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There isn’t one EV transition. There are two.
This has not been a good week for the electric-vehicle transition. On Wednesday, General Motors scrapped a self-imposed plan of building 400,000 electric vehicles by the middle of next year. Then it jettisoned plans with Honda to build a sub-$30,000 EV. On Thursday, Mercedes Benz announced that its profits had fallen in part due to turbulence in the EV market, and Hertz ditched a plan to have EVs make up 25% of its fleet by 2024.
Nor has the past month been much better. Ford has slowed down its EV factory build-out. Elon Musk announced that Tesla was taking a wait-and-see approach to opening its next plant, in Mexico, and The Wall Street Journal has reported that EV demand is proving weaker than once expected. Higher interest rates and, perhaps, a continued lack of public chargers now seem to be impairing the EV transition.
It’s an odd time, because while the day-to-day news is bad, the overall trend remains good — surprisingly good, even. More than 1 million EVs have been sold in America this year, and the country is likely to record 50% year-over-year EV market growth for two years in a row. That is not the usual sign of an industry in trouble. The industry is faltering, yes, but only compared to the rapid scale-up that companies once aimed for — and that the Paris Agreement’s climate targets demand. And at a global level, the news is better: The economics of batteries and trends in the Chinese and European markets leave little doubt that EVs will eventually win.
So how to make sense of this moment? Automakers, it seems, are not doubting whether the EV transition will happen; they are pausing to figure out how best to proceed. Journalists often talk about the “EV transition,” but this is something of a misnomer — there are really at least two different transitions, two different bridges to the EV future.
One of those transitions must be navigated by the legacy automakers, such as Ford and GM. The other must be completed by the new electric-only upstarts, such as Tesla and Rivian. Both transitions are, today, half-complete. What is notable about this moment is that both transitions are also in flux — and the companies and executives tasked with navigating them are struggling with their next steps.
The first bridge must be built by Ford, GM, Toyota, Volkswagen, and every other legacy automaker heavily invested in the U.S. market. You can think of it as a bridge made of cross-subsidies — subsidies not from the government, but from other cars in their product line.
Right now, many automakers earn their biggest profits by selling big, gas-burning vehicles: crossovers, SUVs, and pickup trucks. They lose money, meanwhile, on each EV that they sell. So over the next few years, these companies must take the huge profits from their SUV-and-truck business and reinvest them into scaling up their EV business.
You can see how difficult this will be by looking at Ford, which conveniently reports earnings from its internal combustion business separately from its electric vehicle business. During the first half of 2023, Ford’s global gas and hybrid sales earned $4.9 billion before interest or taxes. Ford’s EV business, meanwhile, lost $1.8 billion before interest or taxes.
During this same period, Ford sold nearly half a million trucks and SUVs in the U.S. alone, and roughly 25,000 electric vehicles. By one calculation, Ford lost $60,000 for every EV that it sold during the first quarter of this year.
This is the narrow bridge that Ford and its ilk must walk: They must remain mature businesses, delivering consistent profits to shareholders, even as they overhaul their entire product line and manufacturing system. And while these legacy automakers have certain advantages — brand cachet, a network of dealerships, and an understanding of how to make car bodies — they lack the deep familiarity with software or battery chemistries that underpin the EV business. What’s more, their current business rests on uneasy foundations: Because their profits are so heavily concentrated in just a few SUVs and trucks, a sudden shift in consumer tastes, fuel prices, or regulation could undercut their whole hustle.
We’ve already seen one consequence of this concentration in the United Autoworkers strike. By focusing its strikes on just a few factories at first, and then gradually expanding them to include each company’s most profitable facilities, the UAW was able to make its strike fund go further than outside commentators initially estimated. That strategy resulted in record high pay raises for workers in the UAW’s tentative deal with Ford; strikes continue at GM and Stellantis.
But this is, of course, only the first bridge to the EV future. Other companies — including Tesla, Rivian, and the early-stage EV startups Canoo and Fisker — have to build a different path across the river. You can think of this as the bridge of scaling up, although some auto-industry analysts give it a different name: crossing the EV valley of death.
