FT : Clean hydrogen investment tops $110bn to defy industry pessimism

Clean hydrogen investment tops $110bn to defy industry pessimism
Money flowing into green and blue hydrogen projects rises $35bn in the past year

Over $110bn is being invested in more than 500 clean hydrogen projects worldwide, according to a new report that pushes back against growing scepticism about the fuel’s future after a wave of high-profile cancellations.

The study, commissioned by the Hydrogen Council, found that $35bn of new projects had reached a final investment decision over the past year, and that pledged investment has been growing at more than 50 per cent annually since 2020.

“The pendulum has been swinging between exuberant enthusiasm — or hype — and doom and gloom,” said Ivana Jemelkova, the lobby group’s chief executive. “If you tell me hydrogen is dead, I can show you 500-plus examples that it’s not.”

The promise of hydrogen, an alternative to oil and gas that produces only water vapour when it burns, peaked in 2022, when the EU forecast that renewable hydrogen would cover one-tenth of the bloc’s energy needs by 2050, turning its industry and transport system green. 

The gas is widely used in refineries, in making fertiliser, and can power steel furnaces, heavy machinery and vehicles. But producing, storing and transporting it remains expensive and technically difficult. Demand has been limited at current prices, which vary by individual project.

And while at least 50 projects have been abandoned over the past 18 months by groups such as BP, Shell, ArcelorMittal and Iberdrola, Jemelkova said this did not reflect a broader slowdown.

“The industry is growing through the process of natural attrition — it’s normal. It was the same in solar,” she said. 

China and the US account for more than half of the $110bn so far invested. Beijing has prioritised “green” hydrogen, which uses renewable electricity to split water molecules, while Washington has focused on “blue” hydrogen, derived from gas with carbon emissions captured and stored.

In total, there is now 1mn tonnes of hydrogen capacity in operation and another 5mn tonnes under construction, equivalent to about half of current US consumption.

“It’s far lower than people had expected,” said Sanjiv Lamba, chief executive of industrial gas group Linde and Hydrogen Council co-chair, but it did show that “projects at scale, which are there to meet demand” can be competitive. 

Much of the new investment in the past year stemmed from a few mega projects, including four large Chinese plants under construction, Blue Point in the US, and that being developed by India’s Hygenco and Ameropa of Switzerland. 

“We’re seeing projects that are a bit more serious, which are bigger, which are supported by the strongest technologies,” said Pierre-Etienne Franc, head of asset manager Hy24, which has invested $2bn in clean hydrogen.

“Developers have disappeared, some gigantic projects have disappeared as well. But if you really look at the figures, they’re far better than what people were saying on the market.”

Franc said that growth, and the focus of his investment, was increasingly in Asia, the Middle East and the US, while Europe was lagging. “If Europe doesn’t get its act together then it’s going to be closed,” he said, echoing widespread criticism of the EU’s regulatory approach.

Lamba said Europe was being held back by a “lack of pragmatism” and its refusal to consider blue hydrogen as a lower-cost transitional option.

One of the largest proposed blue hydrogen projects is ExxonMobil’s plant at Baytown in Texas, but the company has yet to take a final investment decision. “We’re concerned about the development of a broader market,” Exxon chief Darren Wood told analysts last month. “If we can’t see an eventual path to a market-driven business, we won’t move forward with the project.”

FT : BYD predicts car brand clearout in China as Beijing cracks down on discount

BYD predicts car brand clearout in China as Beijing cracks down on discounting
About 100 automakers need to be ‘pushed out’, says world’s largest electric-vehicle producer

BYD has predicted a bloodbath in the Chinese car industry in the wake of Beijing’s crackdown on aggressive discounts, warning that roughly 100 carmakers needed to be “pushed out” of the hyper-competitive market.

China’s car industry has been at the forefront of President Xi Jinping’s attacks on cut-throat price wars stemming from excessive manufacturing capacity.

Government officials have blamed aggressive discounting, known as neijuan or “involution”, in various industries for exacerbating deflation.

Without the ability to offer discounts to attract customers, “some of the original equipment makers will be pushed out”, said Stella Li, BYD’s executive vice-president, on the sidelines of the Munich motor show. “Even 20 OEMs is too much.”

Until now, about 130 manufacturers have jostled to capture share in the world’s largest car market for pure battery electric vehicles and plug-in hybrids.

However, Li and other global car executives are now forecasting a drop in the number of companies, following a remarkable period of rapid sales growth and a decline in prices of electric vehicles made in China.

