Congratulations, we made it through Groundhog Day! And our condolences to Milltown Mel, who unfortunately did not. Now that we can be confident that winter is coming to an end, let’s look back on the cleantech news from the coldest month of the year. Fortunately, we have some warming updates about self-heating plasma for fusion power, we’ll discuss what the SPAC-lash is and why it’s happening, highlight some interesting research about batteries, and check in on our friends over at Invenergy.
The Air is Coming out of the Balloon for Electric Vehicle Stocks
Friend of Evergreen Shayle Kann recently highlighted the ‘SPAC-lash’ occurring in the climate space – with the majority of deSPAC’d climate tech companies trading down at least 40%. (Shameless plug – Shayle also highlighted this during Evergreen’s January Climate Tech Investors Predict 2022 event)
This makes a lot of sense to me, given the obvious exuberance of the SPAC wave, especially in electric vehicles.
I read a post recently that discussed how initially SPACs were just considered an easier way to go public, but are now gaining a negative connotation. That actually ignores history – before SPACs were a new easy cool way to go public, they were just called blank check companies, and they did indeed have a negative connotation. What’s old is new again!
That said, it’s not the SPAC vehicle itself that’s solely to blame – there has been what I consider to be irrational exuberance around electric vehicle companies, with everyone assuming that every EV company can copy all the best parts of Tesla while avoiding all the worst ones.
A prime example – now that legacy automakers have started to roll out new electric trucks, Rivian’s stock is below its IPO price (down 40% as of the writing of this post).
I am not writing this to criticize Rivian, it seems like people like their new trucks. That said, they are having challenges scaling up manufacturing. And it doesn’t take a wizard to conceive that this might be an issue. Back in 2019 when Rivian announced its deal with Amazon, I had the following thought in the Cleantech Roundup:
…it is not as simple as signing on the dotted line; Rivian has received more than a billion in private investment (including from Amazon) but still needs to finalize the design of their vehicles, conduct safety testing, and scale-up production of the vehicles from 0 today. As we saw from Tesla’s “production hell,” ramping large manufacturing operations for innovative products is not a trivial matter.
This is of course not limited to Rivian, either, it’s just a symptom of the exuberance around electric vehicle stocks – electric trucks in particular. Sometimes to get the implied valuation of the stock prices that companies had a few months back, you have to assume that there isn’t any competition in the segment, or that legacy automakers would never produce electric vehicles that consumers liked.
Meanwhile, because of Rivian’s struggles to meet production volumes, the joint venture between Rivian and Samsung SDI to provide a dedicated supply of batteries for the vehicles fell apart (because Rivian was struggling with volume, it couldn’t commit to buying a certain volume of batteries, and without that commitment, the agreement fell apart).
The Battery Report (2021) by Volta Foundation and Intercalation is chalk full of interesting information and analysis on news, industry trends, roadmaps, fundraising, and more – worth a read. If you’re short on time, head over to the Intercalation Station newsletter summarizing the report. I’ve included a couple slides I found most interesting below, highlighting different approaches to innovation in the sector and how continued cost decreases for lithium ion are putting pressure on next gen technologies.
Friend and neighbor of Evergreen, Invenergy, had a busy month in January. The company announced a $3 billion investment deal with investment management company Blackstone Infrastructure Partners to accelerate renewable energy development activities. The following week, the company announced a launch of a new community solar platform, Reactivate, with impact investment platform Lafayette Square.
Both of these moves highlight the increasing activity and money flowing to renewables projects (at both the utility scale and community level). Regardless of what happens in Washington with policy, expect to see more and more inflows of capital into renewables projects, which can offer stable long term returns while also having bonus ESG value for investors’ portfolios.
Self Heating Plasma
Axios reported on a significant fusion research advancement coming from Lawrence Livermore’s National Ignition Facility (otherwise probably best known for serving as a set for a Star Trek movie). Meanwhile, there was a bumper crop funding for private sector fusion companies in 2021, including a $1.8 billion round for Commonwealth Fusion Systems.
As a non-scientist, my default position is skepticism on fusion, because of the enormous energy and infrastructure requirements required to operate this type of power once it is actually eventually commercialized, but I will be very happy when my skepticism is eventually proven wrong (which I imagine it will happen, but will take many moons).
Andrew Beebe of Obvious Ventures shared Ten Climate Tech Predictions for 2022. Of these, the one that I think will be most impactful (and also happen to agree with) is: new SEC regulatory standards for carbon disclosure.
Another prediction from Axios: that there’ll be an “EV Tsunami in 2022.” That sounds about right (although the post is actually talking about vehicles showing up in 2022, 2023, and 2024) – 2022 is the first year there will be real vehicle options for most of the most popular vehicle segments in the US, including midsize SUV and pickup.
How to Long Haul?
Recent research modeled tradeoffs between battery electric trucks and hydrogen fuel cell trucks. It essentially suggested battery electric vehicles were more cost effective for ranges under distances for roughly 400 miles; whereas hydrogen trucks start to make sense for trips longer than that – especially with heavy cargo (hat tip to the Intercalation Station newsletter for sharing this article).
Back in the August Cleantech Roundup we mentioned how John Deere had acquired autonomous tractor company Bear Flag Robotics. Lo and behold, at the 2021 Consumer Electronics Show in January, John Deere announced its first autonomous tractor model.
Charging Stations: the Oil of the Future?
Over at Trucks’ Future of Transportation newsletter, Reilly Brennan highlighted how oil supermajors project more profits from EV fast chargers than from gas pumps in the near future.
My impression is that, while most EV charging happens at home, EV owners are willing to pay a premium for fast fill ups while on the road (whereas fueling for traditional vehicles happens entirely at gas stations, so drivers are not conditioned to pay a premium). Also, because you’re primarily focused on long distance trip takers with a higher willingness to pay, you can concentrate those charging stations at locations likely to see higher levels of utilization.
That said, it sounds like there’s still a lot of experimentation going on, as these companies open their first large EV charging stations. I’m a bit skeptical that making charging stations larger and brighter actually moves the needle much on EV acceptance, although some better signage and wayfinding couldn’t hurt!
Lanzajet, a spinout from Chicago area carbon recycling technology company Lanzatech, received a $50 million investment from Microsoft’s Climate Innovation Fund to help build a new sustainable aviation fuel production facility in Georgia. Link
GM announced a major tranche of investment in its EV vehicle supply chain in Michigan, including a new battery factory near Lansing and the conversion of an existing plant to build electric trucks. Link
Energy Impact Partners announced their new Frontier Fund for investments in deep decarbonization efforts (Shayle, mentioned earlier, is a partner in the fund). Link