These companies have to survive long enough to build up economies of scale. You can think of it this way: At the beginning of an EV company’s lifespan, it knows very little about how to mass-produce its EVs, but it has a lot of cash to burn. As it matures, it gets better at making EVs and grows its customer base, and it makes cars more frequently and more cheaply. Eventually, it reaches a point where it can sell lots of EVs for more money than they cost to make — that is, it can be a mature, profitable business.
But in the middle, it faces a hold-your-breath moment where its high costs can overwhelm its meager production. This is the valley of death, “the challenging period between developing a product and large-scale production, when a company isn’t earning much if any revenue, but operating and capital costs are high,” as the journalist Steve Levine puts it at The Information.
Nearly every EV company faces this problem to some extent right now. Elon Musk discussed it during a recent rambling Tesla earnings call. “People do not understand what is truly hard. That’s why I say prototypes are easy. Production is hard,” he said. “Going from a prototype to volume production is like 10,000% harder… than to make the prototype in the first place.”
Now, Tesla seems to have mostly cleared the valley of death with its Model 3 and Model Y this year, allowing it to undertake a campaign of aggressive price cuts that have increased demand while retaining some profitability.
But what Musk was talking about — and what Tesla is clearly struggling with — is the Cybertruck, which will debut next month after a multi-year delay. Musk warned that the company had “dug its own grave” by trying to build the Cybertruck and that there would be “enormous challenges” in producing it profitably and at scale.
But “this is simply normal,” he added. “When you've got a product with a lot of new technology or any brand-new vehicle program, but especially one that is as different and advanced as the Cybertruck, you will have problems proportionate to how many new things you're trying to solve at scale.”
Every other EV company finds itself on the same narrow bridge. Rivian, for instance, is somewhere further behind Tesla in general but is fast making up ground. It scaled up its production of its R1T and R1S models last quarter faster than analysts thought, but was at last report still losing money on each vehicle. Rivian’s CEO, R.J. Scaringe, told me that the company is focusing on making its next line of vehicles, the R2 series, easier and simpler to manufacture to avoid this problem.
Even further behind Rivian are Fisker, which claims to have delivered 5,000 of its Ocean SUVs, and Canoo, which is struggling to stay solvent.
What’s hard about this moment, then, is that the downsides and risks of each approach have never been clearer.
If a legacy company completes its EV transition too quickly, then it risks finding itself with a fleet of electric vehicles that the public isn’t ready to buy. Companies like Ford, GM, Volkswagen, and Toyota must scale up a profitable EV product line at the same time that they sell vehicles from their legacy business.
Worldwide, no historic automaker has transitioned fully to making battery-electric vehicles, although some have come very close: BYD, the Chinese automaker that has surpassed Tesla as the world’s biggest producer of EVs, opted to quit making internal-combustion vehicles last year, but it still sells plug-in hybrids. Volvo, too, is making an attempt: It has promised to stop selling internal-combustion cars by 2030. But Volvo is owned by the Chinese automaker Geely, meaning that both of these companies can sell their cars to a much larger and more EV-interested Chinese domestic market.
Yet the second transition is tough, too. Although it may seem that EV-only companies have a lot of freedom (by lacking a network of EV-skeptical dealerships, for instance), they also have no alternative revenue to cushion themselves through a period of soft demand — they can’t ever cross-subsidize. Although it sold buses and not private vehicles, the American EV-only vehicle maker Proterra is indicative here: It went bankrupt earlier this year after getting stuck halfway through the valley of death.
America is going to have a domestic EV industry. By the mid-2030s, most automakers will be integrated EV companies, building and selling electric vehicles that include some in-house hardware, software, and battery components. Consumers will think of their new vehicles more as technology than as a simple mode of transportation, and they will power them from ubiquitous charging stations, which will be as mundane and abundant as wall outlets are today.
That future is certain. But what kinds of cars will we be driving, and what companies will count themselves among the electric elect? I couldn’t tell you. It will all depend on what happens next — on who makes it across the narrow bridge.
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It would have delivered a gargantuan 6.2 gigawatts of power.
The Bureau of Land Management says the largest solar project in Nevada has been canceled amidst the Trump administration’s federal permitting freeze.
