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We didn’t know it was coming. We didn’t know where it came from. We still can’t nail its climate change connection.

What happened?
No, seriously — what happened?
Last week, the American megalopolis, that string of jewels on the old Atlantic coast, found itself shrouded by wildfire smoke. New York City’s air turned ashen and dun, then glowed a supernatural amber. For the first time in who-knows, sightseers standing at the U.S. Capitol Building could not see the Washington Monument, a mile and change down the Mall.
You could list the sports games canceled or flights delayed, but what was oddest about the event was the sheer ubiquity of it. This was one of the few news stories I can remember where you could look up from whatever article you were reading and see the story itself, softly lapping at your window.
And then it was gone. By Friday, the haze had blown out to sea.
It was, in retrospect, a strange time — deeply strange, humblingly strange, strange before almost any other quality. More than 128 million Americans were under an air-quality alert on Wednesday night — roughly the population of Germany and Spain combined — but scarcely 36 hours earlier, nobody had known to prepare for anything worse than a moderate haze. The country’s biggest wildfire-pollution event on record arrived essentially out of nowhere.
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One of the main modes of journalism today — but also, frankly, one of the main frames of our whole cultural apparatus, from TikToks that lightly gloss Wikipedia articles to rampant right-wing conspiracism — is that of the explanation. Everyone explains what’s happening to each other, as it happens, at all times, and therefore makes the world seem rational, empirical, and less frightening. Yet with the wildfire smoke, what is so striking is how little we understood. Nearly every important step in the story was misapprehended as it happened.
We didn’t know that the smoke was coming, for instance. On Tuesday morning, meteorologists predicted that the same moderate haze that has hung around all season would again hit the East Coast. The New York Department of Environmental Conservation put out an alert saying that the air quality index, or AQI, might rise to 150 across the state.
They did not forecast — nobody, as far as I can tell, did — that the worst air pollution in decades would soon wallop the state. By Tuesday night, New York City’s AQI had already reached 174, according to Environmental Protection Agency data. As I walked home in D.C., I could see tendrils of visible smoke hugging the upper stories of apartment buildings.
This prediction failure gave the ensuing response a halting, confused quality. How could such a massive event come out of nowhere? Not until Thursday afternoon — when the smoke had nearly passed — did the federal government advise its workers that they could telework or take vacation time to avoid the bad air. On Friday, New York closed in-person schools, just in time for blue sky to return.
I find it hard to blame them. This was an unprecedented event in part because the fires were so far from where they affected. Everyone had seen the videos of smoke besieging Portland and San Francisco in 2020, but back then, the fires had been near those cities — a couple hundred miles away at most. Where was the smoke coming from now? The Adirondacks were fine. Vermont was’t burning.
Here, we misunderstood again. Many outlets — including this one, at first — initially reported that the smoke came from Nova Scotia, where large and destructive fires had raged the week before. But those fires had been doused over the weekend by some of the same weather pattern that was now ferrying smoke to us. In fact, the smoke had come from the boreal forests of northern Quebec, more than 500 miles from New York City.
Why were these fires raging? Not even Canadians could give a good answer. With fires in Alberta and Nova Scotia gobbling attention and resources, the Quebec fires had seemingly been an afterthought until their smoke blew into Toronto and Ottawa, which happened only a few hours before it arrived in New York. Suddenly, a secondary event had become the main event.
On Wednesday, I talked to a Canadian climatologist who seemed hazy about why Quebec was burning in the first place. “I think this situation is kind of similar to Nova Scotia,” he told me, blaming that province’s warm, dry spring for the blazes. But this explanation — which appeared in many outlets — was only somewhat true: While Quebec had suffered a warm May, it was not in drought.
