Nissan chief warns on threat posed by Chinese rivals’ rapid pace of production
Chinese groups have put Japanese and international carmakers under pressure, says Makoto Uchida
Nissan’s chief executive has warned that the rapid pace of production of Chinese carmakers is piling pressure on international manufacturers as they struggle to compete for market share.
Makoto Uchida issued the warning as Japanese brands in particular lose consumers to highly competitive Chinese rivals.
He told the Financial Times’s Future of the Car summit on Wednesday that “agile” local carmakers in China, the world’s largest auto market, were pushing rivals to speed up production.
“We should not be just relaxed and sitting down. The lead time is very agile,” Uchida said, adding that Chinese manufacturers were showing “massive strength”.
The time it took Chinese manufacturers to bring a car to market was “much faster than we expected before”, he said. “We need to align.”
Chinese carmakers are making big inroads at home and overseas with competitively priced electric vehicles, leaving behind some international manufacturers.
Japanese brands, including the world’s biggest carmaker Toyota, are some of those suffering the most as a result.
Toyota said it would accelerate its electric vehicle line-up in China, after its 2022 sales in the country fell for the first time in a decade.
Nissan, which reports earnings for its full year on Thursday, had projected in February that sales of Chinese cars would fall 24 per cent volume-wise to just over 1mn in the 12 months to the end of March.
That would push Chinese sales by unit — previously its biggest market — below those in North America. The group has a passenger car joint venture in China with Dongfeng Motor.
“How we can make something for China in China . . . will be the key,” Uchida told the FT summit.
Chinese groups such as Nio and BYD are also looking to take on European brands on their home turf in another challenge for companies struggling to bring down the cost of production to make EVs accessible to consumers.
“The biggest danger is the Chinese coming in . . . because they are coming in with quite competitive prices and with very good vehicles,” Linda Jackson, the chief executive of Stellantis’s Peugeot brand, told the FT summit.
Separately, Uchida said Nissan was still in discussions with the British government over how to salvage production at its plant in Sunderland, where it is seeking help to cope with high energy prices. It also has issues with the high cost of dealing with suppliers.
Sunderland was “a key plant”, Uchida said, but the group needed “competitiveness, especially in the supply chain”.
Both Uchida and Renault’s chief executive Luca de Meo said on Wednesday that talks to reset the capital structure of their long-troubled alliance were progressing well, despite the final signature of the new accord dragging on after it was outlined in February.
Uchida said there was no “specific hold-up” but added that the group needed to be sure the redesigned partnership, which might include an investment from Nissan in Renault’s electric vehicle unit Ampere, reflected “benefits for both sides” in its final version.
De Meo, who was also speaking at the FT car summit, said that after the listing of Ampere scheduled for later this year, the Renault group could look to float its Alpine sports car brand.
“Alpine could be a potential for an [initial public offering] but it will take time to show investors the power of the project,” he said.
From: Laurent Chekroun (MAKOR CAPITAL MARKET) At: 05/10/23 16:29:27 UTC+2:00
Subject: Wired : Everyone Was Wrong About Reverse Osmosis—Until NowEveryone Was Wrong About Reverse Osmosis—Until Now
A new paper showing how water actually travels through a plastic membrane could make desalination more efficient. That’s good news for a thirsty world.
MENACHEM ELIMELECH NEVER made peace with reverse osmosis. Elimelech, who founded Yale’s environmental engineering program, is something of a rock star among those who develop filtration systems that turn seawater or wastewater into clean drinking water. And reverse osmosis is a rock star among filter technologies: It has dominated how the world desalinates seawater for about a quarter of a century. Yet nobody really knew how it worked. And Elimelech hated that.
Still, he had to teach the technology to his students. For many years, he showed them how to estimate the high pressures that push the water molecules in seawater across a plastic polyamide membrane, creating pure water on one side of the film and leaving an extra-salty brine on the other. But these calculations relied on an assumption that nagged Elimelech and other engineers: that water molecules diffuse through the membrane individually. “This always bothered me. It does not make any sense,” he says.
This might seem like an arcane engineering question, but Elimelech’s beef with reverse osmosis is based on a real-world problem. Over 3 billion people live in areas where water is scarce. By the year 2030, demand is set to outstrip supply by 40 percent.
