TheChek News Flow

The investor behind TaylorMade and Tiger Woods’s new Sun Day Red line is making an unlikely, $2 billion bet on the golf boom. Will it pay off?

He manages assets worth billions of dollars, controls one of the most recognizable sports brands and does business with some of the world’s best golfers: Scottie Scheffler, Rory McIlroy, even Tiger Woods.

But even Jinhyeok Jeong says people are surprised when they meet the chairman of TaylorMade Golf and find themselves shaking hands with a young Korean guy.

“When they look at my skills at golf,” he says, “they’re even more surprised.”

There might not be anybody in golf in a more surprising position of influence these days than this 39-year-old investor based in South Korea who picked up his first set of clubs a few years ago and now owns an iconic American equipment maker.

Jeong is the founder and chief executive of Centroid Investment Partners, a private-equity firm that came out of nowhere and paid $1.7 billion to buy TaylorMade in 2021, which was a bit like some unknown amateur showing up at Augusta National Golf Club this weekend and winning the Masters.

The deal made his Korean investment company that was completely unfamiliar to almost everyone in the golf world one of the sport’s biggest and unlikeliest players.

The whole thing is so improbable that even the people closest to Jeong struggle to wrap their minds around it. When he took a picture with George W. Bush at the 2022 Presidents Cup in North Carolina, he texted it to his parents only for them to be totally baffled. “My mom told me: Why did you send me a photo with a doll?” he said. It didn’t occur to them that their son might actually be hanging out with an American president. They thought he was posing with a mannequin.

Their heads might really explode if they saw a photo of Jeong with TaylorMade’s most important partner.

When Tiger Woods recently decided to launch his own apparel line, he teamed up with TaylorMade on a premium lifestyle brand called Sun Day Red, a nod to the color that he wears for the final round of tournaments. The first products drop on May 1, but Woods has already replaced the Nike swoosh with his new logo: a tiger with 15 stripes—one for each of his major championships.

TaylorMade has spent nearly a half-century making drivers, woods and irons. So why is a company known for clubs now betting on clothing?

One reason is that golf is booming. The war between the PGA Tour and LIV Golf means the best golfers are getting paid more than ever. The rest of us are spending more money than ever. Over the past five years, worldwide sales of golf equipment are up 40% and golf apparel is up 21%, according to Golf Datatech, a Circana-owned research firm.

But there’s another reason that Centroid is bullish on golf. Jeong says he’s on the hunt for global companies with potential in Asia, where Centroid’s presence is a competitive advantage, and that describes TaylorMade to a tee.

The sport is thriving in America, but nowhere is the future of golf more promising than Korea. Even though it has fewer courses than Florida, Korea is now the world’s largest market for golf apparel. Not the largest per capita. The largest, period.

So it was fitting that Jeong was in Seoul and wearing a TaylorMade golf polo when I spoke with him. To understand Centroid’s investment thesis, all you had to do was look at him.

He believes that capitalizing on the opportunities in both the Korean market and the apparel business will make TaylorMade worth more than what he paid.

Like most golfers, Jeong loves the sport. Like most golfers, the sport does not love him back. But unlike most golfers with an 18-handicap, he owns the company that makes his driver. He says his firm has plowed roughly $2 billion into the sport to buy an operator of private courses across the U.S. and a Korean country club in addition to TaylorMade, which it could take public.

This is not the first time private equity has taken an interest in golf. It’s not even the first time private equity has taken over TaylorMade.

In 2017, Adidas dumped TaylorMade when it decided to get out of the golf business, and the New York-based private-equity firm KPS Capital Partners took over the company.

One of the first things KPS discovered when it studied consumer behavior is that people really, really care about the clubs their favorite golfers play with. With that in mind, TaylorMade made a series of crucial moves. It slashed the number of endorsement deals from more than 400 to fewer than 100 and targeted the select players who drive equipment sales. Woods plays with TaylorMade clubs, as do Scottie Scheffler and Nelly Korda, the No. 1 men’s and women’s golfers. It also pumped resources into developing a ball good enough for Rory McIlroy. It even shifted marketing dollars to dominate your Instagram feed and YouTube algorithm, where you click on one golf video and hours later you’re shelling out for new irons.