Esmeralda 7 was supposed to produce a gargantuan 6.2 gigawatts of power – equal to nearly all the power supplied to southern Nevada by the state’s primary public utility. It would do so with a sprawling web of solar panels and batteries across the western Nevada desert. Backed by NextEra Energy, Invenergy, ConnectGen and other renewables developers, the project was moving forward at a relatively smooth pace under the Biden administration, albeit with significant concerns raised by environmentalists about its impacts on wildlife and fauna. And Esmeralda 7 even received a rare procedural win in the early days of the Trump administration when the Bureau of Land Management released the draft environmental impact statement for the project.
When Esmeralda 7’s environmental review was released, BLM said the record of decision would arrive in July. But that never happened. Instead, Donald Trump issued an executive order as part of a deal with conservative hardliners in Congress to pass his tax megabill, which also effectively repealed the Inflation Reduction Act’s renewable electricity tax credits. This led to subsequent actions by Interior Secretary Doug Burgum to freeze all federal permitting decisions for solar energy.
Flash forward to today, when BLM quietly updated its website for Esmeralda 7 permitting to explicitly say the project’s status is “cancelled.” Normally when the agency says this, it means developers pulled the plug.
I’ve reached out to some of the companies behind Esmeralda 7 but was unable to reach them in time for publication. If I hear from them confirming the project is canceled – or that BLM is wrong in some way – I will let you know.
It’s not perfect, but pretty soon, it’ll be available for under $30,000.
Here’s what you need to know about the rejuvenated Chevrolet Bolt: It’s back, it’s better, and it starts at under $30,000.
Although the revived 2027 Bolt doesn’t officially hit the market until January 2026, GM revealed the new version of the iconic affordable EV at a Wednesday evening event at the Universal Studios backlot in Los Angeles. The assembled Bolt owners and media members drove the new cars past Amity Island from Jaws and around the Old West and New York sets that have served as the backdrops of so many television shows and movies. It was star treatment for a car that, like its predecessor, isn’t the fanciest EV around. But given the giveaway patches that read “Chevy Bolt: Back by popular demand,” it’s clear that GM heard the cries of people who missed having the plucky electric hatchback on the market.
The Bolt died at the height of its powers. The original Bolt EV and Bolt EUV sold in big numbers in the late 2010s and early 2020s, powered by a surprisingly affordable price compared to competitor EVs and an interior that didn’t feel cramped despite its size as a smallish hatchback. In 2023, the year Chevy stopped selling it, the Bolt was the third-best-selling EV in America after Tesla’s top two models.
Yet the original had a few major deficiencies that reflected the previous era of EVs. The most egregious of which was its charging speed that topped out at around 50 kilowatts. Given that today’s high-speed chargers can reach 250 to 350 kilowatts — and an even faster future could be on the way — the Bolt’s pit stops on a road trip were a slog that didn’t live up to its peppy name.
Thankfully, Chevy fixed it. Charging speed now reaches 150 kilowatts. While that figure isn’t anywhere near the 350 kilowatts that’s possible in something like the Hyundai Ioniq 9, it’s a threefold improvement for the Bolt that lets it go from 10% to 80% charged in a respectable 26 minutes. The engineers said they drove a quartet of the new cars down old Route 66 from the Kansas City area, where the Bolt is made, to Los Angeles to demonstrate that the EV was finally ready for such an adventure.
From the outside, the 2027 Bolt is virtually indistinguishable from the old car, but what’s inside is a welcome leap forward. New Bolt has a lithium-ion-phosphate, or LFP battery that holds 65 kilowatt-hours of energy, but still delivers 255 miles of max range because of the EV’s relatively light weight. Whereas older EVs encourage drivers to stop refueling at around 80%, the LFP battery can be charged to 100% regularly without the worry of long-term damage to the battery.
The Bolt is GM’s first EV with the NACS charging standard, the former Tesla proprietary plug, which would allow the little Chevy to visit Tesla Superchargers without an adapter (though its port placement on the front of the driver’s side is backwards from the way older Supercharger stations are built). Now built on GM’s Ultium platform, the Bolt shares its 210-horsepower electric motor with the Chevy Equinox EV and gets vehicle-to-load capability, meaning you’ll be able to tap into its battery energy for other uses such as powering your home.
