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BYD is coming for their marketshare.
On the surface, it should be a triumphant moment for the Big Three, the triumvirate of traditional American automakers made up of Ford, General Motors, and Stellantis.
They survived the pandemic and inflationary surge of the early 2020s, and they settled their labor issues with the United Auto Workers. They even had a pretty good 2023, financially. Even as interest rates reached multi-decade highs, which should normally discourage big-ticket car and truck purchases, Ford and General Motors booked $4 billion and $12 billion in profit, respectively — slightly below 2022’s levels but more than might have been reasonably expected. Stellantis, which owns the Jeep and Dodge brands, posted a record profit.
Consumers and businesses are still buying millions of full-size pickups, SUVs, and vans each year. If interest rates start to fall this summer, and the economy holds out, then 2024 could be even bigger. Yet the companies are clearly increasingly worried. And they have good reason to be. They are entering a critical period: a time when they must make the EV transition, or die trying.
For the past decade, Detroit has supported itself partly off profits earned from selling SUVs, crossovers, and pickup trucks to North Americans. It essentially delegated the market for small cars and trucks to foreign automakers operating in the United States, like Toyota and Honda. You haven’t even been able to buy a Ford-badged sedan or hatchback in the United States since the pandemic, as the automaker has winnowed its car offerings here down to the Mustang.
That model worked in the post-Great Recession period when gasoline was generally cheap and the global auto market was stable and growing. But now those profits are coming under threat. The primary driver of that threat is the rise of Chinese automakers, who are chomping away at the Big Three’s shrinking market share in China and around the world.
In the coming weeks, more and more attention will be paid to this important shift. The Biden administration is reportedly so alarmed at the ability of Chinese-made cars to enter American markets that it is considering hiking tariffs on EVs and other clean-energy products further.
Here are three important aspects of this story to understand:
Each of the Big Three finds itself in a slightly different position in the EV transition than it expected to be — and while none of them is quite as weak as it may look at first, no automaker is doing particularly well.
Ford, for instance, seems to have nailed it with the Mustang Mach E, a family-friendly crossover that has outsold any individual electric model from Kia or Hyundai. But it has struggled to convince truck buyers to try out its all-electric F-150 Lightning, and it has slowed its EV investment plans. The company lost $64,731 on each electric car it sold last year — $4.7 billion on EVs overall — meaning that its electric division only survives because of its ample profits from selling gas-burning SUVs and trucks.
General Motors sells the Chevrolet Bolt, the country’s best-selling EV that isn’t a Tesla. But it has struggled to roll out its new Ultium battery platform, which it hopes will be the basis of all its new electric cars. It recalled the Chevrolet Blazer EV after test units literally left reviewers stranded by the side of the road.
Stellantis — the trans-Atlantic fusion of the Fiat, Dodge, Jeep, and Peugeot brands — is arguably in the best shape of the three, although you could argue that it barely counts as a member of the Big Three anymore. (It is headquartered in the Netherlands.) It turned a profit on its electric cars last year, but almost all of that came from European brands that aren’t offered here. Its American business remains slower and more pickup-dependent.
Since the pandemic, China’s position in the global auto market has completely changed. Last year, the country exported more cars than it imported for the first time ever. Although most of its auto exports are gas-burning vehicles — it has filled a gap in the Russian car market left behind by western automakers’ post-Ukraine withdrawal — electric cars make up a larger and larger share of its production.
The star of China’s EV market is BYD, which passed Tesla last year as the world’s No. 1 producer of electric cars. By leveraging China’s domination of the battery industry and facility with electronics manufacturing, BYD can sell EVs for under $12,000.
While BYD hasn’t started to sell cars in the United States yet, it is getting closer to the market. On Tuesday, the head of BYD’s operations in Mexico told Nikkei that the company is exploring opening a new factory in that country.
That could get BYD’s cars into the U.S. under the umbrella of the U.S.-Mexico-Canada trade agreement. Then, even if the federal government found a way to block the domestic sale of BYD cars, the company could still cut into U.S. automakers’ market share in Mexico and potentially Canada, which are both major markets for American manufacturers.
Even without North American factories, Chinese EVs have started to dribble into the United States. Volvo’s small new electric SUV, the XC30, is manufactured in China and will debut at $34,950 this year. That’s roughly the same price GM hopes to achieve with its American-made Chevrolet Equinox EV, a similarly sized SUV, which is due to go on sale later this year.