The timing of these decisions couldn’t have been any better, as the pandemic was the best thing for golf since Tiger himself. The boom produced more golfers, young golfers and women golfers. And people who started playing as an excuse to get outside haven’t stopped. There are more rounds of golf played in the U.S. today than ever before, which is remarkable, because there are more ways to play golf, like “screen golf” and Topgolf. In fact, America now has more off-course golfers than on-course golfers.

All of which made for a masterful turnaround.

KPS went from buying TaylorMade for $425 million to selling the company less than five years later to Centroid for $1.7 billion.

Before the TaylorMade deal, Centroid specialized in small buyouts of Korean companies, including a textile manufacturer and book distributor. It was founded in 2015 by Jeong, who dreamed of building “the KKR of Korea.” But at the time, it was barely known in Korea.

The idea of an obscure, inexperienced firm going from domestic buyouts to a major global acquisition was so implausible that investment bankers didn’t take Centroid seriously when it took aim at TaylorMade, said Kangmin Shin, the firm’s U.S.-based managing director. He couldn’t blame them.

“If I were one of those investment bankers, I would do the same,” Shin said. “It’s very unusual that a Korean-based private-equity firm is trying to take over a global company.”

Others were skeptical even after Centroid pulled off the deal. Before his first visit to the company’s Southern California headquarters, Jeong was in a nearby Dick’s Sporting Goods shopping for TaylorMade apparel when an employee told him the company had just been acquired by a Korean private-equity fund. “That’s me!” Jeong exclaimed. Sure, the Dick’s salesman said. So what do you really do for a living?

But one person who recognized Centroid as an extremely serious bidder was David Abeles, the CEO of TaylorMade. Centroid had reached out to him and expressed an interest in buying the company long before the company was officially for sale.

When it finally hit the market, Jeong brought in local investors and raised the funds to make an audacious offer for TaylorMade, which he felt was undervalued compared with the publicly traded parent companies of rivals Callaway and Titleist.

TaylorMade was sitting pretty on the fairway when Centroid invested, which meant Abeles and the company’s management could focus on growing the business. There was still plenty of room to grow. Jeong says apparel sales generated 2% of the company’s revenue at the time of the acquisition, but he believes that number can get closer to 30%. And the key to making that happen is the market he knows best.

Korea drove nearly half of golf’s worldwide apparel sales in 2022, according to Golf Datatech. Fashion is a part of golf in Korea the same way frustration is a part of golf everywhere. They may be playing on indoor simulators, but Korean golfers are willing to pay premium prices to look like they’re on the first tee at Augusta National. “They really love to show off what they are wearing,” Jeong said.

He’s banking on Sun Day Red’s expensive polos and fancy hoodies being huge in Korea when they hit Asia in the next two years.

By then, Jeong might even do the one thing he hasn’t done as the owner of a company in business with Tiger Woods: meet Tiger Woods.

Maybe his parents will actually believe him.

1. Cyera, $300M, cybersecurity: While it is true cybersecurity funding has significantly slowed, it certainly has not dried up. Data security startup Cyera raised a $300 million Series C led by Coatue at a $1.4 billion valuation. The round nearly triples the New York-based startup’s valuation from its $100 million Series B last June which valued it at $500 million. Founded in 2021, Cyera has raised $460 million to date, per the company. Cyera offers a platform that helps security teams at companies understand what data they have and how it’s used, as well as how to secure it — all of which has become more important with companies relying on data to drive AI initiatives. The startup also uses AI in its platform to assess risks a companies’ data represents regarding security, privacy and regulatory compliance.

2. Monad Labs, $225M, blockchain: New York-based Monad Labs locked up the biggest Web3 funding round of the year thus far, collecting a $225 million funding round led by Paradigm. Monad is a layer-1 blockchain that is compatible with the Ethereum Virtual Machine but can process transactions using the same set of rules faster. The round is reminiscent of the 2021-22 era when layer-1 protocols like Aptos Labs raised big. Founded in 2022, the company has raised $244 million, per Crunchbase.