But it’s the price that’s the real wow factor. Bolt will launch with an RS version that gets the fancier visual accents and starts at $32,000. The Bolt LT that will be available a little later will eventually start as low as $28,995, a figure that includes the destination charge that’s typically slapped on top of a car’s price, to the tune of an extra $1,000 to $2,000 on delivery. Perhaps it’s no surprise that GM revealed this car just a week after the end of the $7,500 federal tax credit for EV purchases (and just a day after Tesla announced its budget versions of the Model Y and Model 3). Bringing in a pretty decent EV at under $30,000 without the help of a big tax break is a pretty big deal.
The car is not without compromises. Plenty of Bolt fans are aghast that Chevy abandoned the Apple CarPlay and Android Auto integrations that worked with the first Bolt in favor of GM’s own built-in infotainment system as the only option. Although the new Bolt was based on the longer, “EUV” version of the original, this is still a pretty compact car without a ton of storage space behind the back seats. Still, for those who truly need a bigger vehicle, there’s the Chevy Equinox EV.
For as much time as I’ve spent clamoring for truly affordable EVs that could compete with entry-level gas cars on prices, the Bolt’s faults are minor. At $29,000 for an electric vehicle in the U.S., there is practically zero competition until the new Nissan Leaf arrives. The biggest threats to the Bolt are America’s aversion to small cars and the rapid rates of depreciation that could allow someone to buy a much larger, gently used EV for the price of the new Chevy. But the original Bolt found a steady footing among drivers who wanted that somewhat counter-cultural car — and this one is a lot better.
“Old economy” companies like Caterpillar and Williams are cashing in by selling smaller, less-efficient turbines to impatient developers.
From the perspective of the stock market, you’re either in the AI business or you’re not. If you build the large language models pushing out the frontiers of artificial intelligence, investors love it. If you rent out the chips the large language models train on, investors love it. If you supply the servers that go in the data centers that power the large language models, investors love it. And, of course, if you design the chips themselves, investors love it.
But companies far from the software and semiconductor industry are profiting from this boom as well. One example that’s caught the market’s fancy is Caterpillar, better known for its scale-defying mining and construction equipment, which has become a “secular winner” in the AI boom, writes Bloomberg’s Joe Weisenthal.
Typically construction businesses do well when the overall economy is doing well — that is, they don’t typically take off with a major technological shift like AI. Now, however, Caterpillar has joined the ranks of the “picks and shovels” businesses capitalizing on the AI boom thanks to its gas turbine business, which is helping power OpenAI’s Stargate data center project in Abilene, Texas.
Just one link up the chain is another classic “old economy” business: Williams Companies, the natural gas infrastructure company that controls or has an interest in over 33,000 miles of pipeline and has been around in some form or another since the early 20th century.
Gas pipeline companies are not supposed to be particularly exciting, either. They build large-scale infrastructure. Their ratemaking is overseen by federal regulators. They pay dividends. The last gas pipeline company that got really into digital technology, well, uh, it was Enron.
But Williams’ shares are up around 28% in the past year — more than Caterpillar. That’s in part, due to its investing billions in powering data centers with behind the meter natural gas.
Last week, Williams announced that it would funnel over $3 billion into two data center projects, bringing its total investments in powering AI to $5 billion. This latest bet, the company said, is “to continue to deliver speed-to-market solutions in grid-constrained markets.”
If we stipulate that the turbines made by Caterpillar are powering the AI boom in a way analogous to the chips designed by Nvidia or AMD and fabricated by TSMC, then Williams, by developing behind the meter gas-fired power plants, is something more like a cloud computing provider or data center developer like CoreWeave, except that its facilities house gas turbines, not semiconductors.
The company has “seen the rapid emergence of the need for speed with respect to energy,” Williams Chief Executive Chad Zamarin said on an August earnings call.
And while Williams is not a traditional power plant developer or utility, it knows its way around natural gas. “We understand pipeline capacity,” Zamarin said on a May earnings call. “We obviously build a lot of pipeline and turbine facilities. And so, bringing all the different pieces together into a solution that is ready-made for a customer, I think, has been truly a differentiator.”
Williams is already behind the Socrates project for Meta in Ohio, described in a securities filing as a $1.6 billion project that will provide 400 megawatts of gas-fired power. That project has been “upsized” to $2 billion and 750 megawatts, according to Morgan Stanley analysts.