We did not understand why these fires are burning — and honestly, we still don’t. President Joe Biden said that the smoke provided “another stark reminder of the impacts of climate change.” I am not so sure. There’s no doubt, to be clear, that climate change will make wildfires worse across North America: The Intergovernmental Panel on Climate Change says that hot, dry “fire weather” will increase throughout the 21st century. But, again, Quebec is not in drought. As for today, no climate-change signal has appeared in eastern Canadian wildfire data. Their connection to climate change is far less clear cut than it is in, say, California’s blazes.
Yet neither would I condescend to someone who does blame climate change here. When something like this happens, how can you not cite the planet’s biggest ongoing physical transformation? If climate change makes flukey weather more likely, shouldn’t we at least consider it being responsible for some of the flukiest weather in decades? The thing about unprecedented events is that you lack precedent for them.
Not that we completely lack an example for this. In 1780, the sun was blotted out across New England. Nocturnal animals came out; people fretted in the streets and abandoned their work; the Connecticut state legislature considered adjourning for doomsday. Not until a decade ago did we finally learn that the “dark day” was caused by Canadian wildfire smoke drifting south.
Which suggests that this might be a once-in-250-year event. But maybe it’s not any more. Maybe with climate change, it’s a once-a-century event. Or a once-in-a-decade event. For now, the sample size is two.
So I wonder: If it wasn’t climate change, would it matter? The pandemic has already taught us that indoor air quality matters, that unseen particles floating in the air can do serious harm. No matter what happens with the climate, Canada is too large and unpopulated to fight every wildfire; neither can it manage the same kind of labor-intensive forest management that California might attempt. East Coasters should come away from our own dark days with new compassion for people out West — and those across the world — who must deal with wildfire smoke on a seasonal basis, not to mention the fires themselves. Regardless of climate change’s role in this fire, it makes wildfires more likely: We should continue to try to decarbonize as fast as we can.
But as for local policy, perhaps our aims should be humbler. We now know (again) that a great cloud of wildfire smoke can blow up on the East Coast at any moment and poison our air. We don’t need to know everything to protect ourselves and our neighbors from that. Air filters cost hundreds of dollars, but not thousands; in new multi-family buildings, they are built into the ventilation system itself. Perhaps the right lesson from this outbreak should be to change our expectations, and think of indoor air filtering like brushing your teeth — a habit essential to our hygiene, to be used by all, and to be provisioned for those who cannot afford one at the public expense.
Maybe that’s prudent climate adaptation. Or maybe — in the wake of COVID, Canadian smoke, and who-knows-what-comes-next — it’s just new common sense.
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The EV maker appears to be poised to start construction on its second factory.
Rivian’s stock fell 18% on Monday, but it’s hard to imagine the company’s executives are too upset. Why? Because the automaker seems to be on the verge of starting work on its long-awaited second factory, 45 miles east of downtown Atlanta.
Let’s do some reading between the lines. Rivian has had a great few weeks. The EV maker announced last week that it is on track to sell about 3,000 more cars this year than expected, and its stock has been on a tear, rising more than 37% from close on June 25 to close on Monday.
The company’s CEO, RJ Scaringe, evidently decided it was time to capitalize on the run-up. The company announced on Monday evening that it would offer another 75 million shares of its stock this week, diluting existing investors. That raise would be used to fund “general corporate purposes,” according to a federal filing, including “the funding of certain equity contributions” related to an Energy Department loan.
Back in April, the company came to new terms with the Department of Energy’s in-house bank over a nearly $6.6 billion loan to build its new Georgia factory, which is supposed to manufacture the company’s new line of cheaper R2 SUV and R3 crossovers. That federal loan — initially negotiated in the Biden administration’s final days — was downsized to $4.5 billion under the new Trump-era terms, but also rewritten to let the automaker draw more money from the deal faster. (Rivian is already making the R2 at its existing factory in Normal, Illinois, but the Georgia factory should have about 40% more capacity than that plant.)
As part of any Energy Department loan — as in any project finance transaction — borrowers have to hold a certain amount of cash in escrow and reserve accounts to secure against a deal failing. Now Rivian can fund that money without tapping its cash on hand further. The new share offering is supposed to price this evening, suggesting that despite today’s slide, the company could raise more than $1 billion from the sale. Rivian’s stock is now trading roughly where it stood a month ago.
