TheChek News Flow

US energy storage industry makes a $100bn commitment — but will it be enough?

The sector faces fierce competition from China, which is much further along in its battery manufacturing process

The US economy contracted by an annualised 0.3 per cent over the first quarter, as companies rushed to import goods ahead of Donald Trump’s sweeping tariffs.

Gloomy economic data and reports that Saudi Arabia is unwilling to prop up the oil market with further supply cuts caused crude prices to slump on Wednesday.

Brent crude, the international benchmark, settled 1.7 per cent lower at $63.12 a barrel while US West Texas Intermediate fell 3.6 per cent to close at $58.21. In April, Brent declined 15 per cent and WTI 18 per cent, the largest monthly declines in almost three and a half years.

Fears over a weakening economy and trade policy uncertainty have also rocked US companies. My colleague Martha Muir reported the Trump administration’s cuts to the clean energy industry have caused 20,000 job losses in the US and threatened almost $70bn in project investments.

Trump’s tariffs have threatened the renewable energy industry, especially the battery storage sector, which relies heavily on Chinese imports.

Today we take a closer look at the US energy storage industry’s $100bn pledge to manufacture and buy American-made batteries, which it expects to meet 100 per cent of domestic energy storage demand by 2030. But some industry experts say five years and $100bn is not enough time or money for a sector that faces an existential threat from tariffs and policy uncertainty.

Programming note: We’re taking a short break for the May 5 UK bank holiday. Energy Source will be back in your inbox next Thursday.

Is $100bn enough to power the US battery boom?

Donald Trump’s trade war and efforts to limit renewable energy development pose a threat to the US battery boom, which has been crucial to helping meet surging electricity demand from artificial intelligence.

The US has seen an explosion in battery deployment on its electricity grid, thanks to federal tax credits in the Inflation Reduction Act. The energy storage industry, which is dependent on imports from China, has helped meet power demand by storing renewable generation during times of excess and discharging it when supply drops.

Trump’s “reciprocal” tariffs and calls to repeal the IRA tax credits threaten to put an end to the industry’s rapid expansion. BloombergNEF estimated the president’s China tariffs will impose a 156 per cent duty on energy storage imports and “devastate” the sector.

On Tuesday, American Clean Power, the clean energy industry trade group, announced a $100bn commitment on behalf of the energy storage industry to manufacture and buy US-made batteries with the aim of meeting 100 per cent of domestic energy storage demand by 2030.

The announcement includes about $10bn to $15bn of previously announced active investments as well as an additional $85bn to $90bn of new commitments from manufacturers and buyers of grid batteries. The ACP said the investment is contingent on “stable tax and trade policy”.

But the endeavour will be hard to achieve as US battery makers — still in their infancy — struggle to compete with China, which produces nearly 90 per cent of the world’s batteries for energy storage systems at a fraction of the cost.

Wood Mackenzie estimated only 30 per cent to 40 per cent of US domestic energy storage demand will be met by American-made batteries by 2030.

Yayoi Sekine, BloombergNEF’s head of energy storage, said: “The US doesn’t currently have enough battery cell manufacturing capacity to meet domestic demand, and isn’t expected to ramp up enough even with existing facilities and plans in the works.”

The industry faces fierce competition from China, which is much further along in its battery manufacturing process and has years of experience perfecting and scaling the technology. Five years may not be enough time to compete with China.

Robert Greskowiak, chief commercial officer at energy storage developer Lightshift Energy, said the cost of US-made battery components is more expensive than international products. He added 100 per cent of the battery cells and containers that Lightshift purchased in 2024 were sourced from China.

“The reality, though, is domestic [battery] manufacturing in the US today is very limited in supply,” Greskowiak said. “These supply chains just take time to set up and so that’s been in progress, but we’re not there yet.”

US battery makers have faced delays and cancellations because of tough market conditions and the lack of competitiveness with China. Kore Power and Freyr Battery cancelled battery plant projects this year in Arizona and Georgia, respectively.