Meta CEO Mark Zuckerberg has said that “energy constraints” are a more pressing issue for artificial intelligence development than whether the marginal dollar invested is worth it. In other words, Zuckerberg expects to run out of energy before he runs out of projects that are worth pursuing.
That’s great news for anyone in the business of providing power to data centers quickly. The fact that developers seem to have found their answer in the Williamses and Caterpillars of the world, however, calls into question a key pillar of the renewable industry’s case for itself in a time of energy scarcity — that the fastest and cheapest way to get power for data centers is a mix of solar and batteries.
Just about every renewable developer or clean energy expert I’ve spoken to in the past year has pointed to renewables’ fast timeline and low cost to deploy compared to building new gas-fired, grid-scale generation as a reason why utilities and data centers should prefer them, even absent any concerns around greenhouse gas emissions.
“Renewables and battery storage are the lowest-cost form of power generation and capacity,” Next Era chief executive John Ketchum said on an April earnings call. “We can build these projects and get new electrons on the grid in 12 to 18 months.” Ketchum also said that the price of a gas-fired power plant had tripled, meanwhile lead times for turbines are stretching to the early 2030s.
The gas turbine shortage, however, is most severe for large turbines that are built into combined cycle systems for new power plants that serve the grid.
GE Vernova is discussing delivering turbines in 2029 and 2030. While one manufacturer of gas turbines, Mitsubishi Heavy Industries, has announced that it plans to expand its capacity, the industry overall remains capacity constrained.
But according to Morgan Stanley, Williams can set up behind the meter power plants in 18 months. xAI’s Colossus data center in Memphis, which was initially powered by on-site gas turbines, went from signing a lease to training a large language model in about six months.
These behind the meter plants often rely on cheaper, smaller, simple cycle turbines, which generate electricity just from the burning of natural gas, compared to combined cycle systems, which use the waste heat from the gas turbines to run steam turbines and generate more energy. The GE Vernova 7HA combined cycle turbines that utility Duke Energy buys, for instance, range in output from 290 to 430 megawatts. The simple cycle turbines being placed in Ohio for the Meta data center range in output from about 14 megawatts to 23 megawatts.
Simple cycle turbines also tend to be less efficient than the large combined cycle system used for grid-scale natural gas, according to energy analysts at BloombergNEF. The BNEF analysts put the emissions difference at almost 1,400 pounds of carbon per megawatt-hour for the single turbines, compared to just over 800 pounds for combined cycle.
Overall, Williams is under contract to install 6 gigawatts of behind-the-meter power, to be completed by the first half of 2027, Morgan Stanley analysts write. By comparison, a joint venture between GE Vernova, the independent power producer NRG, and the construction company Kiewit to develop combined cycle gas-fired power plants has a timeline that could stretch into 2032.
The Williams projects will pencil out on their own, the company says, but they have an obvious auxiliary benefit: more demand for natural gas.
Williams’ former chief executive, Alan Armstrong, told investors in a May earnings call that he was “encouraged” by the “indirect business we are seeing on our gas transmission systems,” i.e. how increased natural gas consumption benefits the company’s traditional pipeline business.
Wall Street has duly rewarded Williams for its aggressive moves.
Morgan Stanley analysts boosted their price target for the stock from $70 to $83 after last week’s $3 billion announcement, saying in a note to clients that the company has “shifted from an underappreciated value (impaired terminal value of existing assets) to underappreciated growth (accelerating project pipeline) story.” Mizuho Securities also boosted its price target from $67 to $72, with analyst Gabriel Moreen telling clients that Williams “continues to raise the bar on the scope and potential benefits.”
But at the same time, Moreen notes, “the announcement also likely enhances some investor skepticism around WMB pushing further into direct power generation and, to a lesser extent, prioritizing growth (and growth capex) at the expense of near-term free cash flow and balance sheet.”
In other words, the pipeline business is just like everyone else — torn between prudence in a time of vertiginous economic shifts and wanting to go all-in on the AI boom.
Williams seems to have decided on the latter. “We will be a big beneficiary of the fast rising data center power load,” Armstrong said.