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BFD Expert Voices - Climate Deals

BFD Expert Voices

Stellantis Ventures, the auto giant's venture arm, has unveiled the first round of recipients of its investment fund, deploying a huge chunk of cash into companies ranging from a battery maker to an AI startup, Katie writes.

Why it matters: Automakers are looking to tech innovation as a way to make the difficult transition to electric vehicles and beat out competitors in the process.

Details: Stellantis, the world's fourth largest automaker, created the $326 million (~€300 million) fund last year to invest in early and later stage startups across mobility.

On Thursday, the company unveiled its initial investments. They did not disclose how much money was spent per investment, though Stellantis Ventures head Adam Bazih said the allocation totaled "a third of the capital."

How it works: Stellantis Ventures invested in 10 startups, some directly related to its automaker brands (like Chrysler, Jeep and Maserati) and some not. The companies include:

Lyten: An 8-year-old startup that makes a lithium-sulfur battery.

6K: A materials-science startup that creates the feedstock for 3D printing and new batteries.

Trails Offroad: A website for off-road trails guides that already has a partnership with Stellantis' Jeep.

Nauto: A startup using AI to help commercial vehicle fleets reduce accidents and fuel use.

NetZero: A French startup developing biochar, which can capture carbon.

Stellantis also invested in a mobility VC fund, but would not name the fund because it's still in the process of closing, said Bazih.

Zoom in: Stellantis Ventures joins the ranks of automaker venture arms like GM Ventures, BMW iVentures, Volvo Cars Tech Fund and Toyota Ventures — all of which are relying on tech to help navigate the challenges of electrification and autonomous vehicles.

Be smart: Some automakers have struggled with their corporate VC arms. Auto venture funds can be more successful for research and development than for generating a return for the auto firm.

Years ago, Honda launched a venture arm called Honda Strategic Venturing, which took equity investments in startups. But in recent years Honda has replaced the VC arm with an accelerator that mostly doesn't do dilutive equity startup investing.

The bottom line: Auto venture investing can be tricky, and we're watching to see if Stellantis will be able to invest in any breakout startups.

1 big thing: Stellantis revs up VC arm

Illustration of a car battery with a dollar sign on it

Reask, an AI startup that has developed a tool to better assess the risks associated with tropical cyclones, closed a $6.55 million seed round, Katie writes.

Why it's the BFD: Climate change is crushing the insurance industry and insurance firms are becoming insolvent or refusing coverage in regions exposed to extreme weather and wildfires.

What they're saying: "Insurance is the first line of defense against climate risk," says Reask CEO Jamie Rodney.

How it works: Founded five years ago, Reask's AI uses data from the complex and changing physics of natural disasters. The models — called physics-based risk modeling — can be more accurate, helping insurers and others to make better predictions.

"You have to understand the physics of the climate to reduce the risks of the climate," says Rodney, who joined Reask from the insurance industry.

Of note: Reask, which operates in Australia and Europe, plans to use the funding to expand its models to include other disasters (beyond cyclones), and expand into the U.S.

The round was led by Collaborative and Mastry Ventures, with participation by Macdoch Ventures and Tencent.

Reask previously raised a pre-seed round that included SV Angel and Hawktail.

The big picture: The current models used to predict risk largely rely on historical data, but with climate change making previously rare events more common, history is only so useful.

Other startups, like Mitiga Solutions, are also developing physics-based climate modeling tools.

The bottom line: Artificial intelligence will be a crucial tool for the insurance and financial sectors to help face the challenging new world of extreme weather.

2. The BFD: Insurance needs AI for climate risk

Illustration of a suited business person walking away with a briefcase in hand and a trail of fiery flames behind them

It's not every day an investor points us to his latest single. But climate tech veteran Andrew Shapiro tells Alan that he was so caught up in incompatible charging hardware for electric vehicles that he penned the jangly rock tune "Electrify Me."

Why he matters: Are the lyrics really about EVs? We leave that to the artist. But he's been in the climate space since 2000 as both investor and founder.

His investment firm Broadscale recently backed last-mile charging-depot developer EV Realty and electric fleet provider Revel.

This interview was lightly edited for length and clarity.

What was the big news in climate tech this week?

GM’s announcement that it is joining Ford in using Tesla’s Supercharger Network and its charging standard is major news.