And transforming water from salty seas into something potable has always been energy intensive. Older thermal desalination plants in the Gulf States—where energy is plentiful—distill seawater by boiling it and capturing the vapor. A newer generation of reverse osmosis desalination plants, which run the water through an array of plastic membranes, have cut the energy demand a little, but it’s not enough. It still takes a lot of power to push water through dense filters, so even minor improvements in membrane design go a long way.
In a study published in April, Elimelech’s team proved that the once-frustrating assumption about how water moves through a membrane is, indeed, wrong. They replace it with a “solution-friction” theory that water molecules travel in clusters through tiny, transient pores within the polymer, which exert friction on them as they pass through. The physics of that friction matter, because understanding it could help people design membrane materials or structures that make desalination more efficient or better at screening out undesirable chemicals, Elimelech says.
More effective membranes could also improve municipal water systems and expand the reach of desalination. “This is one of those major breakthroughs,” says Steve Duranceau, an environmental engineer at the University of Central Florida, who spent 15 years designing desalination plants before becoming a professor. “This will change the way that people start modeling, and interpreting how to design these systems.”
“They've nailed it,” agrees Eric Hoek, an environmental engineer at UCLA who trained under Elimelech 20 years ago but was not involved in the study. “Finally, somebody has put the nail in the coffin.”
THE ROOTS OF the new solution-friction idea are actually old. The molecular math behind it dates to the 1950s and 1960s, when Israeli researchers Ora Kedem and Aharon Katzir-Kachalsky, and UC Berkeley researcher Kurt Samuel Spiegler, derived desalination equations that considered friction—meaning how water, salt, and pores in the plastic membrane interact with each other.
Friction is resistance. In this case, it tells you how hard it is for something to get across the membrane. If you engineer a membrane that has less resistance to water, and more resistance to salt or whatever else you want to remove, you get a cleaner product with potentially less work.
But that model got shelved in 1965, when another group introduced a simpler model. This one assumed that the plastic polymer of the membrane was dense and had no pores through which water could run. It also didn’t hold that friction played a role. Instead, it presumed that water molecules in a saltwater solution would dissolve into the plastic and diffuse out of the other side. For that reason, this is called the “solution-diffusion” model.
Diffusion is the flow of a chemical from where it's more concentrated to where it's less concentrated. Think of a drop of dye spreading throughout a glass of water, or the smell of garlic wafting out of a kitchen. It keeps moving toward equilibrium until its concentration is the same everywhere, and it doesn’t rely on a pressure difference, like the suction that pulls water through a straw.
The model stuck, but Elimelech always suspected it was wrong. To him, accepting that water diffuses through the membrane implied something strange: that the water scattered into individual molecules as it passed through. “How can it be?” Elimelech asks. Breaking up clusters of water molecules requires a ton of energy. “You almost need to evaporate the water to get it into the membrane.”
Still, Hoek says, “20 years ago it was anathema to suggest that it was incorrect.” Hoek didn’t even dare to use the word “pores” when talking about reverse osmosis membranes, since the dominant model didn’t acknowledge them. “For many, many years,” he says wryly, “I've been calling them ‘interconnected free volume elements.’”
Over the past 20 years, images taken using advanced microscopes have reinforced Hoek and Elimelech’s doubts. Researchers discovered that the plastic polymers used in desalination membranes aren’t so dense and poreless after all. They actually contain interconnected tunnels—although they are absolutely minuscule, peaking at around 5 angstroms in diameter, or half a nanometer. Still, one water molecule is about 1.5 angstroms long, so that’s enough room for small clusters of water molecules to squeeze through these cavities, instead of having to go one at a time.
About two years ago, Elimelech felt the time was right to take down the solution-diffusion model. He worked with a team: Li Wang, a postdoc in Elimelech’s lab, examined fluid flow through small membranes to take real measurements. Jinlong He, at the University of Wisconsin-Madison, tinkered with a computer model simulating what happens at the molecular scale as pressure pushes salt water through a membrane.
Predictions based on a solution-diffusion model would say that water pressure should be the same on both sides of the membrane. But in this experiment, the team found that the pressure at the entrance and exit of the membrane differed. This suggested that pressure drives water flow through the membrane, rather than simple diffusion.
They also found that water travels in clusters through the interconnected pores, which, though tiny, are large enough that the water doesn’t have to scatter into single molecules to squeeze through. Those pores seemed to appear and disappear across the membrane over time, thanks to the applied pressure and natural molecular motion.