3. Torl BioTherapeutics, $158M, biotech: It was just about a year ago that Los Angeles-based biopharmaceutical company Torl BioTherapeutics closed a $158 million Series B led by Goldman Sachs Asset Management. Well, the cancer-treating biotech is back this week after it closed a B-2 financing at another $158 million led by Deep Track Capital. The startup will use the new cash in the development of novel, antibody-based therapeutics to fight cancer. Founded in 2018, Torl has raised more than $350 million, per the company.

4. Guesty, $130M, hospitality: People love to travel and they seem to love to stay at short-term rentals. Guesty, a property management software platform for those rentals, raised a big $130 million Series F led by KKR India Asset Finance this week to help property managers keep up with that demand. The Covina, California-based startup operates in more than 80 countries and will use the fresh cash to continue its U.S. expansion. Founded in 2013, the company has raised nearly $411 million, per Crunchbase.

5. Platform Science, $125M, transportation: San Diego-based Platform Science, an edge application platform for transportation fleets, raised $125 million. The company did not name a lead investor, but investors in the round included Daimler Trucks and RyderVentures among others. The startup’s platform helps equip enterprise commercial fleets with mobile devices and applications for better flexibility, visibility and productivity. Founded in 2015, the company has raised nearly $323 million, per Crunchbase.

6. (tied) Collaborative Robotics, $100M, robotics: Santa Clara, California-based Collaborative Robotics locked up a $100 million Series B led by General Catalyst. Collaborative has raised over $140 million since being founded in 2022, per the company.

6. (tied) FloQast, $100M, accounting: Los Angeles-based FloQast, a finance and accounting operations platform, closed a $100 million Series E led by Iconiq Growth at a post-money valuation of $1.6 billion. Founded in 2013, the company has raised nearly $303 million, per Crunchbase.

6. (tied) Seaport Therapeutics, $100M, biotech: It is no surprise, as the dangers of depression and anxiety become more apparent in society, that more startups are looking to conquer the illnesses. Boston-based Seaport Therapeutics launched this week to do just that. The biotech startup raised a $100 million Series A co-led by Arch Venture Partners and Sofinnova Investments. The biotech company focuses on medicines for depression, anxiety and other neuropsychiatric disorders.

9. Nectero Medical, $96M, biotech: Tempe, Arizona-based Nectero Medical, a clinical-stage biotech startup developing therapies to treat aneurysmal disease, closed a $96 million Series D led by Norwest Venture Partners. Founded in 2017, the company has raised nearly $116 million, per Crunchbase.

10. Grow Therapy, $88M, healthcare: New York-based Grow Therapy, a software developer for the mental health industry, closed an $88 million Series C led by Sequoia Capital. Founded in 2020, the company has raised $178 million, per Crunchbase.

The second-biggest round of the week went to a European startup specializing in loans and investments.

At WWDC in 2020, Apple announced a new car key feature that lets people use the Wallet app on the iPhone or Apple Watch to control their car. While adoption of this feature has been slow, head below to find the full list of cars that support Apple car key integration.

This feature lets users add their car key to the Wallet app, then use the wallet app to lock, unlock, and start their car. While specific implementations vary depending on the carmaker, there are a few different ways Apple’s car key feature can be used:

The car key feature also includes support for Express Mode. This feature allows you to use your car key without unlocking your device, or authenticating with Face ID, Touch ID, or a passcode. The Wallet app also supports sharing your car key using things like Messages, Mail, and AirDrop.

2021 – 2023 1 Series

2021 – 2023 2 Series

2021 – 2023 3 Series

2021 – 2023 4 Series

2021 – 2023 5 Series

2021 – 2023 6 Series

2021 – 2023 8 Series

2021 – 2023 X5

2021 – 2023 X6

2021 – 2023 X7

2021 – 2023 X5 M

2021 – 2023 X6 M

2021 – 2023 Z4

2022 – 2023 i4

2022 – 2023 iX

2022 – 2023 iX1

2022 – 2023 iX3

2023 i3

2023 i7

2024 i5

2022 – 2023 HAN

2023 GV60

2023 G90

2023 Palisade

2023 IONIQ 6

2024 Kona EV

2023 Telluride

2023 Niro

2024 Seltos

2024 EV9

Emeya EV

2024 E‑Class

More to come?

