all that, which is its own challenge. In the regulated market, it's basically getting a deal with the utility. It's a b to b sales motion where we go to utility and say, hey, we offer megawatts as a service. Yeah, we'll go install these batteries that we've that we've built behind me. We'll put them on homes in your service territory. You can control them, operate them, and use them to add flexible capacity to the grid and so that's a matter of, you know, B to B sales, long sales cycles and and working with both the regulators and the utilities in that state. Got it. To go into those states. So I'll say we'll we'll launch a few new regulated, utility opportunities over the next next few months here. Yeah. And then in the deregulated part, we'll also launch a few new states. But as I said, like, it wouldn't be surprising to me if we're only in, you know, ten, fifteen, 20 states over the next few years just because, again, the geographical density is so helpful for us. Yeah. Yeah. And, of course, like, you you only have so much manufacturing capacity. You have to load balance your own business across your salespeople, your installers, your manufacturing capacity, your supply chain, all of this stuff. That makes a ton of sense. Well, congratulations

Speaker 1: on the progress, and thank you so much for coming on and sharing Massive. It with Love seeing you guys cook. Yeah. Amazing work. Awesome. And thanks for thanks for effective the factory demo. Yeah. That is remarkable. I know. We'll we'll come by next time we're in town. Yeah. That'd be awesome. We'll talk to you soon. Cheers, John. See you. Goodbye. Let me tell you about the New York Stock Exchange. Wanna change the world? Raise capital at the New York Stock Exchange.