Depending on the membrane material, these pores interact differently with water, salt, or other compounds. Elimelech thinks engineers could design membranes to better reject salt (by maximizing how much the pores interact with them) or reduce friction with water (by making the pores less attracted to it, so it slips on by). Making it easier to separate the two means you could use less pressure and reduce energy cost.
Or, he thinks, engineers could tailor membranes to filter out environmental nasties, like boron and chlorides. Roughly 20 percent of boron from seawater slips through membranes as boric acid. That quantity is safe for people but potentially toxic for crops that are irrigated with wastewater. In Israel, water purification plants have to take extra detoxifying steps just to cut out the boron and chlorides in water used for agriculture. If you can filter these out on the initial pass, Elimelech says, “You can save on capital costs and energy.”
Hoek thinks the idea is plausible—but not quite there yet. (His colleagues recently explored designing membranes for boron rejection.) Engineers might tinker with channel size, local pH, or electrical charges on the membrane pores, he suggests.
And this may go beyond boron, chloride, or even desalination. Municipal utility plants use reverse osmosis to remove hazardous PFAS “forever chemicals” from drinking water. Current membranes are still regarded as the best approach, but many researchers are determined to design better ones to capture the toxic compounds.
Duranceau dreams of membranes that are as flexible and customizable as clothing—which can be selected based on whatever the user needs. After all, membranes are plastics, the paragon of customizability. Maybe, the engineers think, this knowledge will lead to membranes made of materials other than polyamide that would be better at screening out PFAS or lead. Or perhaps the membrane one chooses will depend on how salty the water is—from brackish to brine.
That may take a while—Elimelech even wonders if it would be best to use an algorithm to search for a membrane material that can beat polyamide, the way biotech companies have turned to machine learning to screen for new drugs. “But it's very challenging,” he points out, because in the last 40-odd years, no one has found anything better. At least now, though, the science of water flow is running clear.
Everyone Was Wrong About Reverse Osmosis—Until Now
A new paper showing how water actually travels through a plastic membrane could make desalination more efficient. That’s good news for a thirsty world.
MENACHEM ELIMELECH NEVER made peace with reverse osmosis. Elimelech, who founded Yale’s environmental engineering program, is something of a rock star among those who develop filtration systems that turn seawater or wastewater into clean drinking water. And reverse osmosis is a rock star among filter technologies: It has dominated how the world desalinates seawater for about a quarter of a century. Yet nobody really knew how it worked. And Elimelech hated that.
Still, he had to teach the technology to his students. For many years, he showed them how to estimate the high pressures that push the water molecules in seawater across a plastic polyamide membrane, creating pure water on one side of the film and leaving an extra-salty brine on the other. But these calculations relied on an assumption that nagged Elimelech and other engineers: that water molecules diffuse through the membrane individually. “This always bothered me. It does not make any sense,” he says.
This might seem like an arcane engineering question, but Elimelech’s beef with reverse osmosis is based on a real-world problem. Over 3 billion people live in areas where water is scarce. By the year 2030, demand is set to outstrip supply by 40 percent.
And transforming water from salty seas into something potable has always been energy intensive. Older thermal desalination plants in the Gulf States—where energy is plentiful—distill seawater by boiling it and capturing the vapor. A newer generation of reverse osmosis desalination plants, which run the water through an array of plastic membranes, have cut the energy demand a little, but it’s not enough. It still takes a lot of power to push water through dense filters, so even minor improvements in membrane design go a long way.
In a study published in April, Elimelech’s team proved that the once-frustrating assumption about how water moves through a membrane is, indeed, wrong. They replace it with a “solution-friction” theory that water molecules travel in clusters through tiny, transient pores within the polymer, which exert friction on them as they pass through. The physics of that friction matter, because understanding it could help people design membrane materials or structures that make desalination more efficient or better at screening out undesirable chemicals, Elimelech says.
More effective membranes could also improve municipal water systems and expand the reach of desalination. “This is one of those major breakthroughs,” says Steve Duranceau, an environmental engineer at the University of Central Florida, who spent 15 years designing desalination plants before becoming a professor. “This will change the way that people start modeling, and interpreting how to design these systems.”
“They've nailed it,” agrees Eric Hoek, an environmental engineer at UCLA who trained under Elimelech 20 years ago but was not involved in the study. “Finally, somebody has put the nail in the coffin.”