The upshot of all of this: With the loan secured, serious building efforts could finally start soon on the automaker’s second factory. (The automaker technically broke ground in September, but has yet to begin meaningful construction.)
“We’re setting up to go vertical in the second half of this year (a.k.a. steel sticking out of the ground) but we have said previously that we expect to draw on the loan for the first time by early 2027,” Peebles Squire, a Rivian spokesman, told me in an email. “Factory timeline is production of vehicles to begin in late 2028.”
(Energy Department loans work on a reimbursement basis, so the automaker will need to begin spending on the factory before it can claim the money.)
Though Rivian is among the most successful of the U.S. electric vehicle startups, it wasn’t completely clear after President Trump took office whether the automaker would survive its trek through the valley of death. It’s still not certain, of course. But positive reviews for the R2, a $6 billion deal with Volkswagen, and its significant Sun Belt factory nearing construction all augur well for the country’s most famous EV startup not run by Elon Musk.
“It’s got nothing to do with technology. It’s nothing to do with execution capability. It’s purely due to access to capital.”
Ever since Trump reentered the White House, Europe has been a safe haven for U.S. climate tech companies fleeing an increasingly hostile policy environment. Through strong carbon pricing and stable regulations, the bloc has created demand for still-experimental technologies such as green hydrogen, thermal energy storage, low-carbon building materials, and sustainable fuels.
And yet at the same time, Europe has struggled to finance many of its own climate tech startups as they enter the capital-intensive scale-up phase. What gives?
The problem is not a lack of startups or capital. European firms raised $61 billion for climate-focused funds last year, far outpacing those in the U.S., which brought in $37 billion, according to Sightline Climate. The problem is that almost all of that European money flows to infrastructure and private equity investors backing more mature technologies. Early-stage startups also enjoy relatively strong backing, but the market starves the growth-stage middle.
The issue is both cultural and structural: Most of the bloc’s investors are unaccustomed to making the high-risk, high-reward bets required to scale climate tech. They also often can’t access tools like loan and equity guarantees, which remain limited in Europe, nor are there the institutional limited partners and growth-stage co-investors that could help de-risk those investments.
“It’s got nothing to do with technology. It’s nothing to do with execution capability. It’s purely due to access to capital,” Craig Douglas, a founding partner at the Berlin-based multi-stage venture firm World Fund, told me. That means companies that have outgrown early-stage financing but are still considered too small or too risky for larger institutional investors often either shutter or seek capital abroad. Logically, if given the chance, most startups choose the latter.
“You’re allowing U.S. investors to cherry pick European assets,” Douglas told me. The result? “European technologies and European companies that are successful end up enriching American pension funds rather than European pension funds.”
Ioannis Ioannou, an associate professor of strategy and entrepreneurship at the London Business School, told me that the consequences extend beyond the purely financial, emphasizing that Europe runs a strategic risk by relying on foreign capital for its climate tech scale-up. “It means you lose the supply chains. You lose the skills. You lose the fine manufacturing capabilities. You lose the so-called green jobs.”
Douglas and the other specialists in European climate finance I spoke with emphasized that the ever-ominous “missing middle” funding gap is particularly pronounced in Europe. A report Douglas co-authored earlier this year, aptly titled “The Series B Funding Gap In European Climate Tech,” quantifies the problem. While 25% of U.S. climate tech companies that raised a seed round from 2010 to 2020 had moved on to secure a Series B by the first half of last year — regardless of what country the capital came from — only 15% of European companies were able to do the same. That has created a growing backlog of startups stuck in a financing limbo: The lineup of European companies looking to raise a Series B grew from 220 in 2020 to 533 in the first half of last year.