Alexei Andreev, co-founder of venture capital firm Autotech Ventures, said it would require “enormous heavy lifting” for the US to start manufacturing its own battery cells because the country would have to start from “scratch”.

“There is a lot of engineering knowhow and so it’s one thing to produce a few cells here and there,” Andreev said. “It’s a completely different story to have high-yielding low-cost, very repeatable manufacturing flow.”

Attempts from Chinese battery makers to localise US production, however, have become a political flashpoint in US-China relations. Gotion, a Chinese battery company that was scheduled to build a $2.4bn factory in Michigan, has sued the local government for allegedly halting the development of the plant.

American Battery Factory, which aimed to build the country’s largest battery gigafactory in Arizona, had delayed its launch and recently announced it would partner with Chinese company KAN Battery to develop a pilot line of battery cells.

John Kem, the president of American Battery Factory, said at the time of the announcement that the US was “10 years behind the leaders of battery cell production”. He added that in order to develop a domestic supply chain, “we must work together with the best in the world”.

Some analysts and industry experts have also said $100bn may not be enough to jump-start the industry in the US.

Mujeeb Ijaz, founder and chief executive of battery manufacturer Our Next Energy, which has invested $1.6bn to build a factory in Michigan, said establishing domestic battery manufacturing is going to “take a lot more than $100bn”.

Andrew Waranch, chief executive of battery energy storage system Spearmint Energy, agreed.

“I don’t think that $100bn is enough,” he said. “The $100bn doesn’t go far if you’ve got to build all parts of the supply chain at once.”

China committed about $100bn in energy storage and electric vehicle battery investments in the past two years, compared to only $44bn that had been announced over the past two years in the US, according to Wood Mackenzie.

While tariffs may help level the pricing between domestic products and imports, many US manufacturers import raw materials. Higher prices are also leading developers to rethink their balance sheets and building plans.

Waranch said the tariffs, if implemented, will raise prices and cause the company to downsize their plans to build battery storage systems. More than 90 per cent of the batteries his company used are made outside the US.

“The tariffs, at least when it comes to batteries and renewable energy, are rather harmful,” he added.

The American Clean Power Association said the plan for US-made batteries to meet 100 per cent of domestic energy storage is feasible so long as it is supported by “stable tax and trade policy” and “streamlined” permitting.

A person familiar with industry efforts around manufacturing and deployment said the organisation’s goal is also contingent on the industry’s removal from “reciprocal” tariffs.

Political support is crucial for scaling the industry. Projects are contingent on federal tax credits in the IRA, which Trump vowed to “terminate” on the campaign trail and is currently on the chopping block as Republicans draft a budget in Congress.

Pensions and endowments turn to ‘net asset value’ loans to fund cash payouts as deal markets seize up

Large pension funds and other big institutional investors have started to borrow against their private equity portfolios to raise cash after a slowdown in dealmaking activity and public offerings has dimmed their hopes of exiting trillions of dollars in ageing deals.

Investors have begun to turn to so-called net asset value loans in recent months to boost liquidity at a time when big chunks of their portfolio are locked up in private equity, venture capital and property assets that have returned very little cash, according to people involved in the deals.

The tactic, in which borrowers pledge their fund stakes as collateral for loans, is mostly used by private equity groups to unearth cash to fund acquisitions or dividends. However it is being adopted by investors in buyout funds as a way to generate cash without fire selling assets at unfavourable prices.

Investors in private equity are short on cash because distributions paid by their funds over the past three years are about half of historical averages, causing the stockpile of unsold private equity deals to hit a record $3tn last year. There is now a $400bn-to-$500bn shortfall of cash that should have been returned to investors, according to Cambridge Associates.

At the start of the year, dealmakers were forecasting a rebound in M&A and public offerings that would cut into the stockpile. Donald Trump’s trade war, however, has frozen activity and private equity executives are now predicting IPOs could be on pause through this year.

“It’s not like suddenly flicking a switch,” said Michael Hacker, the global head of portfolio finance and partner on the secondaries team at Carlyle AlpInvest. “A lot of the current market activity has been in the works in one way or another going back to last year when a lot of the projected exit activity didn’t materialise.”