That Volvo is able to achieve price parity with General Motors is itself a testament to the Chinese sector’s advantage, as the price factors in the U.S.’s 25% tariff on car imports from China.
What’s tricky is that while China is objectively better than the rest of the world at building electric cars, its companies are also helped by a slowdown in its domestic economy.
China is suffering a multi-year economic slowdown due to the slow deterioration of its real estate and construction sectors. The slower domestic economy means that these products are cheaper. More than 70% of China’s exports have fallen in cost over the past year, according to Nikkei Asia, a phenomenon that economists describe as “exporting deflation.” In part because President Xi Jinping has been so reluctant to adopt policies that would increase domestic consumption, the country’s most sure-fire method of generating economic growth has been to export more products abroad.
Many of those products — such as EVs, solar panels, and batteries — are essential to global decarbonization. As the historian Adam Tooze has written, clean energy is now the primary driver of economic growth in China. As Chinese companies search for foreign markets to sell their climate-friendly products, they are driving prices down for those products globally. That could potentially undercut other automakers’ ability to find a path to making profitable EVs.
This is the difficulty of thinking through this issue: The Big Three have made legitimate missteps, Chinese firms have a legitimate advantage over American and European firms, and Chinese firms can enjoy lower costs due to problems in the Chinese economy. How do you sort through those factors? Whatever path you choose, one message emerges: The Big Three can only be protected from the EV revolution for so long. One way or another — whether by the law of the land or the law of the markets — it’ll come for them.
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A climate tech company powered by natural gas has always been an odd concept. Now as it moves into developing data centers, it insists it’s remaining true to its roots.
Crusoe Energy has always been a confusing company, whose convoluted green energy credentials raise some eyebrows. It started as a natural gas-powered Bitcoin miner, then became a climate tech unicorn thanks to the fact that its crypto operations utilized waste gas that would have otherwise been flared into the atmosphere. It’s received significant backing from major clean tech investors such as G2 Venture Partners and Lowercarbon Capital. And it touts sustainability as one of its main selling points, describing itself as “on a mission to align the future of computing with the future of the climate,” in part by “harnessing large-scale clean energy.”
But these days, the late-stage startup valued at $2.8 billion makes the majority of its revenue as a modular data center manufacturer and cloud services provider, and is exploring myriad energy solutions — from natural gas to stranded solar and wind assets — beyond its original focus. Earlier this week, it announced that it would acquire more than 4 gigawatts of new natural gas capacity to power its data center buildout. It’s also heavily involved in the Trump-endorsed $500 billion AI push known as the Stargate Project. The company’s Elon Musk-loving CEO Chase Lochmiller told The Information that his team is “pouring concrete at three in the morning” to build out its Stargate Project data centers at “ludicrous speed.”
Some will understandably take a glance at this rising data center behemoth and wonder if climate tech is really an accurate description of what Crusoe actually does these days. As the steady drumbeat of announcements and press surrounding Crusoe’s partnerships and power deals has built up, I certainly wondered whether the company had pivoted to simply churning out data centers as quickly as possible. But investors — and the company itself — told me that’s far from true.
Clay Dumas, a partner at Lowercarbon Capital, which invested in the company’s $128 million Series B and $350 million Series C rounds, told me that Crusoe remains as mission-focused as ever. “When it comes to power, Crusoe is the most aggressive innovator in the AI infrastructure space,” Dumas said via text message. “There is no better team to integrate new energy sources for compute workloads so we don’t turn the whole world into one giant fracking operation.”
Ben Kortlang, a partner at G2 Venture Partners, which led the company’s Series C round, agreed, telling me that Crusoe is best positioned to build out data centers in a way that doesn’t “plant the seeds for 50 or 100 years of environmental damage.”
Yet it’s hard to pin down exactly what the energy mix will end up looking like for the high-profile data centers in Crusoe’s pipeline, including the complex it’s currently building for OpenAI, which is part of the Stargate project in Abilene, Texas. The company announced on Tuesday that it had started construction on the second phase of the facility, which expands the total scope from around 200 megawatts of power across two facilities to include a total of eight buildings over 4 million square feet, using 1.2 gigawatts of power. Crusoe’s spokesperson, Andrew Schmitt, declined to comment on whether this additional capacity would serve Stargate.