Of the 129 brands selling EVs and hybrids in 2024, consulting firm AlixPartners estimates that 15 will remain financially viable by 2030. BYD rival Xpeng has previously predicted the world’s car industry will shrink to only 10 companies over the coming decade.

Li said BYD would benefit from reduced price competition, arguing that customers would be more likely to choose cars based on other criteria such as technology and driving experience.

However, BYD, which competes with Tesla for the crown of world’s largest electric-vehicle manufacturer, was not completely shielded from the domestic pressures created by the government, according to analysts. 

The group reported lower than expected net profit and revenues for the second quarter, hit by Beijing’s crackdown on long-term supplier payment practices and discounting.

Citi has slashed its forecasts for BYD’s annual sales — from expectations of 5.8mn cars this year, 7.2mn next year and 8.4mn in 2027 — to 4.6mn, 5.4mn and 6mn, respectively. That compares with sales of 4.3mn units last year.

Li played down concerns about the government campaign’s longer-term impact on BYD’s performance but acknowledged that more Chinese companies were likely to seek growth overseas as intense competition in the domestic market persists.

“I think our profit will still remain strong,” said Li. “I think you will see more Chinese companies come overseas, but the overseas market is not that simple.”

BYD and other Chinese brands have been rapidly expanding their sales in the UK and other European markets by offering affordable EVs and plug-in hybrids with advanced software and other technologies. State-owned Changan has also recently launched in the UK as part of its overseas push.

Li said BYD remained on track to start manufacturing vehicles in Europe through its plant in Hungary from later this year, although scaling up production will take longer.

In a separate interview, Tianshu Xin, who heads the joint venture between Chinese EV start-up Leapmotor and Stellantis, said the company was not in any rush to localise production in Europe despite Brussels’ higher tariffs on imports of electric vehicles made in China.

Leapmotor is considering producing its B10 electric sport utility vehicle at a Stellantis plant in Spain but Xin said the company was able to sell vehicles made in China at competitive prices as it was able to use Stellantis supplier and dealer networks.

Producing cars in Europe was “super complicated”, Xin said. “The [labour] cost is so high and the energy is so high.”

>>> US After Hours Summary: NBIS +51.4% on AI infrastructure deal with Microsoft

After Hours Summary: NBIS +51.4% on AI infrastructure deal with Microsoft; AVO +4.5% on earnings; CASY -1% on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: AVO +4.5%, YEXT +2.8%

Companies trading higher in after hours in reaction to news: NBIS +51.4% (to deliver AI infrastructure to Microsoft), WOLF +28.2% (Court approves plan of reorganization), RAPP +2.5% (announces proposed public offering), NEXT +2.3% (executes sale and purchase agreement with COP), NG +2.2% (drilling results), NXT +2% (acquires Origami Solar), FLR +1.5% (awarded a position on the Cooperative Threat Reduction Integrating Contract (CTRIC) IV), ALNY +0.4% (commences private offering), RAIL +0.4% (adopts limited duration stockholder rights plan), DRS +0.3% (launches new product line of high-performance AI-enabled Ground Vehicle Architecture Smart Display system), PTEN +0.2% (reports August rig data)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MAMA -4.9%, CASY -1%

Companies trading lower in after hours in reaction to news: PL -15.7% (announces proposed private offering), AIRO -11.2% (launches public offering of common stock), CHPT -4.8% (files for $400 mln mixed securities shelf offering), DOOO -2.4% (enters into agreement with BMO Capital Markets), NWSA -1.7% (announces resolution of Murdoch Family Trust), DELL -1.7% (announces CFO transition), RARE -1.6% (announces data from Phase 3 Study), SPAI -1.2% (files for common stock offering by selling shareholders), T -0.5% (provides details on fireside chat), ASR -0.1% (announces passenger traffic for August), EQT -0.1% (sale and purchase agreement with Commonwealth LNG), CNI -0.1% (expands firefighting capabilities)

WSJ : SpaceX’s $17 Billion Deal Plunges Musk Deeper Into Wireless Market

SpaceX’s $17 Billion Deal Plunges Musk Deeper Into Wireless Market
Deal with EchoStar could help the Elon Musk-led company carve out a bigger role in the cellphone market

  • SpaceX will pay EchoStar $17 billion for rights to use its spectrum for cellphone service, enhancing Starlink’s connectivity.
  • The deal includes $8.5 billion in cash and up to $8.5 billion in stock, plus $2 billion for EchoStar’s debt interest.
  • EchoStar’s spectrum deals follow FCC pressure to compete, with AT&T also buying spectrum to improve cellphone service.