NAV loans are often considered as an alternative to selling private equity stakes on the secondary markets, another route that investors have taken to raise cash in recent months. By borrowing instead, investors can get cash without selling their stakes at a discount and realising a loss.

The loans are typically for four or five years and have loan-to-value ratios of about 20 per cent, causing buyers like insurance companies and private credit funds to deem them safe assets.

NAV loans are controversial on Wall Street because they require investors to cross-collateralise their fund assets: in essence, to secure a loan with a broad pool of assets, putting their entire fund investments at risk. Last year, an industry trade body issued guidelines surrounding the use of NAV loans to pay dividends after the Financial Times reported on the growing use of the tactic.

Niche player 17 Capital and bigger firms Carlyle and Ares Management are among the most active providers of NAV loans.

Investors first started taking out NAV loans a couple of years ago, as the use of financial engineering tools like fund securitisations became a more mainstream way to extract cash from the logjam of unsold assets.

Other investors that have taken out NAV loans are family offices and sovereign wealth funds, according to people involved in the deals. So far, the biggest loans have reached around $800mn in size, although people familiar with pending transactions said that they will soon eclipse $1bn in size.

“It’s a liquidity management tool that not everybody is using, but the largest, more sophisticated limited partners are using to help manage their balance sheet,” said one lender who has provided financing for these loans. 

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While not discussing the acquisition of Versace, Prada Group CEO Andrea Guerra highlighted untapped potential for both Prada and Miu Miu, whose sales rose 60 percent in the first quarter of 2025.

MILAN — While reporting a 13 percent increase in revenues for Prada Group in the first quarter of the year, Andrea Guerra characterized the industry overall as being “in a reshuffle mode that is not close to being finished. I think it will take another 12 months, probably, to see something different.”

For this reason, the group’s chief executive officer believes “this is a period where we can win market share with a great performance, because we have stability on one side, and we are full of creativity on the other side. So I think that stability nowadays is a very positive signal.”

Addressing analysts during a conference call on Wednesday, Guerra said that “normally, the first three, four months of the year are the most delicate ones from a psychological point of view.” He admitted he was pleased with group revenues that rose to 1.34 billion euros compared with 1.19 billion euros in the first quarter last year, but he was cautious about “a market that is not easy.”

He defined 2025 “a very peculiar and very complicated year. We are finding our own ways, and we will continue to fight. We will continue to remain in a positive environment for both brands. But for sure, the last almost 24 months have not been easy, and recently, I would say that maybe we have reached the lowest plateau. We continue nurturing creativity, motivating our people to keep on with this positive double-digit growth.”

The Prada brand’s retail sales were relatively flat at 827 million euros compared with 826 million euros last year, characterized as “a resilient performance against the highest quarterly comps of 2024,” which are expected to ease slightly in the second half of the year, said chief financial officer Andrea Bonini.

Miu Miu‘s sales climbed 60 percent at constant exchange rates to 377 million euros, growing across categories and regions.

Asked to comment on potential overlaps and synergies, Guerra said “we are managing the two brands totally independently. Between all brands in the universe, there are some overlaps, obviously. By growing, Miu Miu has gained market share on everyone in the market. Some brands more, some brands less. And I would say that Prada has been one of the less. Having said so, consumers are free to do whatever they want. We are constantly nurturing brand by brand and inside the brand their consumer segments by their sub-consumer segments. And we are not [having] any thoughts on cross-branding, on overlapping or anything like that. That will never be the case.”

Responding to another question about the two brands, now that the balance between them has changed, the executive said Miu Miu “still is learning a lot from Prada. And there are so many things we can do with Miu Miu because Prada is there.”

Analysts did not ask any question about Versace, the third major brand that is expected to join the group, which also comprises the smaller Church’s and Car Shoe labels.

On April 10, Prada said it is acquiring Versace from Capri Holdings for 1.25 billion euros, with the closing expected in the second half of 2025 upon regulatory approvals.