What Schmitt did confirm via email is that while the project has a 1.2 gigawatt grid interconnection — enough to meet the entirety of its power needs — Crusoe will also rely on natural gas as “backup energy,” as well as behind-the-meter energy solutions such as solar and battery storage to “create a highly optimized and efficient power plan for the full site.”
The company also won’t speculate on how much energy will come from each particular source. To some degree, the exact grid energy mix and what additional energy resources will get built is unknowable, though Schmitt told me that Crusoe chose Abilene for the area’s abundant wind resources. There’s often too much of it for the grid to handle, meaning the excess energy is curtailed or sold at a negative price. But if a large load — say, a Crusoe data center — were added to the grid, less renewable energy would go to waste, thereby increasing the profitability of renewables projects and incentivizing more buildout overall.
This strategy, Schmitt told me, “reflects [Crusoe’s] guiding principle of bringing load to stranded and under-utilized energy” rather than bringing energy sources to the data center load itself, as the industry has traditionally done. G2, the venture capital firm, is all in on this premise. “By putting a big load center right there in a fantastic renewable resource environment, the thing that will naturally get built is renewables,” Kortlang told me. “Crusoe doesn’t need to mandate that, or control that, or be the one building the renewables. They’re creating the demand.”
But this approach is only net-positive for the climate if it increases the share of renewables in the mix overall, i.e. if new, large loads are leading to more solar and wind buildout than new natural gas buildout. And while a renewables-heavy buildout seems to be what Crusoe and its investors are assuming will happen, Crusoe can’t actually control what gets put on the grid or the economic or political factors that drive those decisions.
It appears to be inevitable that gas will play some role, even if it’s providing power directly to the data center itself and not to the grid overall. According to Business Insider, public filings with the Texas Commission on Environmental Quality show that so far, Crusoe plans to operate on-site natural gas turbines at the Abilene facility totaling 360 megawatts of power. That represents 30% of the data center’s total 1.2 gigawatts of announced capacity.
Although powering data centers with new solar or wind is usually the cheapest option — especially in places like Abilene — building natural gas can be quicker and more reliable, assuming you’re able to acquire the severely backlogged turbines. That’s something Kortlang readily acknowledged to me. “We will see a lot of buildout of natural gas over the last half of this decade, because it’s the easiest thing to controllably build that gets you large amounts of baseload power quickly,” he said.
Kortlang didn’t seem fazed by Crusoe’s announcement this Monday that it’s pursuing a joint venture with the investment firm Engine No. 1, giving the company access to a whopping 4.5 gigawatts of natural gas power. To put that in perspective, there’s only about 25 gigawatts of existing data center capacity in the U.S. today. Schmitt told me this latest announcement is unrelated to the Stargate Project.
Engine No. 1 has secured seven GE Vernova natural gas turbines through a partnership with Chevron announced in January. As Chevron puts it, this joint development will create “scalable, reliable power solutions for United States-based data centers running on U.S. natural gas.” But critically, as Crusoe emphasized, “plans for these data centers include the use of post-combustion carbon capture systems,” which are designed to capture the CO2 from power plants after the fossil fuels are burned, but before they’re released to the atmosphere.
Presumably, these plans will also incorporate either some way to utilize the CO2 in industry or to permanently sequester it underground, though the company hasn’t mentioned anything to this effect. This technology hasn’t been a part of the company’s strategy in the past, though Kortlang told me that Crusoe has been evaluating the viability of carbon capture and storage for as long as G2 has been involved.
Gas-fired power plants paired with carbon capture have never really caught on, simply because they’re pretty much bound to cost more than not building carbon capture. When I asked Kortlang if this meant Crusoe was banking on its data center customers being willing to pay more for greener power, he told me that was “to be determined.” Who exactly was going to design and build the carbon capture technology — Crusoe, Chevron, or another to-be-named project partner — was also “to be determined.” But there’s not actually all that much time to figure it out. In Chevron’s announcement, the company said it was planning to deliver power by the end of 2027.
So, is Crusoe still a climate tech company? The answer seems to be yes — or at least it’s definitely still trying to be.
