Korva is a scroll of the internet’s best ideas.
Cancel Gen 2, build it ourselves
The three-generation plan
The plan was to crawl, then walk, then run. Gen 1 was an off-the-shelf battery system, Gen 2 would be built to Base's requirements by partners, and Gen 3 would be Base's own battery, made in Texas. Dino Sasaridis, who spent thirteen years at Tesla leading mechanical engineering on Powerwall 3, first recommended canceling Gen 2 right after joining in May 2024. Cancellation penalties of $15 million would have eaten a big chunk of Base's funding, so he worked on making Gen 2 as good as it could be.
A nagging idea
The idea kept nagging. Gen 2 was still buying a product from someone else, and a company that doesn't own the technology stack can't fix it when it breaks. The design looked more complicated than Gen 1, likely to fail, and unlikely to teach Base anything new. After about a year he was 80% confident Base would move faster without it. CEO Zach Dell asked for time to think, and days later they both laughed it off as crazy. Then Jared Greene, Base's head of software, heard the idea in passing and agreed, and within a week the leadership team was weighing it, just as the Liberation Day tariffs made building in the US more attractive.
Canceling Gen 2
The May 1 investor update announced the cancellation and the shift of all engineering to Gen 3. Dozens of people changed projects at once, throwaway work disappeared, and the weekly meetings about which inverter supplier was slipping stopped. The power electronics team joined an architecture week, desks gathered in a big circle, and the sprint produced a Gen 3 concept. Base left the Gen 2 contracts with only $1 million in penalties.
Why do companies build their own batteries?
Designing the pack in-house lets one team tune the cells, the electronics, and the software together, instead of negotiating each change with a supplier. It also removes the supplier's profit margin from the cost of the product. The approach is called vertical integration, and it keeps a supplier's roadmap from setting the company's schedule. Henry Ford took it to an extreme at his River Rouge complex, which received iron ore and coal at one end and shipped finished cars from the other.
How do supplier cancellation penalties work?
Manufacturing contracts usually let a buyer cancel, but the buyer pays for what the supplier has already committed. That covers parts ordered, work in progress, and custom tooling that has no other customer. The size of the penalty is negotiated up front and often rises as the supplier spends more money. Penalties are commonly written to shrink when the supplier can redirect parts or tooling to other buyers.
Why can't a buyer fix a supplier's product?
When a supplier owns the design files and the firmware source, the buyer sees only how the product behaves. A fault that crosses the boundary between components can bounce between the two companies, each pointing at the other. Warranty terms also tend to route repairs through the supplier's own engineers and schedule. Source code escrow agreements exist to give a buyer access to a vendor's code if the vendor fails or disappears.
More from Packy McCormick