THE ROOTS OF the new solution-friction idea are actually old. The molecular math behind it dates to the 1950s and 1960s, when Israeli researchers Ora Kedem and Aharon Katzir-Kachalsky, and UC Berkeley researcher Kurt Samuel Spiegler, derived desalination equations that considered friction—meaning how water, salt, and pores in the plastic membrane interact with each other.
Friction is resistance. In this case, it tells you how hard it is for something to get across the membrane. If you engineer a membrane that has less resistance to water, and more resistance to salt or whatever else you want to remove, you get a cleaner product with potentially less work.
But that model got shelved in 1965, when another group introduced a simpler model. This one assumed that the plastic polymer of the membrane was dense and had no pores through which water could run. It also didn’t hold that friction played a role. Instead, it presumed that water molecules in a saltwater solution would dissolve into the plastic and diffuse out of the other side. For that reason, this is called the “solution-diffusion” model.
Diffusion is the flow of a chemical from where it's more concentrated to where it's less concentrated. Think of a drop of dye spreading throughout a glass of water, or the smell of garlic wafting out of a kitchen. It keeps moving toward equilibrium until its concentration is the same everywhere, and it doesn’t rely on a pressure difference, like the suction that pulls water through a straw.
The model stuck, but Elimelech always suspected it was wrong. To him, accepting that water diffuses through the membrane implied something strange: that the water scattered into individual molecules as it passed through. “How can it be?” Elimelech asks. Breaking up clusters of water molecules requires a ton of energy. “You almost need to evaporate the water to get it into the membrane.”
Still, Hoek says, “20 years ago it was anathema to suggest that it was incorrect.” Hoek didn’t even dare to use the word “pores” when talking about reverse osmosis membranes, since the dominant model didn’t acknowledge them. “For many, many years,” he says wryly, “I've been calling them ‘interconnected free volume elements.’”
Over the past 20 years, images taken using advanced microscopes have reinforced Hoek and Elimelech’s doubts. Researchers discovered that the plastic polymers used in desalination membranes aren’t so dense and poreless after all. They actually contain interconnected tunnels—although they are absolutely minuscule, peaking at around 5 angstroms in diameter, or half a nanometer. Still, one water molecule is about 1.5 angstroms long, so that’s enough room for small clusters of water molecules to squeeze through these cavities, instead of having to go one at a time.
About two years ago, Elimelech felt the time was right to take down the solution-diffusion model. He worked with a team: Li Wang, a postdoc in Elimelech’s lab, examined fluid flow through small membranes to take real measurements. Jinlong He, at the University of Wisconsin-Madison, tinkered with a computer model simulating what happens at the molecular scale as pressure pushes salt water through a membrane.
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Predictions based on a solution-diffusion model would say that water pressure should be the same on both sides of the membrane. But in this experiment, the team found that the pressure at the entrance and exit of the membrane differed. This suggested that pressure drives water flow through the membrane, rather than simple diffusion.
They also found that water travels in clusters through the interconnected pores, which, though tiny, are large enough that the water doesn’t have to scatter into single molecules to squeeze through. Those pores seemed to appear and disappear across the membrane over time, thanks to the applied pressure and natural molecular motion.
Depending on the membrane material, these pores interact differently with water, salt, or other compounds. Elimelech thinks engineers could design membranes to better reject salt (by maximizing how much the pores interact with them) or reduce friction with water (by making the pores less attracted to it, so it slips on by). Making it easier to separate the two means you could use less pressure and reduce energy cost.
Or, he thinks, engineers could tailor membranes to filter out environmental nasties, like boron and chlorides. Roughly 20 percent of boron from seawater slips through membranes as boric acid. That quantity is safe for people but potentially toxic for crops that are irrigated with wastewater. In Israel, water purification plants have to take extra detoxifying steps just to cut out the boron and chlorides in water used for agriculture. If you can filter these out on the initial pass, Elimelech says, “You can save on capital costs and energy.”
Hoek thinks the idea is plausible—but not quite there yet. (His colleagues recently explored designing membranes for boron rejection.) Engineers might tinker with channel size, local pH, or electrical charges on the membrane pores, he suggests.
And this may go beyond boron, chloride, or even desalination. Municipal utility plants use reverse osmosis to remove hazardous PFAS “forever chemicals” from drinking water. Current membranes are still regarded as the best approach, but many researchers are determined to design better ones to capture the toxic compounds.