As of right now, these are the only cars that Apple says support car key. Ideally, adoption will only continue to grow, but we’ll have to wait for more announcements from automakers to know for sure.

FOMO, or the “fear of missing out,” is a well-known social-media phenomenon. Now, one investment strategist says she is OMO—“OK missing out”—when it comes to this year’s stock market rally because she’s nervous about earnings and how high prices have gotten.

“I wouldn’t be taking as big of a risk because of valuations,” says Julie Biel, chief market strategist at Kayne Anderson Rudnick, an investment firm with nearly $60 billion in assets under management. “It’s terrifying how narrow the rally has been.”

Stocks had a tough week, with the S&P 500 index dropping about 1% and the Dow Jones Industrial Average down nearly 2% following the hotter-than-hoped-for consumer inflation report released on Wednesday. Valuations, though, still look stretched—the S&P 500 is trading for more than 21 times 2024 earnings estimates, above its average for the past five and 10 years, after gaining 8% this year.

“You need growth to surprise to the upside,” Biel says. “If not, high multiples can get compressed, and that can happen quickly. Investors will run for the exits.”

And growth is what corporations need to deliver when they report first-quarter earnings and guidance for the rest of the year.

Several big financials kicked off the profit parade with mixed results on Friday. Wells Fargo and Citigroup shares had muted moves, but JPMorgan Chase fell as CEO Jamie Dimon warned that “the global landscape is unsettling” and that “persistent inflationary pressures...may likely continue.” Goldman Sachs Group, Bank of America, and Morgan Stanley report this coming week. So do Taiwan Semiconductor, Johnson & Johnson, and UnitedHealth Group as well as United Airlines, CSX, Procter & Gamble, and Netflix.

Analysts are expecting profit growth of just 3.6% for companies in the S&P 500 for the first quarter, according to FactSet. And that’s being driven largely by tech—think Nvidia, Super Micro Computer, and artificial intelligence—and parts of healthcare, namely weight-loss-drug makers Eli Lilly and Novo Nordisk.

“We’re still seeing this dichotomy or dispersion in earnings,” says Joe Amato, chief investment officer at Neuberger Berman, noting that profits for companies in many other cyclical sectors might actually decline in the first quarter.

Earnings are expected to improve as the year progresses; second-quarter profits are forecast to rise nearly 10% and earnings for all of 2024 are estimated to be up 11% from 2023 levels. “We should start to see better balance,” Amato said. “Companies should gain some earnings momentum because of the resilience of the U.S. economy.”

It’s put up or shut up time. Anthony Saglimbene, chief market strategist at Ameriprise Financial, says he’s unsure whether consumers and corporate customers can continue to spend enough to support broader earnings growth. Overall inflation may be receding—or not—but many Americans still feel tapped out, particularly as rent costs and gas prices keep soaring. “A lot of companies are finding it to be a harder time to raise prices,” Saglimbene says.

Hopefully, demand for goods and services won’t evaporate. Wall Street needs strong earnings even more than usual as rate cut hopes fade. The good news is that stocks usually follow profits, so strong earnings growth—even in the face of higher interest rates—could offset worries about inflation and a less-dovish Federal Reserve.

Is that asking too much?

Thanks to the turbulent geopolitical environment, weapons manufacturers are having a moment

A fondness for European defence stocks has been a somewhat oddball hobby for most of the last decade or two, but like V-neck jumpers, the sector is firmly back in fashion. So much so, in fact, that it is looking a little overdone. (I didn’t realise the jumpers were out either, but our style pages informed me of my ignorance last week.)

Many investors succeeded in ignoring the defence sector altogether for years, particularly in the period before Russia’s full-scale invasion of Ukraine in 2022. It was, of course, naivety in retrospect but compelling at the time.