Elon Musk’s SpaceX is writing its biggest check ever to expand its foothold in the mobile-phone business.

SpaceX said Monday it would pay $17 billion for the rights to use some of EchoStar’s SATS 15.33%increase; green up pointing triangle valuable spectrum for cellphone service.

The deal with EchoStar includes $8.5 billion in cash and up to $8.5 billion of SpaceX stock for two chunks of valuable U.S. wireless licenses and related domestic and international rights to beam signals from space. The rocket and satellite-internet company also agreed to pay about $2 billion of cash toward interest payments on EchoStar debt through November 2027.

SpaceX is already a growing home broadband provider through its Starlink business and has dipped into the mobile-phone sector through a U.S. partnership with T-Mobile. However, the new spectrum rights would significantly improve Starlink’s ability to connect with cellphones in remote areas beyond the reach of cellphone towers.

SpaceX said it would use the spectrum as a foundation for Starlink’s direct-to-cell business around the globe. It could also share spectrum with telecom partners.

The most valuable piece of the deal covers two license blocks that allow a carrier to provide ground-based 5G cellphone and broadband service in the U.S.

T-Mobile is in talks to lease some of the spectrum rights that SpaceX plans to acquire, according to people familiar with the matter.

EchoStar’s latest spectrum deals respond to pressure from the Federal Communications Commission, which threatened in May to strip some of its valuable spectrum rights. FCC Chairman Brendan Carr said in a letter to EchoStar that it wasn’t effectively competing with the big three wireless carriers using the wireless licenses at its disposal.

The threat prompted a whirlwind of deal talks with multiple telecom and satellite companies, including T-Mobile and Verizon.

AT&T was the first spectrum buyer out of the gate with an agreement to spend about $23 billion to buy other chunks of cellphone spectrum rights from EchoStar to improve its traditional cellphone service from the ground. The Dallas telecom giant’s chief executive, John Stankey, called the deal “an opportunistic and pre-emptive asset acquisition.”

EchoStar said Monday it expects the new SpaceX deal and the earlier spectrum sale will resolve the FCC’s inquiries. It plans to use proceeds from the deals to retire debt and fund operations.

Shares in EchoStar surged around 17% in Monday trading. If those gains hold, the stock will have roughly tripled in value in recent weeks. Shares in carriers including T-Mobile, AT&T and Verizon declined to start the week.

The deal with EchoStar is the largest ever struck by SpaceX, which Musk founded more than two decades ago.

Space and telecom executives have been debating the opportunity represented by connecting mobile phones and other devices through satellites over the past few years. Besides SpaceX, the idea has drawn in heavyweights, including Apple, as well as newer companies like AST SpaceMobile and Lynk Global.

SpaceX has already deployed the largest satellite-internet constellation in low-Earth-orbit with Starlink, which now consists of more than 8,000 satellites. The spacecraft have powered Starlink’s expansion around the world, giving SpaceX a growing revenue source.

Musk said last year that Starlink would strike partnerships with other cellphone carriers around the world to provide links on cellphones. But those deals require painstaking planning with both wireless companies and their national regulators in each country.

Some of the spectrum SpaceX is set to acquire would give the company the ability to directly connect consumers’ phones. SpaceX said in its statement Monday that it remained committed to working with network operators around the world.

EchoStar said Monday that cellphone users on its Boost Mobile service would benefit from a “long-term commercial agreement” to connect to Starlink’s satellites in remote areas, ending the period of U.S. exclusivity that T-Mobile has marketed as a selling point for its wireless plans.

The deal requires U.S. officials’ approval. And its complex nature could still cause problems. A separate EchoStar plan to merge the Dish Network pay-TV unit with rival DirecTV fell apart last year after some bondholders balked at a debt-swap deal tied to the transaction.

The agreement also unravels a direct-to-device satellite constellation that EchoStar said in August it would develop. The company selected Canada-based MDA Space to build those satellites, but terminated the arrangement.

Mike Greenley, CEO at MDA, on an investor call Monday said EchoStar’s plans had changed in a sudden and drastic way. MDA is due contract-termination fees and costs, he said.

The Information : In Munich, a Bolder CATL Doubles Down on Good-Enough Batteries

In Munich, a Bolder CATL Doubles Down on Good-Enough Batteries

For years, Western battery startups using exotic materials have promised outsize driving range and charging speed, all at a good price. None has reached commercial production, and an increasing number have failed.

Not to fret, China’s battery colossus, CATL, seemed to say on Sunday. CATL is steadily improving its tried-and-true battery, which will more than satisfy the auto industry’s needs.