Duranceau dreams of membranes that are as flexible and customizable as clothing—which can be selected based on whatever the user needs. After all, membranes are plastics, the paragon of customizability. Maybe, the engineers think, this knowledge will lead to membranes made of materials other than polyamide that would be better at screening out PFAS or lead. Or perhaps the membrane one chooses will depend on how salty the water is—from brackish to brine.
That may take a while—Elimelech even wonders if it would be best to use an algorithm to search for a membrane material that can beat polyamide, the way biotech companies have turned to machine learning to screen for new drugs. “But it's very challenging,” he points out, because in the last 40-odd years, no one has found anything better. At least now, though, the science of water flow is running clear.
Sound Ventures has already plugged half its new $240 million AI fund into three companies
Sound Ventures, the eight-year-old, Beverly Hills, Ca.,-based venture firm led by general partners Ashton Kutcher, Guy Oseary, and Effie Epstein, announced a new $240 million AI fund just last week.
Turns out half of it is already invested in the three companies that it announced at the time that it rolled out the fund: OpenAI, Anthropic, and Stability.AI.
Further, says Epstein, the team plans to invest in just six companies altogether, they aren’t setting aside money for follow-on rounds, and backing rival companies is not, in the case of this fund, a deterrent.
The strategy flies in the face of traditional venture investing tenets, but the highly concentrated nature of its AI fund is a reflection of just how few power players Sound Ventures anticipates will emerge in a world remade by AI, including because of the technical talent required and the capital needed to cover compute costs. (OpenAI CEO Sam Altman has previously described these as “eye watering.”)
We talked with Epstein earlier today about the new, high-risk, potentially high-reward strategy of Sound, which is separately investing an early-stage fund that it closed in 2021. Our chat, below, has been edited lightly for length.
You said last week that you think just a handful of players are going to emerge as the victors here, given the talent and capital required to support these foundational model layers. You’ve backed three already — OpenAI, Anthropic, and Stability.AI. Will you sink more into these same companies as they raise subsequent rounds? How highly concentrated will your AI fund be?
So the fund will be quite a concentrated portfolio, and it’ll be concentrated across six to seven positions.
That’s wild. So, like, half the fund is gone already?
That’s probably a safe estimate. We’ve invested in three companies already — we’re not going to disclose how much we invested per company — but if you do the math, it’s about six positions, and three of them have already been made, so that’s pretty accurate.
Which company has attracted the most capital? Is it OpenAI?
We’re not going to disclose the amounts across each company but I will tell you the fund came together quickly from a fundraising perspective [thanks to the] work that we’ve done over the last 15 plus years [including when Kutcher and Oseary were investing their personal funds as angel investors]. And when you think of OpenAI specifically, Ashton and Sam [Altman] have known each other for over a decade. So we have fostered these incredible relationships with exceptional founders . . and built a track record. And so that’s why we were able to get quite significant allocations when you look at these companies, in quite competitive rounds.
The team at Anthropic used to work at OpenAI and is ultimately trying to compete with OpenAI. Was there any pushback about your approach?
What’s so interesting about this ecosystem is that founders recognize they are all on a similar mission. Of course, it’s a competitive market. Companies are fighting for talent, as as you’d want them to be, but at the end of the day, if we at Sound can help support them from a narrative perspective, from a branding and marketing perspective [and to share] what’s happening broadly within AI, that is something that benefits the ecosystem as a whole, and that’s why the founders were really supportive. It’s something that we would only do with the blessing of our founders.
What kind of information rights do you get from these companies?
I think the most important thing again is that we do this in collaboration with our founders. We’ve invested in more than 200 companies [since Kutcher and Oseary began investing in startups, including Uber, Airbnb, and Spotify]. There have been cases in the past where we’ve invested in competitors as well, and that has been with the opt-in from founders on both sides. And our track record at the end of the day of supporting founders is the reason why we’re able to attract exceptional founders to Sound.
Has Sound talked to Elon Musk about what he wants to build? Would you potentially back that company if it comes to pass?
That honestly is not something I can comment on at this point. He is not part of the portfolio.
Okay. But you’re obviously aware that he’s trying to build a rival to OpenAI.
In general, we’re aware of many of the players out there. That’s our job as venture investors. We need to understand what the market landscape looks like. [In fact] we’ve been investing in AI for a decade. We actually made our very first bet within artificial general intelligence back in 2007; we invested in Vicarious [the robotics and AI company acquired last year by Alphabet] and so we’ve been in and around this industry for a while and gotten to know some of the key players. It’s why this strategy came together for us quite quickly.
