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Reuters
13 hours ago
- Business
- Reuters
Breakingviews - Why green investors keep getting carried away
LONDON, June 26 (Reuters Breakingviews) - To paraphrase Mark Twain, speculative bubbles don't repeat themselves, but they often rhyme. The green technology boom that has imploded over the past three years is remarkably similar to the alternative energy bubble that inflated prior to the global financial crisis of 2008. Both frenzies were driven by investors' unrealistic expectations about how quickly new energy technologies would be taken up. What is now known as the Cleantech 1.0 boom took off in 2005 after the U.S. Congress enacted tax credits for renewable energy. Former Vice President Al Gore's 2006 documentary 'An Inconvenient Truth' raised public awareness of climate change. In early 2007 the venture capital investor John Doerr gave a much-publicised TED talk, opens new tab in which he asserted that 'green technologies – going green – is bigger than the internet. It could be the biggest opportunity of the twenty-first century.' Doerr's firm, Kleiner Perkins, later launched a fund to 'help speed mass market adoption of solutions to the climate crisis.' Many other venture capitalists jumped on the bandwagon. The WilderHill Clean Energy Index, launched in 2004, more than doubled between May 2005 and December 2007. Dozens of startups were launched to invest in batteries, solar, biomass and wind energy. An electric vehicle company, Better Place, established in Silicon Valley in 2007, raised nearly $1 billion to build a network of charging stations. Solyndra, an innovative solar panel manufacturer, attracted a host of big-name investors and later received more than $500 million in loan guarantees from the administration of President Barack Obama. No single factor was responsible for pricking the bubble. The collapse of Lehman Brothers in September 2008 dampened animal spirits; advances in hydraulic fracturing technology led to cheaper U.S. natural gas; Spain and Germany reduced their subsidies for renewable energy; and American solar companies proved unable to compete with subsidised Chinese competitors. Nearly all the 150 renewable energy startups founded in Silicon Valley during the boom subsequently failed, including Solyndra and Better Place. Cleantech venture capital funds launched during the bubble produced negative returns. By the end of 2012 the WilderHill index had fallen 85% from its peak to around 40. By coincidence, that is where the benchmark currently trades. The recent green tech bubble was more extreme. The WilderHill index climbed from 47 in March 2020 to 281 less than a year later. Whereas U.S. venture capitalists spent an estimated $25 billion funding clean energy startups between 2006 and 2011, Silicon Valley splurged more than twice that sum in 2021 alone, according to Silicon Valley Bank. Market valuations were quite absurd. By late 2020, the battery company QuantumScape (QS.N), opens new tab, which came to the market by merging with a blank-check firm, was valued at more than General Motors (GM.N), opens new tab, despite having no sales. The market frenzy is long past. QuantumScape stock is down more than 95% from its peak, while the WilderHill index has fallen 85%. Several listed electric vehicle companies, including truck maker Nikola, have filed for protection from creditors. President Donald Trump's administration is reducing subsidies for renewables and electric vehicles. Oil giants BP (BP.L), opens new tab and Shell (SHEL.L), opens new tab are cutting back their alternative energy investments, just as they did after the Cleantech 1.0 boom. The outcome for green venture capital remains unclear but anecdotal evidence suggests that many funds are now changing hands at steep discounts to their appraised valuations. The common error investors made during both booms was to become entranced by extravagant growth forecasts. In his book, 'More and More and More: An All-Consuming History of Energy', Jean-Baptiste Fressoz criticises the application of the sigmoid function – also known as the S-curve – to predict the course of the energy transition. This model describes the adoption of a new technology as starting out slowly, rapidly gathering pace before eventually levelling off when the market becomes saturated. The United Nations Intergovernmental Panel on Climate Change has used the S-curve in its projections for renewable energy demand and the accompanying decline of fossil fuels. The S-curve was originally discovered a hundred years ago to describe how the population of drosophila flies changes under laboratory conditions. It was later applied, with varying degrees of success, to project human population growth. The American energy scientist M. King Hubbert was the first to use the S-curve to forecast energy production. In the 1950s, advocates for nuclear energy used the model to predict what they believed was the inevitable transition from fossil fuels towards an atomic-powered future. Hubbert also used the S-curve