Google Invests in AI Startup Runway to Wrest Cloud Business From AWSRead more

Qichao Hu, CEO of Boston-based next-generation battery developer SES, which is in the race to qualify for lucrative U.S. tax credits. Photo: Courtesy SES

The Electric: The Climate Law Triggers a Race Among Next-Gen Battery Makers

Photo: Qichao Hu, CEO of Boston-based next-generation battery developer SES, which is in the race to qualify for lucrative U.S. tax credits. Photo: Courtesy SES

Save the date: The Biden administration, armed with $125 billion in loans, grants and tax credits, is trying to nudge American entrepreneurs into creating a U.S. battery supply chain and reviving the nation as an industrial powerhouse. How is that going—and what exactly does the U.S. battery master plan look like? To discuss and get your questions answered, join me as I host host Jigar Shah, head of the Department of Energy loans program, at Live Chat With The Electric, Dec. 1 at 3 pm ET. Register here. If you'd like to invite a guest, email me directly.

Tens of billions of dollars thrown at a long cash-starved industry can fundamentally shape which technology gets ahead, and which is shunted aside. This week, we look at the potential shakeout that the Inflation Reduction Act is causing in the U.S. battery industry.     

In the last couple of years, several next-generation battery startups have gone public based on investor conviction that electric vehicle makers will adopt their technology, opening the door to big profits. The $125 billion climate law, and the threat of imminent recession, have roiled that calculus, posing a new challenge to these upstarts.

Three of these companies—QuantumScape, Enovix and SES—have hit technological, commercial or manufacturing struggles in recent weeks (more on this below). But the Inflation Reduction Act, which for the next decade will be awarding large subsidies to companies making battery cells in the U.S., has further shaken up the industry. Both the subsidies to battery makers and separate tax credits to buyers of EVs made in the U.S. expire at the end of 2032, placing a premium on batteries that are primed to go today or will be soon, and erecting a hurdle for those that won’t be ready until late in the decade or beyond. That potentially will create a moat that excludes the most exotic battery technologies and sets up a race among next-generation startups to be on the right side of the wall before the subsidies expire.

Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Microsoft's Satya Nadella, left, and Peter Lee. Photo by Bloomberg, Microsoft
How Microsoft Swallowed Its Pride to Make a Massive Bet on OpenAI
Satya Nadella didn’t want to hear it. Last December, Peter Lee, who oversees Microsoft’s sprawling research efforts, was briefing Nadella, Microsoft’s CEO, and his deputies about a series of tests Microsoft had conducted of GPT-4, the then-unreleased new artificial intelligence large-language model built by OpenAI.
Art by Clark Miller
The AI Age e-commerce ai
How to Grease a Chatbot: E-Commerce Companies Seek a Backdoor Into AI Responses
When Andy Wilson’s company received its first successful client referral through ChatGPT, he was shaken to his core.
Chris Britt, co-founder and CEO of Chime.
Exclusive startups Finance
Chime’s Slowdown Highlights Limits of Bank Disruptors
Chime found a way to offer zero-fee banking services without being a bank itself. But that approach is starting to show its limits.
Art by Clark Miller.
Exclusive startups crypto
MoonPay CEO, Other Executives Cashed Out Before Crypto Business Dropped
In November 2021, just as crypto prices were hitting all-time highs, MoonPay—a crypto payments startup that celebrities including Jimmy Fallon and Paris Hilton had praised for its non-fungible token “concierge” service— announced it had completed its first ever outside fundraising: an eye-popping $555 million round at a $3.4 billion valuation from investors including Tiger Global Management and Coatue Management.
Art by Clark Miller
The Big Read markets Finance
The Master of Destruction Rides Again
In the spring of 2022, the irascible Wall Street short seller Marc Cohodes was in a particularly foul mood.
Art by Clark Miller.
Social Studies culture
The Day TikTok Went Dark in India
On June 29, 2020, as thunderstorms swept Mumbai and daily Covid-19 cases in India surged by almost 20,000, millions of people began experiencing a flood of network errors on their mobile devices.