Sure, and I appreciate this bet on the network effects at play here. Relatedly, there was lot of attention paid last week to Chegg, whose shares tanked after it acknowledged the degree to which OpenAI’s chatbot, ChatGPT, is disrupting its business. Chegg is a portfolio company of Sound as well. How do your companies protect themselves?
We’ve reached out to a number of our companies to help them understand and think through how they can leverage this type of technology internally. We believe that every company, regardless of industry or sector or the problem that they’re trying to solve, will have to figure out a way to incorporate this into part of their offering. I think something incredible that [Chegg CEO] Dan [Rosensweig] did was, in the few weeks before earnings came out, was his announcement around a partnership with OpenAI.
How are you using AI inside Sound Ventures?
We use it for sourcing primarily, just to understand where talent is going. We’re so obsessed with talent.
In the meantime, you’re concurrently deploying another fund?
Yes. We have two strategies that we deploy in parallel. There’s the growth strategy, which is really dedicated to the foundational model here. And in parallel, we’re investing our [third, $200 million] early stage fund. That is typically used to fund Series A and B software companies. As it relates to AI, that would mean funding the application layer that sits on top of the models. That’s an area we’ve been super, super active in and exploring deeply.
Microsoft Bets That Fusion Power Is Closer Than Many Think
Startup backed by OpenAI founder Sam Altman agrees to provide tech giant with electricity by 2028
Many experts believe fusion power remains decades away. Microsoft MSFT -0.53%decrease; red down pointing triangle thinks it could be just around the corner.
In a deal that is believed to be the first commercial agreement for fusion power, the tech giant has agreed to purchase electricity from startup Helion Energy within about five years.
Helion, which is backed by OpenAI founder Sam Altman, committed to start producing electricity through fusion by 2028 and target power generation for Microsoft of at least 50 megawatts after a year or pay financial penalties.
The commitment is a bold one given that neither Helion nor anyone else in the world has yet produced electricity from fusion.
“We wouldn’t enter into this agreement if we were not optimistic that engineering advances are gaining momentum,” said Microsoft President Brad Smith.
Fusion powers the sun and stars, and has the potential to provide nearly limitless amounts of carbon-free power if someone can harness it on earth. The International Atomic Energy Agency expects electricity from fusion in the second half of the century.
Helion is building a prototype that it says will demonstrate the ability to produce electricity through fusion next year.
“The goal is not to make the world’s coolest technology demo,” Mr. Altman said in an interview. “The goal is to power the world and to do it extremely cheaply.”
Mr. Altman, the chief executive officer of OpenAI—the artificial-intelligence startup behind the viral chatbot ChatGPT—said having a first customer is critical for keeping Helion grounded in the realities of business, including working with clients, utilities and electric-grid operators.
Microsoft earlier this year struck a multibillion-dollar partnership with OpenAI to expand the use of artificial intelligence in its products.
Constellation Energy, which has among its power-generation assets the nation’s largest fleet of nuclear plants, would be the power marketer and manage transmission for the project.
Mr. Altman said he is hopeful that Helion can deliver electricity to the grid even earlier than 2028. He has put $375 million into Helion and said he visits the company once a month, helping executives figure out what to work on and how to be as efficient as possible, as well as recruiting and assessing talent.
“I had this belief that the two things that would matter most to making the future and raising the quality of life a lot were making intelligence and energy cheap and abundant, and that if we could do that, it would transform the world in a really positive way,” Mr. Altman said.
A number of prominent investors from Mr. Altman to Bill Gates have put money into fusion firms, which have raised more than $5 billion, according to the Washington, D.C.-based Fusion Industry Association.
The process of splitting atoms in nuclear-fission power plants provides nearly 20% of U.S. electricity. But nuclear fusion systems would generate electricity from the energy released when hydrogen atoms are combined to form helium.
The industry got a boost in December when the U.S. Energy Department announced a research breakthrough by scientists after a fusion reaction at the Lawrence Livermore National Laboratory produced more energy than was used to create it by firing lasers at a target.
To be a practical source of power, the entire facility would need to net produce rather than consume energy, and at a price that competes in the broader electricity market.
The agreement for 50 megawatts is a small one for Microsoft. The company is among the world’s largest buyers of power-purchase agreements, which allow customers to lock in electricity supplies for a period of years. Last year, Microsoft announced deals for 1.2 gigawatts of clean power, according to BloombergNEF.