As for the first-quarter results, group retail sales rose 13 percent to 1.21 billion euros, driven by like-for-like, full-price sales.

Wholesale revenues were up 7 percent to 96 million euros and royalties grew 15 percent to 29 million euros.

While not taking part in the conference call, Patrizio Bertelli, group chairman and executive director, said in a statement that, “We are pleased with another quarter of solid performance. In an increasingly turbulent and uncertain landscape, we continued to execute with confidence and discipline, leveraging creativity and the strength of our organization.”

Agility and flexibility are key in this environment, but “at the same time, we believe it is essential to continue to invest with a long-term mindset, preserving and developing craftsmanship and know-how, supporting our partners and strengthening our infrastructure,” he concluded.

Guerra said Prada’s resilience lay in “a well-balanced product category mix,” and cited the opening in the quarter of the brand’s first stand-alone dining space in Asia at Rong Zhai, its restored historical mansion and art space in downtown Shanghai. “A kind of melting pot of architecture and gastronomic offer between Milan and Shanghai,” the project was conceived by renowned arthouse director Wong Kar Wai. There also was the opening of a Prada Caffè in Singapore.

The Prada brand “continues on its journey of cultural innovation and after a very long temporary gastronomic offer in Harrods,” Guerra said. Rong Zhai, he continued, “is a cultural landmark and it has become the brand’s epicenter in China, with a section dedicated to Fondazione Prada, a section dedicated to the ultimate experience of our clients, and a section in the garden dedicated to the gastronomic experience. I think that this is a big step forward and allows everybody to touch our intentions, our objective, our ambition, to constantly carve society culture with our actions.”

The Chinese cluster remains volatile and back to a single-digit decline against double-digit growth in the fourth quarter and, while offshore spend amounts to 30 percent of the total, it’s still positive and Chinese tourists are “more visible in Europe,” Guerra said.

Speaking about the U.S., he said Prada “can continue to be stable. Every week, every day is a different story, with [ongoing] changes in the region. I think that we have been opening a kind of new era for Prada in the U.S., and this is what we’re trying to do. It’s not easy to comment on today, to be honest, not easy at all and I think the second quarter is still complicated for Prada.”

Prada unveiled a menswear store on New York’s Fifth Avenue, reflecting continuous investments in North America, Guerra said.

At Miu Miu, leather goods remained the fastest-growing category, supported by the spring 2025 campaign celebrating the brand’s signature Matelassé line. Among the highlights of the quarter, the group mentioned the launch of Miu Miu Gymnasium sport-inspired pop-ups and the unveiling of the Miu Miu Custom Studio project. This, said Guerra, “is another step forward in Miu Miu to be part of a larger and stronger community,” helping to interact with it and delivering unique products. The reaction has been very positive “and we are very happy about it,” he enthused.

Responding to a question, Guerra was wary of talking about leather goods icons at Miu Miu. “It’s very complicated. I think that there are some spectacular, successful lines, which I hope will become icons in time. So we are nurturing them, we are cultivating them. We’re working on them,” he said, citing the Wander and the Arcadie models, among others. “We’re doing our best in that I think that we are recapturing our fair market share in leather goods with Miu Miu.”

Guerra said the refurbishing and reopening of the brand’s SoHo store was met with “great success,” and that the company is “heavily working” to expand the brand in the 2026-28 period in North America. ”The perception and request is very high, and we see it online every day.”

In February, Silvia Onofri joined Miu Miu from Napapijri, under the VF Corp. umbrella, as its new CEO.

Group sales in Asia-Pacific increased 10 percent to 438 million euros, despite a challenging comparison base and broadly unchanged market conditions in the region.

Guerra enthused about the new Miu Miu store that just opened at SKP in Wuhan, the brand’s largest in China so far, which had “an unbelievably strong first week.” The outlook is “very positive about the long term future of the region.”