In a presentation ahead of this week’s opening of Europe’s largest auto show, held in Munich, CATL doubled down on its “good enough” battery, made of cheap materials like lithium, iron and phosphate.

Lingbo Zhu, chief technology officer of CATL’s international business unit, said the company is using LFP in a new battery, the Shenxing Pro, which he said would deliver almost 400 miles of driving range. When the battery is running out of juice, a driver could add 210 miles of more range in 20 minutes, he said.

Most importantly, he claimed, the Shenxing Pro is ultrasafe. If a cell shorts in a Shenxing battery pack, he said, any resulting fire would be contained, and not spread immediately to other cells, giving emergency crews time to contain it.

CATL officials at the presentation said the Shenxing is exactly what is needed now, on the cusp of widely deployed EVs that drivers can operate with no hands on the wheel or eyes on the road. This move to more fully autonomous cars, they argued, may shift the responsibility for accidents and other problems from the driver to the system. Since there is no driver, the maker of the battery could be held responsible in a lawsuit. But the Shenxing “is safe enough, good enough, fit for purpose now and the future,” Lingbo said.

CATL, which sells 38% of the world’s lithium-ion batteries, said it was shifting from solely exporting batteries from China, and would make the Shenxing and other batteries in Europe, where it has three factories. The company said it was also shifting from only selling cells to the arguably more profitable business of producing full battery packs for consumers and commercial businesses.

Those moves seemed likely to add to CATL’s dominance, making the presentation a shot over the bow of U.S. and European battery startups, most of which have hit hard times. Last week, California-based sodium-ion battery developer Natron Energy closed its doors; last month, bankrupt European battery champion Northvolt sold itself for pennies on the dollar to Lyten, a California-based battery startup minnow. Norway-based Freyr Battery has started to sell off its production equipment, and has remade itself into a solar panel assembly company.

I went to see the CATL presentation as a flood of Chinese car, battery, software and component companies poured into Munich for this week’s event. Volkswagen, BMW, Mercedes-Benz, Volkswagen and other European automakers are also heavily represented and will attempt to show that they can stand out against the Chinese competition.

Battery veterans I contacted were surprised at the Shenxing Pro’s monstrous size—122 kilowatt-hours, or roughly twice the size of most LFP batteries. The Tesla Model Y SUV and Model 3 sedan made outside the U.S., for example, use 60 kWh LFP batteries.

By supersizing the battery, CATL appeared to be moving to expand LFP into the premium car and pickup truck segments. That would be a step up for LFP batteries, which are typically cheaper but provide less range than the nickel-based batteries used in most Western-made EVs.

But over the last few years, CATL and the industry’s No. 2 battery maker—China’s BYD—have steadily tweaked the chemistry so that nickel-based batteries appear to be at risk of severe marginalization.

In just one innovation, Zhu said CATL had so tightly packed the LFP cells into the pack that it achieved 76% design efficiency, meaning that it had just 24% dead space containing electronics, mountings, a battery management system—the stuff that prevents a fire.

That is extremely high efficiency—a more typical number is in the 60s. But the moves that CATL has made to make the battery safer appear to allow a much tighter pack.

This is the third version of the Shenxing. In April, CATL, announcing a second generation of the battery, startled the industry by saying it could add roughly 200 miles of charge in five minutes. That was three times faster than the quickest charge currently available in Western-made models. But by configuring the battery for such fast charging, the battery sacrifices the kind of range CATL is offering in the latest version.

If all the claims made then and on Sunday are true, what is missing is a commercial order. After the presentation, I asked a company spokesperson whether any automaker had committed to using the battery. He said none had, but that CATL was ready to work with any of them to co-develop one. “That’s how it’s done,” he said.

>>> US Early premarket gappers

Early premarket gappers
  • Gapping up:
    • RAPP +165.5%, SATS +35.5%, PLCE +12.5%, IDYA +10.8%, APP +7.7%, HOOD +7.6%, ALKS +6.9%, PLBY +6.9%, USAS +6.2%, HSAI +6%, DBVT +4.8%, HIVE +2.8%, NUVB +2.6%, EME +2.5%, NRGV +2.4%, PAAS +1.8%, IREN +1.6%, ACGL +1.1%, CTRI +1%, NGD +1%, EC +1%, CRNC +0.9%
  • Gapping down:
    • SMMT -23.2%, NFE -15.1%, TONX -12%, KGS -1.2%, ONDS -1.1%, AZN -0.7%, NUVL -0.7%, ALC -0.6%