Trump's EV Subsidy Repeal Ushers in Survival of the Fittest for Climate Tech

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Trump's EV Subsidy Repeal Ushers in Survival of the Fittest for Climate Tech

A few weeks after a major election victory, the Trump transition team has unveiled plans to eliminate the $7,500 tax credit for electric vehicle (EV) buyers. While rumors of such climate subsidy cuts had circulated, the announcement still impacted Tesla and Rivian shares negatively. This moment represents a pivotal shift for the climate tech sector, which must transition from relying on subsidies to delivering independent business value.

To thrive in this new landscape, solutions must focus on being better, cheaper, or more efficient—not just environmentally friendly. Although some see this policy shift as a setback for climate initiatives, it could spur resilience in climate tech startups, pushing them beyond the subsidy-reliant model seen during the zero-interest-rate era or the initial cleantech boom. The early solar energy bubble, for example, burst because it heavily depended on government subsidies, lacking a robust foundation.

This shift in funding priorities aligns with discussions at COP 29 in Baku, where concerns grew over climate financing for developing nations. With a Trump administration likely to withdraw from the Paris Climate Accords, donor nations may reduce foreign aid for climate initiatives, shifting the burden toward private-sector investment.

For investors, this change demands a new perspective. Solutions like synthetic fuels, which heavily rely on subsidies, may no longer be viable. Instead, software-driven climate startups offering services like carbon accounting or risk ratings will be assessed as traditional SaaS businesses, which have seen valuations drop significantly since 2021.

However, deep tech innovations addressing climate challenges aren’t obsolete. With 90% of the necessary technologies for achieving net zero yet to be deployed, startups must expedite the path from research to commercialization. Leveraging AI, robotics, and lean manufacturing will be key to delivering affordable, high-ROI solutions to market faster.

Accelerating EV Affordability

The Trump administration’s decision to cut the EV tax credit seems surprising, especially given its alliance with Tesla’s Elon Musk. Yet Tesla supports repealing the subsidy, as it disproportionately affects competitors like GM, which are more reliant on it to sell lower-cost EVs to price-sensitive consumers. Tesla’s higher-end buyers, often earning above $150,000, are less influenced by the credit, while rivals targeting entry-level markets will need to find new ways to reduce costs.

The high cost of EV batteries, which account for 30-40% of a vehicle’s price, remains a major barrier to affordability. Innovations like solid-state lithium batteries and modular designs are already underway, but disruptive approaches, such as battery-swapping technology, are gaining traction in markets like China and India. By decoupling batteries from EVs, manufacturers are lowering retail prices and reducing fleet operational costs by up to 20%.

Another area ripe for innovation is the EV powertrain, which impacts energy efficiency and accounts for up to 25% of vehicle costs. Advances in powertrain technology could help reduce battery sizes and extend driving ranges, making EVs more accessible.

This challenge mirrors the broader climate tech sector’s need to deliver standalone technological breakthroughs that offer significant business advantages without policy support.

Evolving from Climate Tech to Deep Tech

Climate tech extends beyond batteries and renewable energy to include carbon capture, green hydrogen, and fusion. Under the Trump administration, climate entrepreneurs must operate as wartime leaders. With climate tech funding hitting a four-year low in Q3, startups that relied on the easy capital of the zero-interest era now face mounting costs for hardware and facilities.

While climate-focused investors remain, generalist investors may pivot to AI and other sectors. However, startups nearing commercialization in deep tech—blending scientific breakthroughs with engineering—are well-positioned to attract interest. Deep tech, accounting for 20% of venture funding today, has produced giants like SpaceX and NVIDIA, proving that combining innovation with solid business fundamentals can deliver massive returns.

The Trump administration’s policy changes could strengthen climate tech by emphasizing business fundamentals over subsidies. Though this transition poses challenges, it may spark a new wave of resilient, high-value climate solutions. The deep tech sector’s success demonstrates that innovation combined with sound business models can scale rapidly and attract substantial capital. For climate tech, the roadmap under Trump 2.0 is clear: create value through innovation, not government support.

SatVu Secures £10m to Revolutionize Climate Tech with Thermal Imaging

A UK-based company specializing in thermal imaging to detect global heat loss will announce this week that it has raised an additional £10 million from key investors. SatVu, which plans to launch two satellites next year, secured the funding in a round led by current backer Molten Ventures, a London-listed supporter of early-stage companies, along with Adara Ventures, marking its first investment in SatVu. Adara's contribution comes from its new energy fund, dedicated to innovative technologies advancing the transition to cleaner energy.

SatVu provides climate data to clients in sectors such as construction and defense, offering insights into energy efficiency and carbon footprints. The company has also gained support from existing investors, including Lockheed Martin's venture arm and London-listed space investor Seraphim.

Based in London, SatVu has developed a monitoring satellite, described as "the world's thermometer," in collaboration with Surrey Satellite Technology. The upcoming announcement on Thursday will also reveal a £10 million insurance payout following the conclusion of its first satellite mission late last year.

Anthony Baker, SatVu's co-founder and CEO, stated that the new funding would enhance the company's ability to deliver "unmatched thermal insights" that enable industries and governments to take meaningful climate action. He highlighted that the launch of HotSat-2 and HotSat-3 will advance efforts toward a net-zero future by providing critical data to tackle urgent environmental and energy issues.

SatVu’s initial satellite, launched with Elon Musk's SpaceX in June 2023, was the first in its constellation. Patrick McCall, a venture partner at Seraphim, praised SatVu's innovative thermal imaging technology, noting that the upcoming satellites would deliver exceptionally high-resolution thermal data. This breakthrough, he said, would transform understanding of energy production, infrastructure, and emissions, supporting global net-zero goals.

Kapture’s Breakthrough Carbon Capture Technology Set to Transform Concrete Production

Kapture has developed an innovative process that captures and stores carbon dioxide emissions from combustion sources, embedding them permanently in concrete. This approach not only reduces emissions but also enhances the performance of the concrete.

In collaboration with Western Australian concrete manufacturer PERMAcast, Kapture conducted trials of their carbon-embedded byproduct to evaluate its strength, durability, and overall performance in real-world applications.

The technology significantly reduces the carbon footprint of concrete production by integrating captured CO2 directly into the mix. This process addresses the emissions associated with cement, one of the most carbon-intensive components of concrete, while maintaining cost efficiency. The byproduct replaces a portion of traditional concrete materials, thereby lowering the environmental impact of cement production without increasing costs.

Kapture CEO Raj Bagri highlighted the success of the trials, stating that preliminary lab results exceeded expectations in terms of material performance. Each ton of Kapture’s solvent used to capture CO2 from diesel generators offsets 0.7 to 1.2 tons of CO2 emissions during cement production.

“Our successful trials in sequestering CO2 within concrete mark a transformative step for one of the most carbon-intensive industries,” Bagri said. “The trials confirmed that Kapture's solution offers the concrete industry a cost-effective, high-performance alternative without the 'green premium.' The byproduct will be commercially available by 2025.”

Founded in 2022, Kapture aims to decarbonize diesel generators using a cost-effective membrane technology that captures CO2 emissions at their source. The startup, part of the Startmate 2023 cohort, is preparing for a major trial of its carbon capture technology with an Australian electricity utility in early 2025, with further details expected to be announced soon.

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