for his famous forecast that U.S. oil production would peak in 1970. Vaclav Smil, a leading energy historian, points out that energy transitions are slow, inherently unpredictable and require extraordinary amounts of investment. Fressoz goes further, claiming that – when energy consumption is viewed in absolute rather than relative terms – there has historically never been a transition. It's true that coal took over from wood as the world's prime energy source in the 19th century, and that later oil and natural gas became dominant. Yet the consumption of all these energy sources continued increasing. The world has never burned more wood than it does today. In absolute terms, coal usage continues to grow. The S-curve has also been used to predict the uptake of various green technologies. As Rob West of Thunder Said Energy, a research firm, observed in a report published last September, both the speed of adoption and the ultimate penetration rate for new inventions are variable. For instance, the demand for refrigerators and television by U.S. households grew very rapidly from the outset, with both reaching penetration rates of nearly 100% in just a few decades. Yet it took more than half a century for gas heating to reach 60% of U.S. households, at which point its market share flatlined. 'It is important not to fall into the trap of assuming that the 'top of the S' is an endpoint of 100% adoption,' writes West. Not long ago, electric vehicles were set to rapidly replace the internal combustion engine, but sales forecasts are now being cut back in developed markets. West anticipates that the eventual market share for battery-powered cars will not surpass 30%. That's a guess. The actual outcome will depend on the state of future technology, which is unknowable. That leaves plenty of scope for green investors to get it wrong again. Follow @Breakingviews, opens new tab on X
Motor Trend
19-06-2025
- Automotive
- Motor Trend
Is It Time for EV Charging Stations to Simply Offer Quick-Time Battery Swaps?
John and Jane Public aren't warming to electric cars at the rate many in the automotive industry thought they would, and that's mostly because EVs still can't match the cost and convenience of gasoline-powered alternatives. The steady march of progress is chipping away at EVs' cost, boosting the distance they can drive on a single charge, and hastening their charging speeds (1-megawatt or better is almost here). But maybe there's a holistically better idea. The article advocates for battery swapping in EVs, citing Chinese company Nio's success with its extensive swap stations. Benefits include quick swaps, cost savings, and greener energy use. The author suggests adopting this system in the West to boost EV adoption and to be able to compete globally. This summary was generated by AI using content from this MotorTrend article Read Next Perhaps it's time we dust off General Electric's plan from 1910, when it equipped its GeVeCo electric trucks with separately leased Hartford Electric batteries designed specially to be swapped quickly when depleted. Together, these electric trucks covered 6 million miles between 1910 and 1924. Electric forklifts have used battery swapping since the mid 1940s, and Israeli startup Project Better Place (later just 'Better Place') endeavored to revive that idea for electric cars beginning in 2007. Better Place was neither a battery company nor a car company, and the challenges of engaging those stakeholders, combined with an immature electric-car market, ultimately doomed the enterprise. And while Israel and Denmark might have been reasonable launch markets, our nation's size seemed logistically daunting, even if enough car companies could come to agree on a battery size, shape, or performance envelope to achieve critical mass. But experiencing Nio's Power Swap experience in Shanghai felt like gazing into a brighter EV future. CATL Goes All In Chinese automaker Nio (founded in November 2014) made battery swapping its unique selling proposition, building a network of more than 3,200 swapping stations in much the same way Tesla built its own Supercharger networks. In the seven years Nio has sold cars, it's revised the battery and station designs a few times. Its newest model, the Firefly EV, uses yet another new swappable battery, designed in conjunction with battery giant CATL and a consortium of companies. One of these, Changan, just delivered 1,000 Oshan 520 taxis in Chongqing, using similar batteries that can be swapped at any of 50 CATL swapping stations promised by the end of 2025. (Swapping is particularly valuable for taxis, ride-share services, delivery and similar commercial vehicles.) Chocolate-Bar Batteries CATL got into the battery swapping concept a while back with small 25-kWh packs that resembled two blocks of baking chocolate that could be used individually or ganged two or three to a vehicle, heightening the baking chocolate allusion. CATL's QIJI swap solution for trucks still follows this model, and the name Choco-Swap, or Choco-SEB (Swapping Electric Block) has