Mr. Smith said Microsoft believes that the biggest innovations of this decade could come in fusion power, artificial intelligence and quantum computing, “that all could intersect with each other.” Both AI and quantum computing would require huge amounts of electricity, which fusion could provide.
“As a purchaser when we lean in at the right moment in the right way we can help make new markets,” Mr. Smith said.
David Kirtley, CEO at Helion, said that like a wind- or solar-power developer—the more typical energy firms involved in power purchase agreements—Helion would pay Microsoft financial penalties if it doesn’t deliver power on time. The companies declined to specify the amount.
“There’s some flexibility, but it is really important that there are significant financial penalties for Helion if we don’t deliver,” Mr. Kirtley said. “We think the physics of this is ready for us to signal the commercialization of fusion is ready.”
Helion and Microsoft are both based in Washington state, and the agreement calls for the fusion company to deliver the power to some of the tech giant’s facilities there.
Australian lithium producer Allkem strikes merger deal with US rival Livent
Key battery component lithium is pivotal as car industry switches to electric
Allkem, one of Australia’s largest lithium producers backed by the world’s biggest car group Toyota, has struck a merger deal with US rival Livent in the latest sign of consolidation in the booming sector.
The all-share merger will value the combined business at $10.6bn with Brisbane-based Allkem’s shareholders owning 56 per cent of the merged entity.
The deal, which creates a company projected to be the industry’s third-largest producer by 2027, comes as the US and Australia step up efforts to cut reliance on China’s supply of critical minerals.
The two companies combined would become the industry’s fourth largest and produce 7 per cent of the world’s lithium, according to Fastmarkets.
Lithium is a key component in batteries for electric vehicles and will be pivotal as the auto industry switches from combustion engines to EVs over the next couple of decades.
Lithium supply is one of the uncertainties for the car industry because of the predicted chronic shortages of the silvery-white material due to the expected rapid shift to battery power.
Peter Coleman, chair of Allkem, whose largest shareholder is Toyota Tsusho, the trading arm of the Japanese carmaker, told the Financial Times the combination of the companies was a “natural fit” because it accelerated their strategies to expand their resource base and processing capacity.
The merger is the clearest sign yet that the industry’s largest groups are aiming to increase scale after a period of sky-high lithium prices lined the pockets of the world’s largest producers.
Albemarle, the world’s largest producer, has in recent months approached Australian producer Liontown Resources — one of Australia’s most promising lithium start-ups — but has been rebuffed.
The combination will create a company centred on lithium resources in Argentina, Australia and Canada, as well as processing in countries including China, the US and Japan.
It will bring together Allkem’s flagship Olaroz mine in Argentina and Mt Cattlin hard-rock project in Western Australia with Livent’s lithium resource also located in the Latin American country that collectively generated $1.9bn of revenue last year. The two companies also have assets under development in Canada.
“Now is the right time to do this,” Coleman said, noting that the recent drop in the lithium price had created a “landing space” for the two businesses to match their respective values and agree a deal.
The consolidation of the lithium sector comes as prices of the battery metal have crashed by more than half from heights of $80,000 per tonne at the end of last year to below $30,000 on weak Chinese EV sector demand, according to Benchmark Mineral Intelligence.
The deal is expected to save $200mn of capital expenditure and unlock $125mn of annual cost savings.
The two companies are set to have a production capacity of 250,000 tonnes of lithium carbonate equivalent by 2027, which would make it the industry’s third-largest player behind the US’s Albemarle and Chile’s SQM, the two companies estimate.
The merger agreement comes as momentum grows for dealmaking in the mining sector after Australia’s Newmont made a $19.5bn bid for Newcrest and Glencore is vying with a Canadian consortium to take over Canada’s Teck Resources.
Rio Tinto wants to grow in lithium but has warned against the risk of overpaying for takeovers.
Reg Spencer, analyst at Canaccord Genuity, said the “timing is suggestive of a defensive move” given that Allkem was set to triple production by 2025 and had yet to have that fully priced into its shares.
Coleman said talks with Livent had started “some time ago” and that the merger was not driven by a defensive move against a larger group preparing to pounce.
The Australian government has identified lithium as one of the key elements in its critical minerals strategy, which includes an attempt to move up the value chain by establishing refining operations in the country.
The joint company will be based in North America with Livent’s chief executive Paul Graves set to take the top job, while Coleman retains his position as chair. It will list on both the New York Stock Exchange and Australia’s ASX.