Makers of bullets, bombs and tanks fell from favour at the height of the sustainable investing boom. When asset managers could barely open their mouths without uttering the letters E, S and G — investment with environmental, social or governance aims — this sector often got the cold shoulder. Again, Vladimir Putin has succeeded in reminding well-meaning money managers that funding companies that try to protect non-aggressor states from harm can still sit comfortably in a virtue-seeking portfolio. In a client podcast last month, Ian Douglas-Pennant, an analyst covering the sector for UBS Research, joked that his client visits across continental Europe now are often characterised by fund managers asking him for a rundown on everything they have missed while they have been hunting for opportunities elsewhere or constrained by ESG considerations. “Can you bring me up to speed on the last 20 years?” they ask. He is happy to oblige.

The performance of the sector this year has been really something. While shiny US tech stocks and chipmakers have sucked in the bulk of fund managers’ attention, European defence has, if you’ll pardon the pun, rocketed. Goldman Sachs’s basket of European defence stocks has pushed 40 per cent higher just this year.

Demand for the sector has clearly woken up. Investment manager VanEck said its exchange-traded fund tracking European defence companies has drawn in $500mn in the year since it launched — a build-up that “illustrates the importance of defence nowadays for investors”, said Martijn Rozemuller, chief executive of VanEck Europe. “Traditionally, the defence industry has been a rather sensitive topic, especially in Europe. However, the outbreak of war in Ukraine and other areas of tension and conflict around the world have changed the way many people view defence policy.”

Among the striking examples in the sector, stocks in the UK’s BAE Systems have climbed by 15 per cent this year — streets ahead of the broader UK index. Germany’s Rheinmetall, which makes ammunition, is up a staggering 83 per cent. Bavaria’s Renk has gained 71 per cent just since it listed in February. Among other things, Renk makes slide bearings for tanks. I do not know what tank slide bearings are, and many other buyers of the shares probably do not either, but they do know that with conflict under way in both Israel and Ukraine, and commitments from a host of European governments to lift defence spending, betting on good fortune for companies in the sector makes sense.

These stocks are tiny flecks in comparison to the giant that is Nvidia, with its market capitalisation north of $2tn, but some of the gains are of a similar magnitude, if not bigger. As Douglas-Pennant at UBS points out, plenty of fund managers are latching on to the phenomenon. 

Nothing moves in a straight line in markets, and so it is perhaps no surprise that this week, the trend came a little unstuck. Rheinmetall shed 7 per cent, while BAE dropped 4.5 per cent. It was the worst day for the sector since the 2020 Covid crisis blasted markets.

This still leaves these stocks standing far above where they started the year, but nonetheless, it is a serious knock. One trigger for this appears to have been a note from Goldman Sachs, in which analysts Peter Oppenheimer and Sharon Bell, among others, said while they are “relatively constructive on the European defence outlook, we are not recommending EU defence given the challenging valuation premium and strong run of outperformance”.

The sector has, they suggested, simply done just too well for its own good. Goldman’s basket of related stocks has pushed higher almost constantly since the invasion of Ukraine, leaving them with valuations some 45 per cent higher than the broader market, compared with an average lag of 7 per cent. Time, it seems, for some investors to pause.

It is rare to find a sector in Europe that drops back simply because it has been such a runaway success. Luxury — Europe’s other key investment theme — has taken a hit from investor unease at Kering’s strategy and at the slow-burning economic malaise in China. They are both meaningful reasons for weakness, but not quite the same thing. 

For defence, this week’s wobble stems from a broad community of investors who ignored the sector for years, now hugging it a little too tightly. Longer term, though, it is hard to see a strong case for a serious decline. The US may have its shiny AI stocks but in this geopolitical environment, the manufacturers of Europe’s bullets and tanks really count for something.

Quiet developments signal that over the next five years we will see technological leaps

In the next five years, significant upgrades to the batteries in electric vehicles should finally hit the market. In the works for decades, these changes are likely to mean that by 2030, gas vehicles will cost more than their electric equivalents; some EVs will charge as quickly as filling up at a gas station; and super long-range EVs will make the phrase “range anxiety” seem quaint.

One reason you might not be aware of these impending technological leaps is that they’ve long been overshadowed by flashier efforts at replacing existing lithium-ion battery tech in EVs altogether. Again and again, those promised battery “breakthroughs” failed to break through, which has left investors holding the bag and consumers disappointed.