stuck. CATL's light-vehicle strategy, however, has morphed to now covering the breadth of vehicle sizes and range needs with two battery form factors, each offering a choice of LFP or NMC chemistry. Swap Station Design Both Nio and CATL swapping stations require approximately the footprint size of three normal parking spaces, with the car driving up a ramp high enough for battery packs to shuttle underneath to begin the process. The two adjacent parking spaces typically house 24–30 batteries that remain bi-directionally connected, charging at moderate rates (up to 100 kW) to a level just past 90 percent. Nio's stations assemble like Legos, allowing a new station to be set up and operational in 4–5 hours overnight. Nio owns and operates most of its stations but is now allowing investment groups or provinces to buy, operate, and share revenues generated as power companies pay to tap this stored energy. Having sold 700,000-plus cars, 80 percent of which are still in service, Nio claims its inventory of swap-available batteries amounts to 6 or 7 percent of the on-road fleet. And to prep for big-travel weekends like Chinese New Year, heavy incentives go out to entice large-capacity battery owner/lessees who don't plan to leave town to swap down, making bigger batteries available for travelers. Anatomy of a Swap Using your car's native navigation system, a trip is plotted including convenient swap stations. As you approach one, a specific time slot is allotted, and a particular battery gets assigned to your car. Your car's battery temperature is shared, and the station adjusts the coolant in the replacement battery to match, thereby preventing expansion or thermal shock. When it's your turn, the station talks you through the process (explaining what the automatic system is doing). You sense the station lift the car slightly, you hear 10 bolts simultaneously undoing, the swap occurs, the bolts tighten, you drop back down and you're on your way. (Note: CATL says Choco-Swap batteries are air cooled, sidestepping the temperature-alignment issue.) What are the advantages? Quicker My Nio Power Swap experience replaced a depleted battery with one charged to 91 percent in less than three minutes, which included the time needed to maneuver into and out of the station. CATL's Choco-Swap requires the driver to pull in, as when entering a car wash. It then swaps packs in 100 seconds (presumably more if adding extra batteries). My ET9 showed 352 miles of range following the swap. Even 1-megawatt charging can't add that many miles that quickly—especially when multiple charging-station users lower the peak rate. Cheaper Drivers can buy most Nio cars with or without batteries included. Opting for the battery-lease deal knocks $17,900 off the luxury ET9's $110,320 price, adding a monthly battery lease of $179. Owned or leased batteries can be swapped, with drivers paying the net difference in energy at a price higher than home charging but lower than high-speed DC fast charging. Then there's the savings of leasing a small battery and simply upgrading and paying for a longer-range one only when traveling. Car companies could slash both time to market and program budgets by offloading or sharing the R&D, safety testing, warranty, and other liability costs that batteries entail. And these standard form-factor batteries can potentially be upgraded over time as new chemistries or solid-state cells become available. Infrastructure pricewise, a battery swapping station is also way cheaper to install than a bank of 1MW chargers able to serve the same number of customers. Power companies faced with adding grid capacity, sub-stations, and transmission lines to support multimegawatt charging banks could save a lot by investing in swapping stations, each of which draws way less power, can absorb excess solar or wind energy, and will help even out loads during periods of peak usage. Greener Batteries that are regularly charged at level-2 rates to 90ish percent should last longer than those that are frequently fast-charged. Each battery has a digital twin in the cloud, and when monitoring detects bad cells or modules, they can be replaced while out of the car, extending the pack's useful life. When usable capacity drops below 80 percent of new, a pack can be reassigned to non-EV use. When drivers use a lighter commuting-sized battery most of the time, they use less energy to operate and generate less wear on the tires and brakes. What exactly changed my mind on swapping? My Shanghai adventure proved China's auto industry is miles ahead of ours. It seems to me that to be at all competitive in the global market, we need to quickly overcome buyers' reluctance to electrify and up our collective EV game. It also seems like high time 'the west' teams up to fight off this Chinese threat, and an automaker/energy-industry collaboration on a battery-swapping ecosystem that ends buyers' battery-life worries while delivering gas-station refueling convenience—all at gas-vehicle operating cost parity—looks like the quickest way to get there.