While smaller climate tech funds in Europe and the U.S. have raised similar amounts of funding for early-stage startups — $18.5 billion in Europe versus $20.2 billion in the U.S. from 2020 through the first half of 2025 — the gap at the larger end of the market is stark. The U.S closed 29 funds of at least $500 million or more, compared with just 11 in Europe. These larger funds are the ones capable of writing the $25 million to $100 million checks companies desperately need to commercialize and scale. As Douglas’ report notes, fewer than 20% of European climate funds are pursuing a growth strategy, with over 70% making early-stage investments only.
“When we raised World Fund One, we were the largest [debut] climate fund in Europe, and we’re a €300 million fund. That’s nuts,” Douglas told me. World Fund aims to help companies “reach growth-investor readiness” by supporting startups from their seed through Series B, a model Douglas would like to see replicated throughout the region. “We need another 20 World Funds out there in the market to start filling this capital shortfall,” he told me. The firm announced last February that it’s raising a second, €500 million fund, but that’s yet to close.
One of the primary reasons European growth-stage investors have less capital to deploy comes down to the structure of European financial markets, which remain heavily reliant on bank lending rather than higher-risk equity investments. As a result, institutional investors like pension funds, insurers, and endowments never built the habit of investing in venture capital, which shows up when comparing the LP bases across the two regions: In the U.S., about 72% of VC funding comes from private institutional investors, compared with just 30% in Europe. Public money, much of it from the European Investment Fund, helps bridge the gap, but it simply cannot match the scale of private institutions.
Pension funds are a telling case. They’re among the largest sources of venture capital in the U.S., allocating nearly 2% of their assets to VC. But in the EU, they allot just 0.018% — roughly 100 times less. And because the U.S. also has far more money sitting in pension funds than Europe does, this makes the gap in actual dollars reaching startups wider still. Without that deep pool of institutional funding, Europe struggles to support the $500 million- to $1 billion-plus funds that would have the wherewithal to lead growth-stage rounds.
The result is a self-reinforcing cycle. Large growth funds require large institutional backers, but precisely because European pension funds and other institutional investors haven’t stepped up, the venture market remains too small to absorb the kinds of $100 million-plus commitments pension investors managing billions of dollars typically want to make. “They don’t see [venture] as an asset class that they can invest in,” Douglas told me. “But the reason that it doesn’t exist is because they’re not investing themselves in that asset class.”
If there’s one thing I learned from my reporting, it’s that white these problems run deep, Europe is hardly standing still. Policymakers and investors are well aware of the disconnect and are now experimenting with strategies to close the scale-up gap and affirm the region’s position as a leader in climate innovation.
To attract more institutional investment, for example, a growing number of initiatives aim to create “funds of funds” and other government-backed structures that pool money from pension funds, insurers, banks, foundations, and other large investors. The fund-of-funds structure lets an institution make a single, large commitment; then, intermediary asset managers break that capital into smaller chunks and invest it across multiple venture funds. This gives large-ticket investors the scale and diversification they want without requiring them to conduct due diligence on dozens of small venture funds; venture managers, in turn, gain access to much larger pools of capital.
Germany’s Wachstumsfonds Deutschland, for example, is a €1 billion fund-of-funds backed by more than 20 investors — including insurers, pension funds, and large family offices — that invests across the German and broader European VC ecosystem, with a focus on growth-stage capital. The EU’s European Tech Champions Initiative follows a similar model. The European Investment Bank and six member-states launched the initiative in 2023 with €3.9 billion to back regional growth-stage VC funds. Now it’s raising a second tranche of money — targeting €15 billion — and is bringing in private institutional capital for the first time.
Europe’s member states have also pushed institutional investors toward coordinated capital commitments in recent years, with France’s Tibi initiative serving as the model. Launched in 2019, it tasks the French government with vetting venture and growth funds, with those that qualify becoming eligible for backing from initiative’s signatories, primarily insurers and some pension funds. The program has attracted about €31 billion in commitments to date. Germany adopted a similar approach with its WIN initiative, which has now secured €12 billion in pledges from more than 30 major corporations — including Deutsche Bank, BlackRock, and Henkel — to invest in the country’s venture ecosystem by 2030.