Incompatible charging hardware has made it difficult for startups, incumbents and consumers who want to go electric.

Interoperability is key to expediting EV adoption, given that range anxiety is the No. 2 reason why consumers don’t buy EVs.

This will put pressure on other automakers and EV charging companies to use Tesla’s charging standard as opposed to the one used by the rest of the industry — Betamax, anyone? — though Tesla will have to support both to get federal incentives.

The White House wants Tesla to open its charging network, which it already is doing in Europe and by making its IP available to others.

The endorsement by rivals validates the reach and reliability of Tesla’s network — and could lead public investors to re-evaluate Tesla and its EV charging competitors.

There is a downside for Tesla, as its proprietary network of 45,000 charging stations globally is a key reason customers choose a Tesla vehicle over rival EVs.

Without that advantage, Tesla could lose market share, which declined to 58% of the U.S. EV market in Q4, down from nearly 78% the year before.

One tip for climate tech investors or founders:

There are many charging use-cases not served by Tesla today. Examples include urban fleets like ride hailing and taxis, last-mile delivery and other commercial vehicles. Broadscale is actively investing in these areas.

💼 First job: I ran the Aspen Institute’s Internet Policy Project, which helped create ICANN, the global governance body for the internet’s domain system.

👑 Proudest investment: California Bioenergy, a dairy-farm RNG developer co-founded in 2006. Brookfield announced an investment in CalBio of up to $500 million last December.

🤦 Facepalm investment: A distributed wind finance company that tried a solar lease model unsuccessfully.

3. Expert voices: Charging for the masses

photo illustration of Broadscale founder Andrew Shapiro surrounded by circles and an EV charger 

Photo Illustration: Tiffany Herring/Axios; Photo: Courtesy of Broadscale

💰 Here comes direct pay: The Inflation Reduction Act finally allows for some of its incentives to be converted into direct cash payments for renewables owners and developers, per guidance from the Biden administration yesterday.

The renewables sector has been calling for “direct pay” for years. It’ll enable nonprofits, local governments and others with low or no tax bills to benefit from federal incentives for renewable energy projects, which have traditionally been available only to developers with large tax bills. Nick Sobczyk has the full rundown.

🏚️ Solar goes historic: A decision by the city of Atlanta to allow solar panels on a home in the West End Historic District has ignited debate about balancing property rights with historic preservation, Kristal Dixon writes for Axios Atlanta.

"The historic preservationists got mad, but my energy bill isn't mad,” property owner Jervonia Melton tells Axios.

🔮  Reading the Shell tea leaves: The oil major is seeking its own niche of leaning into the energy transition further than U.S. rivals Exxon and Chevron — yet staying deeply committed to oil and growing its gas business, Ben Geman writes in Generate.

One example: CEO Wael Sawan acknowledged that developing renewables is "not where our strength is." But, he added, Shell could have a role to play in renewables — especially in light of its background in power trading.

🏭 More cash for industrial decarbonization: The Department of Energy today will award $135 million for 40 projects that help decarbonize heavy industries such as cement, metals and chemical production, Ben also writes.

While the award isn't huge, it signals a wider recognition that heavy industry is a needed policy focus.

4. Temperature check

Illustration of an ice cream cone with a melted puddle of ice cream that looks like the earth.

• Peakview Capital raised $145m for its fourth vehicle, which makes direct and indirect VC investments. https://axios.link/3JfJBE7

• Eavor Technologies, a Calgary, Alberta-based closed-loop geothermal developer, closed a €34m Series B led by OMV AG. BP Ventures, Eversource Energy and Vickers Venture Partners participated. https://axios.link/3p5jNno

• Sicona Battery Technologies, an Australian battery materials developer with a focus on the U.S. market, raised an AU$22m Series A led by Himadri Speciality Chemical, Artesian and Waratah Capital. Riverstone Ventures, Chaos Ventures, Investible Climate Tech Fund and Club Investible participated. https://axios.link/3qJW3pe

• Greywolf Capital Management, a Purchase, N.Y.-based alternative asset manager with ~$4b AUM, raised $120m for its Greywolf Containership Opportunities Fund II targeting maritime investments. https://axios.link/43VSBWI

• Aspen Aerogels, a Northborough, Mass.-based materials developer for the sustainability and electrification sectors, terminated its previously announced "at-the-market" ("ATM") equity offering program. https://axios.link/3JebPz7