Second-half figures in China are expected to be better because comps are easier, he said, although the Chinese cluster continues to be “volatile.” He added that he hoped “some of the governmental policies will modify a little bit the consumer mood and allow people to spend a little bit more money and save less, but I don’t see today any kind of change. Let’s see.”

Europe was up 13 percent to 334 million euros, lifted by both domestic and tourist spending.

Sales in the Americas rose 11 percent to 201 million euros, despite increased volatility during the period, and boosted by local demand. “We think the impact of a weaker dollar and recent uncertainty may be more visible going forward,” Guerra said.

Asian sourcing is extremely low and, when asked about potential price increases in the States in light of U.S. President Donald Trump’s tariffs, the “maintenance type of increases [of around 2 to 4 percent] would be enough to compensate. But the point is, the impact that matters the most, and it’s harder to quantify, is the one on consumer confidence in the mid- to long-term, on the U.S. economy,” Guerra said. “By June, we will understand what happens with tariffs and what we need to do. We will have to do certain things on pricing, for sure, but I do not know exactly the amount today.”

Japan continued to grow and sales in the region were up 19 percent to 172 million euros, although the increase showed progressive moderation and is expected to continue, said Bonini, “as we saw extraordinary growth over the first half of 2024 driven by local consumption, but also very, very significant touristic flows.”

The Middle East ended the quarter as the best-performing region, with retail sales up 31 percent to 70 million euros.

Thomas Chauvet at Citi said “all stars still seem aligned for Prada.”

The analyst underscored the group was “the fastest-growing luxury company this quarter,” beating a consensus of a 12 percent increase. However, “it was a mixed bag between Miu Miu and Prada” as the former’s growth normalization is not clearly visible yet, while Prada brand’s deceleration in the quarter “was a bit worse-than-feared,” against the toughest comparative of 2024, up 7 percent and up 4 percent in the fourth quarter.

At Bernstein, Luca Solca said the Prada brand’s flat organic growth in the first quarter suggested that “much of this weakness can be blamed on a pull-back in local spending by Chinese nationals.”

Solca believes other nationalities “are at risk of deteriorating further” in the second quarter given the macroeconomic uncertainty and U.S. tariffs “weighing on consumer feel-good and hence luxury spending.” With a scenario that is deteriorating, “slowing growth at Prada and eventually Miu Miu increases the risk of operating deleverage, just as management picks up Versace in the second half, which will be another source of margin dilution.”

Meta has updated the privacy policy for its AI glasses, Ray-Ban Meta, giving the tech giant more power over what data it can store and use to train its AI models.

The company emailed Ray-Ban Meta owners on Tuesday with a notice that AI features will now be enabled on the glasses by default, according to The Verge. This means Meta’s AI will analyze photos and videos taken with the glasses while certain AI features are switched on. Meta will also store customers’ voice recordings to improve its products, without an option to opt out.

To be clear, Ray-Ban Meta glasses are not constantly recording and storing everything around the wearer. The device only stores speech that the user says after the “Hey Meta” wake word.

Meta’s privacy notice on voice services for wearables says that voice transcripts and recordings can be stored for “up to one year to help improve Meta’s products.” If a customer doesn’t want Meta to train its AI on their voice, they will have to manually delete each recording from the Ray-Ban Meta companion app.

The change in terms is along the lines of Amazon’s recent policy change affecting Echo users. As of last month, Amazon will run all Echo commands through the cloud, removing the more privacy-friendly option to process voice data locally.

Companies like Meta and Amazon are eager to hoard these heaps of voice recordings because they are useful training data for their generative AI products. With a wider range of audio recordings, Meta’s AI can possibly do a better job at processing different accents, dialects, and patterns of speech.

But improving its AI comes at the expense of user privacy. A user may not understand that if they use their Ray-Ban Meta glasses out of the box to photograph a loved one, that person’s face may find its way into Meta’s training data, for example. The AI models behind these products require obscene amounts of content, and it benefits companies to train their AI on the data that their users are already producing.

Meta’s hoarding of user data is not new. Already, the company trains its Llama AI models on public posts that American users share on Facebook and Instagram.