The Irish Venture Capital Association has proposed a similar model, while Tibi’s founder — the economist Philippe Tibi himself — has been on a tour essentially pitching the idea across the bloc. But Ioannou isn’t convinced that creating country-specific Tibi-style commitments is the most efficient way for the region to scale climate tech.
“I’m not sure that fragmentation will actually solve the problem,” he told me. “Maybe it will be better if all that capital came into one larger fund, whereby the scale-ups wouldn’t have to deal with country level fragmentation, regulations, jurisdictions, legal, and all that kind of stuff.”
That’s the idea behind the new €5 billion pan-EU Scaleup Europe Fund, which is designed to invest directly in European deep-tech startups — climate tech very much included — rather than through venture funds. Announced last year, the fund has already secured roughly €2.5 billion in capital commitments from both the European Commission and private institutional investors, with a second fundraising round planned for the second half of this year. EQT, Europe’s largest private-markets investor, will manage the funds, ultimately deciding which growth-stage companies to back.
“Everything happened so quickly, from agreeing to it to executing on it to allocating it,” Douglas told me. “In effect, it happened in less than a year, which in the European context is crazy.”
The idea is to replicate what the combination of U.S. federal support and deep private capital markets has accomplished, Dimitri Colin, a policy officer at the cleantech policy and advocacy group Cleantech for Europe, told me. “The whole idea is to bring what worked in the U.S. into European public financing policies,” he said. Colin extolled the virtues of the Biden-era Loan Programs Office, as well as the efficacy of other Inflation Reduction Act-fueled efforts such as generous production tax credits when it comes to derisking investment in first-of-a-kind tech.
In our interview as well as in a recent report, Colin argued that EU funding should move from prioritizing grants to loan and equity guarantees in its forthcoming budget for the years 2028 through 2034. That’s because guarantees have proven far more effective than government grants at bringing private investors into climate tech, Colin told me. According to his report, every euro of grants or equity capital channeled through the VC arm of the European Innovation Council yields about €3 in additional investment. That’s nothing to scoff at, but it pales in comparison with InvestEU, the bloc’s €26.2 billion investment guarantee program. Every euro of guarantees from the latter attracts nearly €14.80 in private follow-on capital.
“The main idea behind the whole budget should be to focus on the leverage effect,” Colin told me, referring to how much additional private funding government backing generates. “How can the little public money that we have in Europe — because the fiscal environment is, of course, very constrained — more easily mobilize private money? That’s what the LPO did well.”
Colin also wants to change the EU’s public funding rules to make it easier to subsidize ongoing operational expenses for early-stage cleantech facilities, similar in effect to U.S. production tax credits. Currently, European policymakers often structure public support for these projects as capex grants paid out after construction is complete. This type of support is more difficult for private investors to underwrite since it doesn’t directly improve the plant’s ongoing operating economics, one of the risks investors care about most.
Getting these financing structures right is a matter of life or death for many of Europe’s most promising climate tech industries. Douglas points to batteries, critical minerals, semiconductors, and green molecules as sectors with the technological readiness to scale domestically — but not yet the capital. “One of the major risks in every sector we know is who’s going to be there, who’s going to be able to go with us on that journey to make sure the company has the capital to be successful,” he told me. Still, he sees reason for optimism. Because if there’s one thing that can be said about the E.U. at this moment, it’s that “they’re definitely taking it seriously.”
“The perfect solution doesn’t exist,” Colin told me. “We need to align the funding models, we need public de-risking tools, but we need also a true industrial strategy, China has done that, the US has done that with the IRA,” he explained. Now it’s Europe’s turn.
Not going to lie, I didn’t see this coming.