Almost all of these coming developments are upgrades to the same tried-and-true lithium batteries that others have promised to disrupt. This gives them a huge advantage: They can be manufactured in existing facilities, and fit into existing supply chains. This matters because previous investments in battery-manufacturing capacity are so enormous—more than $30 billion in 2023 alone, according to BloombergNEF—that they make it that much harder for any technology that can’t be manufactured in those facilities to be competitive.

BMW’s 2025 battery rollout

It’s possible to optimize many features in a battery, from how fast it can charge to how many years it can last. One of the most important measures of a battery’s performance is how much energy a manufacturer can cram into a given battery cell, which is known as its energy density. Typically, that energy density has gone up a few percentage points a year, and it’s those slow, cumulative, hard-won gains that have gotten us to where we are today.

Bigger jumps in the energy density of batteries are rare. But BMW recently announced that it will begin selling the first vehicle using the company’s new platform for EVs, which it calls “Neue Klasse,” in 2025. These vehicles will have a new kind of battery which will hold more than 20% more energy than the previous type, and charging speed and range will also improve by up to 30%, says a BMW spokesman.

What makes possible these improvements are a new, cylindrical shape for the battery cells, and tweaks to their chemistry.

New battery chemistries in 2026

Massachusetts-based battery-component manufacturer SES AI is on track to help automakers deliver vehicles with an additional leap in the energy density of their batteries in 2026, says Chief Executive Qichao Hu.

SES AI is already the first company in the world to deliver to an automaker advanced prototypes of batteries with a particular kind of new tech, and is working with GM, Hyundai and Honda. In 2025, SES AI expects to deliver the next iteration of its cells, which are suitable for use in a fleet of prototype vehicles.

If GM decides that the first vehicles to get SES AI’s new batteries should be, say, electric Hummers, then the company would help GM build 100 prototype Hummer EVs with the new technology, and they would then be run through a gantlet of tests for nine months to a year, Hu says. If all goes well, by 2026 the batteries should be ready to be put into production.

The key to SES AI’s technology is solid lithium metal, which is used in place of the graphite that’s in today’s lithium-ion batteries.

Battery 101

To understand why that matters, it helps to know a little bit about how today’s batteries work. A typical EV battery is like a sandwich made of thin layers. First there’s what’s known as an anode, made of graphite. Suffusing the whole cell is a liquid electrolyte—like Gatorade, but it has lithium salts instead of sodium. Then a thin “separator”—picture something like saran wrap. Finally there’s a cathode, which is a mix of various metals, typically lithium, nickel, manganese and cobalt.

When a battery is pushing electricity to the motor of a vehicle, lithium ions are moving between the anode and the cathode, through the plastic separator, which has microscopic holes just big enough for lithium ions to move through. It’s the physical movement of those lithium ions from one side of the battery sandwich to the other that generates current.

In theory, a lithium metal anode can hold 10 times as many lithium ions as a graphite one. All other things being equal, this means the energy density of a battery using lithium metal in place of graphite could be up to 50% higher.

The result, says Hu, is that automakers could someday offer affordable EVs that have the same range as today’s high-end ones. That would mean even entry-level EVs might go 300 miles on a charge. High-end EVs with bigger batteries could, in turn, set new records for range, besting current record-holders which top out at around 500 miles.

Because the lithium metal in SES AI’s batteries replaces just one part of the battery cell, it can be incorporated into existing assembly lines. Currently, there are two dominant types of batteries for EVs, one optimized for high-end vehicles, and the other for lower-cost ones such as Tesla’s Model 3 and the coming tidal wave of affordable Chinese EVs. SES AI’s lithium metal technology works in both.

Superfast charging by 2028

SES AI is hardly the only company promising significant upgrades to today’s batteries within the next few years. StoreDot, a battery startup based in Israel, is working on new battery tech for making EVs charge so quickly that filling them up could someday be comparable to stopping at a gas station in a conventional vehicle.

StoreDot counts BP, Daimler Truck, Volvo and Vietnamese EV maker VinFast as investors and partners. StoreDot has announced that the first automaker to incorporate its batteries for “ultrafast charging” will be Geely-owned Polestar.

