As a recovering policy person, it is my hope that in some future month the news is not primarily tied to DC policy debates, although I think I might need to wait a little while for that.
Credit: Circana.com
Tariffs, Unfortunately
China has made significant strategic investments in the clean energy supply chain, especially critical minerals, solar, and batteries. Now, as the Trump administration is imposing gigantic tariffs on china, the clean energy supply chain is being significantly impacted by these tariffs. Some of the solar supply chain had been relocated to other southeast asian countries, largely to reduce geopolitical risk, although these countries (like Vietnam) are also being hit with significant tariffs.
Ostensibly the tariffs are intended to encourage more domestic manufacturing. However, the combination of policy uncertainty (as to whether Republicans will change or repeal the Inflation Reduction Act) combined with the extremely broad base the tariffs are targeting (because the tariffs are targeting input materials like steel and aluminum, a solar manufacturer that sets up shop in the US is still impacted by these tariffs) make actual business investment a challenge.
Meanwhile, China announced export controls and certain rare earths materials related to advanced manufacturing of electric vehicles, military aircraft, and chips. A limited volley in the trade war. By the way, these materials also face tariffs even if they aren’t export controlled.
Update: in May, the US and China announced they have been chatting and temporarily rolled back some of their tariffs, although even this temporary rolled-back levels are extremely substantial trade barriers with significant implications for the energy support chain.
Credit: Dandelion Energy
Suburban Boreholes
Homebuilder Lennar and Dandelion, the geothermal heat pump implementer, announced plans to install Dandelion systems in new home developments. A good example of business innovation (rather than technology innovation) driving down costs here. In the process, the builder doesn’t have to pay for new gas pipeline infrastructure to the homes (since they’ll just be electric to start with). Related: home energy efficiency measures that this sort of project would benefit from are currently on the chopping block in the reconciliation bill being debated in Washington DC.
Credit: U.S. Department of Energy
Department of Sudden Departure
The Department of Energy conducted a second opportunity for folks there DOE to leave and receive salary and benefits for about 6 months. Anecdotally, it sounds like a significant number of people have opted to leave after experiencing the beginning of the new administration, putting the actual work of the Department under duress.
Importantly, this is not just people who were going to retire or leave anyway, I know dedicated people leaving because there’s so much chaos and uncertainty, and they don’t have any confidence they won’t be fired if they stay. This is something I definitely underestimated the magnitude of before this happened.
One area where the DOE is not waiting for departures is the Office of Clean Energy Demonstrations, which they are attempting to wind down completely. This is not wise, and not partisan – physical technologies need validation, and this office was set up to fill a gap that existed in government support (namely, there was support at the earliest commercialization stages, and once the technology had been demonstrated and was ready for greater scaled deployment, but not in between).
Sodium Ion Batteries
CATL introduced its commercial sodium-ion battery (which have the potential to be cheaper than lithium ion but less energy dense and typically fewer cycles); in its initial applications, the EVs with them will have a primary lithium ion battery and an auxiliary sodium ion battery, for longer trips (so that it isn’t cycled quite as frequently). This has a corollary in the recent trend started in China of extended range electric vehicle models (which are primarily EVs but have an auxiliary energy source, in this case a small internal combustion engine). Initially these batteries will be focused on small cars with ranges that are fairly limited.
Conservative Climate Policy
One good thing happening out there in DC is a new legislative proposal sponsored by Bill Cassidy (R-La.) and Lindsey Graham (R-S.C.) that would introduce a carbon border adjustment tax mechanism. The Foreign pollution fee act, as it would be called, would help level the playing field from an emissions perspective for US heavy industry by imposing a tax on products produced overseas that have a larger emissions footprint. This approach would also indirectly incentivize carbon capture and durable carbon removal efforts (to reduce this tax burden). It also helps to address very real leakage issues that exist with climate regulations (if the US cleans up its act, it is still going to be cheaper for other countries to not do so, so this type of policy can help level the playing field for domestic producers who are using relatively cleaner processes). Europe has a directionally similar mechanism that is in the process of being phased in, so there’s some prior art in this space. It’s an admirable piece of conservative climate policy, but let’s all agree not to call it that okay?
Other News
CDR.FYI shared their Q1 Durable CDR Update. CDR is an interesting, evolving, growing, and chunky space – the top 5 deals were more than half of total volume, and 4 these transactions were the largest ones the suppliers had ever signed (and all were different technology pathways)
Pitchbbook highlighted the continued lack of venture liquidity
Walmart is getting into the EV charging network business (at its stores). There are a number of newer initiatives and networks who are building on learnings (and mistakes) of the earlier EV charging network deployments; in this case Walmart has a nice angle since they don’t need to rely on the charging revenue for it to be a good idea, their brand image aligns their incentives for it to be a good experience, and they have staff onsight if troubleshooting is needed.
Slate launched as a cheap modular EV truck. Reilly Brennan did a better summary than I would in his excellent Future of Transportation newsletter, so here is his:
Slate launched, as a low-cost modular EV truck and SUV (link). While the form factor would remind you of a Land Rover on Ozempic, the business model is closer to Harley-Davidson or Spirit Airlines: sell the vehicle for low margins, then offer accessories for between 40-50% gross margins. Blend those two together and you have financials closer to Porsche. America’s first low-cost EV was [any number of] rapidly depreciating second-hand models, but perhaps Slate is the second one. Related: traditional NMC batteries on the launch model, not LFP, due to potential supply chain impacts and federal credits (link).