Tesla just finished its strongest showing in years. In the second quarter of 2026, the company sold about 480,000 vehicles around the world — well over stock market projections of about 400,000 EVs. Tesla’s sales mark a full 25% year-over-year increase from the second quarter of last year.
If you’re surprised by this news, you’re not alone. Sales of Elon Musk’s EVs had been trending downward over the past few years following a series of self-inflicted wounds. The Cybertruck was a bomb. Tesla appeared to be interested only in building the self-driving cars and autonomous robots of the future, not the electric vehicles of today. Musk’s associations with President Trump and off-putting online politics alienated potential customers everywhere.
Yet here we are. So what happened?
European gas prices, for one thing. Tesla sales actually continued to fall in the U.S., where the electric car market as a whole still hasn’t recovered from tariffs confusion, the loss of federal subsidies, and other chaotic conditions over the past year. Tesla’s rally came instead from China and, interestingly, Europe: Registrations rose 39% in Denmark, 56% in Sweden, and 43% in Portugal and Italy.
It wasn’t so long ago that Musk’s politics had reportedly cratered interest in his cars in those countries. But European gas prices, which are typically much higher than those in the U.S., have also soared because of oil shocks related to the Iran War. EV interest, then, is up — so high that lots of buyers are willing to look past the personality of Tesla’s chief. (It doesn’t hurt that Tesla introduced less-expensive versions of both Model 3 and Model Y, with remarkably cheap leases and loans, to Europe this year to help overcome its struggles there.)
In China, meanwhile, Tesla has had something else up its sleeve to buoy sales. We’ve repeatedly noted the contraction of the company’s EV lineup: With the failure of the Cybertruck as well as the outright cancellation of the older and slow-selling Model S and Model X — the electric cars that pushed Tesla into the mainstream in the 2010s — the brand gets nearly all of its sales (more than 97% in Q2) from just two cars, the Model 3 sedan and Model Y crossover. And there are no signs it has an all-new mass-market car coming soon.
Instead, Tesla cobbled one together by making a new version of an existing car. In China, Musk has been selling the Model Y L, a version of his crossover with its platform stretched out by 6 inches to cram in an extra row of seats. (Tesla has offered a seven-seat version of its ordinary Model Y, but the two little seats in the back had just 25 inches of legroom compared to the 31 inches in this new version.) As a three-row SUV, the longer Model Y lets Tesla compete in a space that it vacated when it killed off the giant, expensive, gullwing-doored Model X. And as of last week, Model Y L is available in the U.S. Tesla hopes the vehicle can lead to a reversal of its sinking fortunes here, where its EV sales shrank by 20% in the second quarter.
Truthfully, the car is a bit of a kluge. Rear seats often require a compromise on comfort and space. In the case of the Model Y L, Jalopnik notes that even with the 6 inches added to the wheelbase, Tesla’s signature sloping roof doesn’t leave much headroom for the occupants of the way-back. Boxier EVs that were built to be three rows to begin with, like the Hyundai Ioniq 9, Kia EV9, and Rivian R1S, are more pleasant for the fifth and sixth passengers. Nevertheless, those who wanted a bigger Tesla at a starting price of around $60,000 can now get one, and that counts.
Model Y L is also a testament to the power of the platform. Yes, building a new vehicle from the ground up would have provided Tesla with a better all-around vehicle than what it got by hacking the Model Y. But the modified Model Y was much faster and cheaper to deliver, providing an entry into a popular segment of the car market just at the moment Tesla needed to right the ship.
Doing more with less, like creating a three-row EV on the platform of your two-row car, looks primed to become a big part of the future of electric vehicles. That’s particularly true when it comes to growing adoption in America, where legacy automakers and startups alike are trying to simplify manufacturing to bring down costs. The solution to get to market for a company like Honda was simply to borrow General Motors’ EV platform and build its first EV on top of it. Rivian has said it has no plans to sell a pickup truck on its new R2 platform the way it has with its original vehicle, but it absolutely could — and arguably should — if market conditions suddenly made such an EV pickup a hot item.