Like SES AI, StoreDot aims to replace the graphite anode in a typical battery with something different. Instead of lithium metal, StoreDot is using silicon in order to increase both the energy density and the charging speed of a battery.

Adding silicon to batteries is something battery makers have been doing for years, and has been key to some of the incremental gains in capacity that have already happened in the past decade. What’s different about StoreDot’s tech is that the company is figuring out how to replace the graphite in batteries entirely, with a substance that is up to 40% silicon.

StoreDot has delivered prototype batteries to automakers, and its current tech—which Polestar is testing—can enable a car’s battery to add 100 miles of range in just five minutes of charging. By 2028—just two years after SES AI’s batteries are set to debut in production vehicles—the company’s engineers aim to deliver to automakers a battery that can add 100 miles of range in just 3 minutes, says Chief Executive Doron Myersdorf.

2030 and beyond—the ‘Holy Grail’ of battery tech?

Briefly a darling of the 2020 to 2021-era SPAC boom, publicly traded solid-state battery maker QuantumScape has since had a rough time, in terms of its valuation. But the company is on track to deliver its first batteries suitable for testing in vehicles by sometime next year, says Quantumscape’s chief technology officer, Tim Holme. From there, it’s up to automakers to determine how quickly they’ll incorporate these batteries into new vehicles.

BMW is currently working with QuantumScape competitor Solid Power on developing solid-state batteries, but “all-solid-state batteries are still several years away from large scale production,” says a BMW spokesman.

Solid-state batteries have been called the holy grail of battery tech because, in theory, they should be able to beat existing batteries by every measure that counts, including charge time and energy density. But they come with a number of challenges, including the way they physically expand and contract when they are charged and discharged.

QuantumScape Chief Marketing Officer Asim Hussain says the company has solved this problem, and many others, and that unlike many of its competitors, it regularly releases test data showing the performance and durability of its batteries.

In EVs, no rollout of new battery tech is a sure thing until it has passed automakers’ extensive internal testing. Even then there can be problems, like when GM had to recall tens of thousands of Chevy Bolts on account of the risk of fires in their battery packs.

This means all of the timetables battery makers have proposed can—and do—slip. Even so, the next five to 10 years should see a steady drumbeat of new battery technologies that yield performance gains beyond the incremental improvements we’ve seen over the past couple of decades. That’s likely to have profound implications both for adoption of EVs, and for which EV makers win and lose.

The $14.1 billion deal still faces regulatory reviews, opposition from United Steelworkers union, members of Congress

United States Steel shareholders approved the sale of the storied company to Japan’s Nippon Steel 5401 -0.36%decrease; red down pointing triangle, in the midst of union opposition and ongoing regulatory reviews that are raising doubts about the $14.1 billion deal.

U.S. Steel shareholders’ X -2.13%decrease; red down pointing triangle approval of the deal was widely expected. Investors are in line to receive $55 in cash for each of their U.S. Steel shares—more than double U.S. Steel’s stock price last August when the company disclosed that it was considering offers.

U.S. Steel said that investors representing 71% of the company’s shares voted on the deal, and of the shares voted, 98% supported the sale. Roughly 29% of shares weren’t voted.

“The overwhelming support from our stockholders is a clear endorsement that they recognize the compelling rationale for our transaction,” said David Burritt, U.S. Steel’s chief executive.

Takahiro Mori, Nippon Steel’s vice chairman who negotiated the deal, said Friday’s vote was a significant step toward completing the acquisition. “From the outset, our goal has been clear—to protect and grow U.S. Steel in the U.S. market,” he said.

U.S. Steel’s stock has been trading well below the purchase price, reflecting investors’ anxiety about the remaining hurdles for the deal to close. The shares declined 2.1% Friday to close at $41.33.

The Pittsburgh-based company selected Nippon Steel over a lower cash and stock offer from U.S. Steel’s main domestic rival, Cleveland-Cliffs. The Tokyo-based company is the world’s fourth-largest steelmaker and has pledged to use its deep pockets and production technology honed at its Japanese mills to upgrade U.S. Steel’s aging plants.

