Western venture capitalists are increasingly pulling back from investing in clean tech sectors like batteries, solar, and wind in the US and Europe, citing China’s overwhelming dominance in manufacturing, innovation, and supply chains. After visiting Chinese factories and startups, many VCs concluded that Western companies can’t compete on scale, cost, or speed, making some sectors effectively “uninvestable,” according to Bloomberg. China now controls the majority of global production in key energy technologies and holds most clean energy patents, driven by a state-backed model that prioritizes scale and energy security over profits. As the West retreats or stalls on climate policy, investors are reassessing their strategies, with some now seeking collaboration with Chinese firms rather than direct competition. They write:
Venture capitalists in clean tech are starting to say out loud what they’ve suspected for a while: China’s dominance has left key sectors in the West uninvestable.
A group of eight VCs from Western firms agreed to share with Bloomberg the details of a July road trip across China during which they visited factories, spoke with startup investors, and interviewed founders of companies.
They knew China had raced ahead in sectors like batteries and “everything around energy,” but seeing how big the gap was firsthand left them wondering how European and North American competitors can even survive, says Talia Rafaeli, a former investment banker at both Goldman Sachs Group Inc. […]
China manufactures about 80% of the world’s solar panels, supplies some 60% of the planet’s wind turbines, 70% of its EVs and 75% of batteries, all at a lower financial cost than the West. […]
“We just saw the most automated, most advanced manufacturing line, and they had 12 of them in parallel, and many more around them,” says Jacob Bro, co-founder and partner at 2150. “And when you see that, you also just realize that catching up to that is futile: it’s not going to happen.”
Europe’s hopes of producing a world-leading battery giant sank with Northvolt AB, which has sought Chapter 11 bankruptcy protection in the US and also filed for bankruptcy in Sweden.
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