• Eni, the Italian energy group, is in talks to sell between a 5% and 15% stake in renewables and retail unit Plentitude, per Reuters. https://axios.link/3CrNhyV

• Nautilus Solar Energy, a Summit, N.J.-based community solar company, acquired a community solar portfolio of up to 270 MW across the Midwest from ESA Solar Development Group. https://axios.link/3Nafdft

• Tigi Solar, an Israeli renewable heat and energy storage provider, and Solid Solar Energy Systems, an Austrian solar and renewable heat provider, signed a $5m agreement with Key Equipment Finance to build and operate a large-scale heat-generation and storage system for an industrial plant in California. https://axios.link/42BUabq

• Powin, the Portland, Ore.-based energy storage developer, announced a 10 GWh battery supply agreement with Eve Energy, a China-based battery cell supplier, for Powin’s 1,850 MWh “Waratah Super Battery” project outside Sydney, Australia. https://axios.link/43IA6p2

• ESS Tech, a Wilsonville, Ore.-based long-duration storage systems manufacturer, signed an agreement with German energy company Leag to jointly develop a 50 MW/500 MWh battery system at the Boxberg Power Plant in Germany. https://axios.link/46575FE

• Generate Capital, the SF-based climate investor, and McKinstry, a Seattle-based building design and construction firm, launched the Viridis Initiative, a joint venture to make energy upgrades for municipalities, universities, schools and hospitals. https://axios.link/3XgM6vF

• Nucor, the Charlotte, N.C.-based steel manufacturer, is opening its second utility towers factory, in Crawfordsville, Ind. The company previously announced plans to build its first utility structure factory in Decatur, Ala. https://axios.link/3Pkp3hL

• Centrus Energy, the nuclear fuel maker, received U.S. Nuclear Regulatory Commission approval to possess uranium at its site in Piketon, Ohio, putting the company on track to begin production of HALEU for advanced reactors by the end of this year. https://axios.link/42FP0va

• Southern Rock Energy Partners, a midstream and downstream oil and gas developer, selected KBR to conduct a feasibility study for a potential “green” refinery in Cushing, Okla. https://axios.link/3XgIY2T

• Canadian Solar, the China-based solar manufacturer with North American headquarters in Ontario, announced plans to build a solar module factory in Mesquite, Texas. https://axios.link/3N9aKd8

• RWE, the German energy company, connected its 137 MWac Fifth Standard battery energy storage system to the California Independent System Operator. RWE says the project is its first utility-scale battery energy storage system to connect to the grid. https://axios.link/42G9xzB

• Lightning eMotors, the Loveland, Colo.-based EV manufacturer, started production of its ZEV4 work trucks for Class 4 school buses and shuttle buses, based on a General Motors platform. https://axios.link/43H2AzE

• Harnois Énergies, a Quebec-based petroleum products distributor, reserved five hydrogen fuel cell-powered trucks from Peterbilt Motors. https://axios.link/3JhJiZw

5. Hot deals

• Suedeen Kelly, former FERC commissioner, joined the clean energy research nonprofit Advanced Energy Institute as board chair. https://axios.link/3NwMiDJ

• Amy Chiang joined carbon tech startup Topsoe as its chief sustainability and public affairs officer. https://axios.link/42KcXBg

• Morten Holm Christiansen became carbon tech startup Topsoe's chief transformation officer. https://axios.link/42KcXBg

• Jeff Gernon was promoted from SVP to chief commercial officer of Audubon Engineering, a Houston-based EPC. https://axios.link/3N8ZOvZ

• Erik Fogelberg joined Wallbox, the Mountain View, Calif.-based EV charging systems provider, as North America GM. Fogelberg was previously VP of North America sales at ChargePoint. https://axios.link/43YBRyf

6. It's personnel

Programming note: Climate Deals will be off Monday for Juneteenth.

🔌 Katie still can't believe that the automakers are embracing Tesla's NACS.

📦 Terry and the toddler were out of the house last night, so Alan spent six hours unpacking and hanging shelves and breaking down boxes. He's sore.

Thank you to Michael Flaherty, George Moriarty and Phoebe Neidl for today's edits.

And thank you for reading Climate Deals! Please share with your friends, family and especially you survey-takers.

June 15, 2023

1 big thing: Stellantis revs up VC arm