Nippon Steel has told the United Steelworkers union it is willing to invest $1.4 billion to improve equipment at U.S. Steel’s older plants, some of which have operated for more than a century. But Nippon Steel’s promises so far have done little to alleviate opposition that flared immediately after the companies announced their deal in December.

The union, which represents about 10,000 hourly U.S. Steel hourly workers, has said it doubts that Nippon Steel is committed to maintaining U.S. Steel’s contract with the union and dismissed the company’s pledges to refrain from layoffs and plant closings as meaningless gestures.

The union said Friday that U.S. Steel executives and shareholders voting for the deal gave priority to their own financial gains over the company’s employees and retirees. “Thankfully, the vote isn’t the end of the story: The decision ultimately isn’t simply up to shareholders and executives,” the union said.

President Biden has said he is opposed to foreign-ownership of U.S. Steel, but hasn’t said explicitly that he would block the deal. Democratic and Republican lawmakers have called for the deal to be blocked, arguing that allowing a foreign-owned company—even from a close U.S. ally in Japan—could undermine U.S. national security if steel is needed for defense purposes.

“If you do reach a true national security emergency, we have substantially less leverage over a Japanese firm than an American firm,” Ohio Republican Sen. J.D. Vance said in an interview this week.

U.S. Steel has said it doesn’t produce steel for military equipment. Most of the company’s sales come from supplying sheet steel to the auto, appliance and construction industries.

The Justice Department is reviewing the merger for market-concentration concerns. Nippon Steel operates a handful of businesses in the U.S. that process steel or produce finished goods with steel. The department recently asked for more information on Nippon Steel’s partnership with steelmaking giant ArcelorMittal in an Alabama steel mill, according to people familiar with the matter. That mill supplies steel to some of the same industries as U.S. Steel.

U.S. Steel considered Nippon Steel’s lack of steel production plants in the U.S. as an advantage over other companies’ bids for the company, including Cleveland-Cliffs, which U.S. Steel’s lawyers warned would likely face a difficult antitrust review. Cleveland-Cliffs and U.S. Steel are the only domestic suppliers of iron ore used to make steel and the dominant producers of automotive steel and steel used in electric-vehicle motors.

The Nippon Steel deal is also under a national-security review by the Committee on Foreign Investment in the U.S. The Treasury Department-led committee of government agencies is expected to take months to complete an investigation of potential national security aspects of the deal.

The committee can recommend that the president block a deal, but it usually prescribes remedies to address potential national-security risks.

The 123-year-old U.S. Steel is one of the oldest continually operated public companies in the U.S. This year’s presidential election has heightened interest in the deal as Biden and former President Donald Trump jostle for votes from steelworkers and other blue-collar workers in battleground states with large manufacturing workforces. The United Steelworkers union last month endorsed Biden for re-election shortly after he came out against the deal.

The White House has framed Biden’s opposition to the deal as mostly about supporting U.S. Steel workers. Biden said Wednesday during remarks with Japan’s Prime Minister Fumio Kishida at the White House that he is committed to American workers, and said he is committed to America’s alliance with Japan.

Kishida, speaking at the same event, reminded the U.S. to adhere to procedures based on law in evaluating the deal. Kishida said that Japanese businesses in the U.S. already employ nearly 1 million people.

“Investment from Japan to the U.S. can only increase upwards in the months and years to come,” he said.

Opponents of the deal have questioned whether Nippon Steel’s business interests in Japan will compromise its management of U.S. Steel. The steelworkers union this week lambasted Nippon Steel for asking the International Trade Commission to lift long-lasting U.S. tariffs on tin-plate from Japan.

Cleveland-Cliffs and U.S. Steel, the only steelmakers in the U.S. that produce the tin-coated steel used in food cans and jar lids, have laid off hundreds of workers and idled tin-plate production in recent years. Cleveland-Cliffs attributed its February decision to close its Weirton, W.Va., tin-plate mill this month to lower-cost imports.

“We are now seeing further evidence that Nippon Steel will continue to prioritize its Japanese operations at the expense of U.S. workers,” the union said. “Nippon must not be allowed to acquire U.S. Steel facilities.”

Nippon had no immediate comment.