By Danny Cotter, Partner at the Westly Group
With the recent passing of the Inflation Reduction Act (IRA) catalyzing over $500 billion in US climate investment, the stage is set for record climate technology funding and innovation. At the same time, extreme weather events including wildfires, flooding, and hurricanes are bringing the need for new climate solutions into plain sight. Our team at the Westly Group, which invests in the digitization and sustainability of energy, mobility, buildings, industry, and cybersecurity, believes that the electrification of power, next-generation vehicles, and sustainable supply chain traceability will be leading the charge.
As EV sales continue to hit record highs, the climate transition is transforming the way we move and igniting a global competition among automakers. American auto giants General Motors and Ford have committed to going all-electric by 2035, while Volvo plans to transition even sooner to selling all electric vehicles by 2030. Tesla has a commanding lead in the market, but there is increasing competition, GM announced its brand new energy division last week. The EV charging market is set to explode in the coming decade, as the space will need to reach $1.4 trillion in cumulative investment by 2040 to reach net zero goals, creating huge opportunities in charging infrastructure and innovation.
Extreme weather events paired with peak energy demand are straining the grid, prompting automakers, utilities, and customers to come together to create more renewable energy sharing practices. In August, Ford announced its partnership with Duke Energy to enable bidirectional vehicle-to-grid charging and allow residents to power their homes and support the grid during outages and high-volume periods. Third-party tech companies are emerging to help strengthen these automaker-utility relationships, establishing a category of their own in the vehicle-to-grid space. WeaveGrid, a developer of electrification software to help ease the vehicle-to-grid transition, is leveraging its technology to keep electricity rates low for customers and improve driver experiences. The company unveiled its evPulse pilot program this year, marking a turning point for the industry in the automation of EV charging schedules and grid resiliency.
Accountability and transparency will also take center stage in the clean tech transition. Given the requirement by the IRA mandating that vehicles qualifying for its $7,500 tax credit must be made predominantly of materials sourced from North America, companies will need to embed sustainable supply chain traceability practices into their production processes. This will involve assigning materials a digital “passport” to track their every move within the supply chain, similar in concept to the barcodes found on store-bought items. This technology will not be limited to EV components, as it is also being used to trace materials such as leather and plastics. Jaguar Land Rover, for example, is leveraging blockchain technology to ensure the leather used in its cars is sourced ethically and sustainably.
Taking a step back, it is clear that we are witnessing
a global shift to electrification, decarbonization, and climate accountability. We believe the IRA is just the tip of the iceberg when it comes to climate investment, with new winners set to emerge across industries as companies leverage breakthrough technologies to leapfrog competitors and accelerate their adoption of sustainable processes.