No other developer has been as diligent about utilizing stranded assets to power data centers. And with its expansion into carbon capture, it certainly seems Crusoe is leaning into an all-of-the-above approach to data center decarbonization. As Dumas told me, “before too long” we’ll also see Crusoe powering its operations with “geothermal, bioenergy, and after that fusion technologies that keep them out ahead of the pack.”
But Crusoe’s business model — and its clean tech bonafides in general — have always relied upon ultimately unprovable counterfactuals. First it was: If this waste gas weren’t powering Bitcoin mining, it would be vented into the atmosphere. That seemed fairly certain, since flaring is common practice in many areas. Now the company is pitching a somewhat fuzzier hypothetical: If this Crusoe data center, powered by some combination of natural gas and stranded renewables, were instead built by another company, it would inevitably be dirtier. Whether or not Crusoe is a boon for the climate ultimately depends upon the degree to which that unquantifiable claim ends up being true.
On Energy Transfer’s legal win, battery storage, and the Cybertruck
Current conditions: Red flag warnings are in place for much of Florida • Spain is bracing for extreme rainfall from Storm Martinho, the fourth named storm in less than two weeks • Today marks the vernal equinox, or the first day of spring.
A jury has ordered Greenpeace to pay more than $660 million in damages to one of the country’s largest fossil fuel infrastructure companies after finding the environmental group liable for defamation, conspiracy, and physical damages at the Dakota Access Pipeline. Greenpeace participated in large protests, some violent and disruptive, at the pipeline in 2016, though it has maintained that its involvement was insignificant and came at the request of the local Standing Rock Sioux Tribe. The project eventually went ahead and is operational today, but Texas-based Energy Transfer sued the environmental organization, accusing it of inciting the uprising and encouraging violence. “We should all be concerned about the future of the First Amendment, and lawsuits like this aimed at destroying our rights to peaceful protest and free speech,” said Deepa Padmanabha, senior legal counsel for Greenpeace USA. The group said it plans to appeal.
The Department of Energy yesterday approved a permit for the Calcasieu Pass 2 liquified natural gas terminal in Louisiana, allowing the facility to export to countries without a free trade agreement. The project hasn’t yet been constructed and is still waiting for final approvals from the independent Federal Energy Regulatory Commission, but the DOE’s green light means it faces one less hurdle.
CP2 was awaiting DOE’s go-ahead when the Biden administration announced its now notorious pause on approvals for new LNG export facilities. The project’s opponents argue it’s a “carbon bomb.” Analysis from the National Resources Defense Council suggested the greenhouse gases from the project would be equivalent to putting more than 1.85 million additional gas-fueled automobiles on the road, while the Sierra Club found it would amount to about 190 million tons of carbon dioxide equivalent annually.
President Trump met with 15 to 20 major oil and gas executives from the American Petroleum Institute at the White House yesterday. This was the president’s first meeting with fossil fuel bosses since his second term began in January. Interior Secretary Doug Burgum and Energy Secretary Chris Wright were also in the room. Everyone is staying pretty quiet about what exactly was said, but according to Burgum and Wright, the conversation focused heavily on permitting reform and bolstering the grid. Reuters reported that “executives had been expected to express concerns over Trump’s tariffs and stress the industry view that higher oil prices are needed to help meet Trump’s promise to grow domestic production.” Burgum, however, stressed that oil prices didn’t come up in the chat. “Price is set by supply and demand,” he said. “There was nothing we could say in that room that could change that one iota, and so it wasn’t really a topic of discussion.” The price of U.S. crude has dropped 13% since Trump returned to office, according to CNBC, on a combination of recession fears triggered by Trump’s tariffs and rising oil output from OPEC countries.
The U.S. installed 1,250 megawatts of residential battery storage last year, the highest amount ever and nearly 60% more than in 2023, according to a new report from the American Clean Power Association and Wood Mackenzie. Overall, battery storage installations across all sectors hit a new record in 2024 at 12.3 gigawatts of new capacity. Storage is expected to continue to grow next year, but uncertainties around tariffs and tax incentives could slow things down.
China is delaying approval for construction of BYD’s Mexico plant because authorities worry the electric carmaker’s technology could leak into the United States, according to the Financial Times. “The commerce ministry’s biggest concern is Mexico’s proximity to the U.S.,” sources told the FT. As Heatmap’s Robinson Meyer writes, BYD continues to set the global standard for EV innovation, and “American and European carmakers are still struggling to catch up.” This week the company unveiled its new “Super e-Platform,” a new standard electronic base for its vehicles that it says will allow incredibly fast charging — enabling its vehicles to add as much as 249 miles of range in just five minutes.
Tesla has recalled 46,096 Cybertrucks over an exterior trim panel that can fall off and become a road hazard. This is the eighth recall for the truck since it went on sale at the end of 2023.
This fusion startup is ahead of schedule.
Thea Energy, one of the newer entrants into the red-hot fusion energy space, raised $20 million last year as investors took a bet on the physics behind the company’s novel approach to creating magnetic fields. Today, in a paper being submitted for peer review, Thea announced that its theoretical science actually works in the real world. The company’s CEO, Brian Berzin, told me that Thea achieved this milestone “quicker and for less capital than we thought,” something that’s rare in an industry long-mocked for perpetually being 30 years away.
Thea is building a stellarator fusion reactor, which typically looks like a twisted version of the more common donut-shaped tokamak. But as Berzin explained to me, Thea’s stellarator is designed to be simpler to manufacture than the industry standard. “We don’t like high tech stuff,” Berzin told me — a statement that sounds equally anathema to industry norms as the idea of a fusion project running ahead of schedule. “We like stuff that can be stamped and forged and have simple manufacturing processes.”
The company thinks it can achieve simplicity via its artificial intelligence software, which controls the reactor’s magnetic field keeping the unruly plasma at the heart of the fusion reaction confined and stabilized. Unlike typical stellarators, which rely on the ultra-precise manufacturing and installment of dozens of huge, twisted magnets, Thea’s design uses exactly 450 smaller, simpler planar magnets, arranged in the more familiar donut-shaped configuration. These magnets are still able to generate a helical magnetic field — thought to keep the plasma better stabilized than a tokamak — because each magnet is individually controlled via the company’s software, just like “the array of pixels in your computer screen,” Berzin told me.
“We’re able to utilize the control system that we built and very specifically modulate and control each magnet slightly differently,” Berzin explained, allowing Thea to “make those really complicated, really precise magnetic fields that you need for a stellarator, but with simple hardware.”
This should make manufacturing a whole lot easier and cheaper, Berzin told me. If one of Thea’s magnets is mounted somewhat imperfectly, or wear and tear of the power plant slightly shifts its location or degrades its performance over time, Thea’s AI system can automatically compensate. “It then can just tune that magnet slightly differently — it turns that magnet down, it turns the one next to it up, and the magnetic field stays perfect,” Berzin explained. As he told me, a system that relies on hardware precision is generally much more expensive than a system that depends on well-designed software. The idea is that Thea’s magnets can thus be mass manufactured in a way that’s conducive to “a business versus a science project.”
In 2023, Thea published a technical report proving out the physics behind its so-called “planar coil stellarator,” which allowed the company to raise its $20 million Series A last year, led by the climate tech firm Prelude Ventures. To validate the hardware behind its initial concept, Thea built a 3x3 array of magnets, representative of one section of its overall “donut” shaped reactor. This array was then integrated with Thea’s software and brought online towards the end of last year.
The results that Thea announced today were obtained during testing last month, and prove that the company can create and precisely control the complex magnetic field shapes necessary for fusion power. These results will allow the company to raise a Series B in the “next couple of years,” Berzin said. During this time, Thea will be working to scale up manufacturing such that it can progress from making one or two magnets per week to making multiple per day at its New Jersey-based facility.
The company’s engineers are also planning to stress test their AI software, such that it can adapt to a range of issues that could arise after decades of fusion power plant operation. “So we’re going to start breaking hardware in this device over the next month or two,” Berzin told me. “We’re purposely going to mismount a magnet by a centimeter, put it back in and not tell the control system what we did. And then we’re going to purposely short out some of the magnetic coils.” If the system can create a strong, stable magnetic field anyway, this will serve as further proof of concept for Thea’s software-oriented approach to a simplified reactor design.
The company is still years away from producing actual fusion power though. Like many others in the space, Thea hopes to bring fusion electrons to the grid sometime in the 2030s. Maybe this simple hardware, advanced software approach is what will finally do the trick.