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Why Silicon Valley is so hot on nuclear energy and what it means for the industry

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The Vogtle nuclear power plant is located in Burke County, near Waynesboro, Georgia in USA. Each of the two existing units have a Westinghouse pressurized water reactor (PWR), with a General Electric turbine and electric generator, producing approximately 2,400 MW of electricity. Two Westinghouse made AP 1000 reactors are under construction here.

Pallava Bagla | Corbis News | Getty Images

Venture capitalists in Silicon Valley and other tech hubs are investing money in nuclear energy for the first time in history. That’s changing its trajectory and pace of innovation.

“There’s not been a resurgence of nuclear power, ever, since its heyday in the late 1970s,” Ray Rothrock, a longtime venture capitalist who has personal investments in 10 nuclear startups, told CNBC.

Now, that’s changing. “I have never seen this kind of investment before. Ever.”  

How nuclear power is changing

Jacob DeWitte, CEO of micro-reactor startup Oklo, says the landscape has changed dramatically since he started raising money in 2014, when he was a part of the Y Combinator startup incubator.

“More investors are interested, more investors are excited by the space, and they’re getting smarter to do the diligence and know what to do here — which is good,” DeWitte told CNBC.

This surge of private investment will be a positive for the industry, agrees John Parsons, an economist and lecturer at MIT.

“I think having fresh perspectives is really good,” Parsons told CNBC. Nuclear energy is “a very complex science, and it’s been supported by the federal government and at these national labs. And so that’s a very small circle of people. And when you broaden that circle, you get a lot of new minds, different thinking, a variety of experiments.”

In any industry, there can be a “groupthink” or “narrowness” in the way things are done over time, Parsons said. With private investment in the space, “there will be out-of-the-box thinking,” he said. “Maybe that out-of-the-box thinking doesn’t produce anything useful. Maybe it turns out that the old designs are the best. But I think it’s really wonderful to have the variety of takes.”

Not everyone is so optimistic that the recent influx of venture dollars will lead to progress.

“Investors have often invested in stupid things that didn’t work,” Naomi Oreskes, a professor of the history of science at Harvard University, told CNBC. “Because the reality is that in a 75-year history of this technology, it has never been profitable in a market-based system.” If investors are putting money into nuclear now, that’s because they think they can make money, and “I can only think they believe they will make money because they think that there’s a big opportunity to have the federal government pick up a big part of the tab,” Oreskes said.

Pitchbook’s private investment data for nuclear technology data includes both fusion and fission.

Chart courtesy Pitchbook.

Nuclear investment by the numbers

From 2015 to 2021, total venture capital deal flow in the United States increased 54% in terms of deals closed and 294% by dollar value, according to data compiled by private capital market research firm Pitchbook for CNBC. In that same time, climate investing deal flow in the United States jumped by 214% in terms of volume and 1,348% by dollar value.

In the nuclear space, investment rose even faster — 325% by volume and 3,642% by dollar value, according to Pitchbook.

Some of the rapid pace of increase in investment in the nuclear sector is explained by its starting point — virtually zero.

“This is still pretty small compared to the private investments in renewables,” like wind and solar, for example, said David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis, a market research firm.

The venture market slowed overall in 2022, and nuclear investment is no exception. Concerns about the war in Ukraine, inflation, a wave of layoffs and murmurs of a recession have made investors nervous in the public markets and private alike.

Pitchbook includes companies developing technologies to mitigate or adapt to climate change in this category. Examples include renewable energy generation, long duration energy storage, the electrification of transportation, agricultural innovations, industrial process improvements, and mining technologies.

Chart courtesy Pitchbook

“At the beginning of the year, we were looking at a much different financial paradigm for nuclear startups seeking funding. Now, following a war, and inflationary related forces, the fundraising market is just not what it was earlier and that is challenging for everyone seeking funding and support, nuclear or otherwise,” Brett Rampal, a nuclear energy expert who evaluates investment opportunities and consults for nuclear startups, told CNBC.

More than $300 billion poured into the venture capital industry in 2021. Rothrock expects to see more like $160 billion in 2022.

“I’m sure that some funds that pull back may never come back,” Rothrock said. But most investors who are putting money into a nuclear company understands that it will not be a quick investment, Rothrock told CNBC. “Entrepreneurs and investors at the level we are talking for nuclear are playing the long game, they have to. These projects will take time to mature and to generate real cash flows.”

Also, the Inflation Reduction Act that President Joe Biden signed into law in August, which includes $369 billion in funding to help combat climate change, has given nuclear investors a very significant positive signal, Rampal told CNBC.

“The IRA investment and production tax credits are not nuclear specific credits, they’re clean energy credits that nuclear is now considered a part of, and that sends a real important message to people and investors that would consider this space,” Rampal said. Similarly important, the European Union voted in July to keep some specific uses of nuclear energy (and natural gas) in its taxonomy of sustainable sources of energy in some circumstances, according to Rampal.

Total venture capital deal activity, according to Pitchbook data, for the last five years.

Chart courtesy Pitchbook.

The VC approach to nuclear

The nuclear power industry in the United States launched as a government project after the U.S. built the first atomic bombs during World War II. In 1951, a nuclear reactor produced electricity for the first time in Idaho at the National Reactor Testing Station, which would become the Idaho National Laboratory.

In the 1960s and 1970s, large conglomerates constructed big nuclear power plants, and those projects often ran over budget. “As a consequence, most of the utilities that undertook nuclear projects suffered ratings downgrades—sometimes several downgrades—during the construction phase,” according to a 2011 report from the Congressional Budget Office. Also, the Three Mile Island accident in 1979 raised public fears about safety and put a damper on construction.

Nuclear power generation in the United States peaked in 2012 with 104 operating reactors, according to the U.S. Energy Information Administration.

However, in recent years, private investors and venture capitalists have been putting money into nuclear startups, driven by a newfound sense of urgency to respond to climate change, as nuclear energy releases no greenhouse gases. There’s also the allure of funding underdog companies with huge upside.

The venture capital model is based on big bets — venture capitalists spread their money across many companies. Most are expected to fail or maybe break even, but if one or two companies get enormous, they more than cover the cost of all those losses. This is the investing model that built Silicon Valley stalwarts like Apple, Google and Tesla.

Some venture capitalists are especially excited about fusion. It’s the type of nuclear energy that powers stars, and it generates no long-lasting radioactive waste — but so far, it’s proven fiendishly difficult to create a lasting fusion reaction on Earth and impossible to generate enough energy for commercial generation.

“It’s far better than nuclear fission,” investor Vinod Khosla told CNBC in October. “It’s far better than coal and fossil fuels for sure. But it’s not ready. And we need to get it ready and build it.”

Khosla isn’t the only one. The private fusion industry has seen almost $5 billion in investment, according to the Fusion Industry Association, and more than half of that has been since since the second quarter of 2021, Andrew Holland, CEO of the association, told CNBC.

Installation of one of the giant 300-tonne magnets that will be used to confine the fusion reaction during the construction of the International Thermonuclear Experimental Reactor (ITER) on the Cadarache site on September 15, 2021.

Jean-marie Hosatte | Gamma-rapho | Getty Images

Others are excited about new advances in nuclear fission, the more traditional type of nuclear power based on breaking atomic nuclei apart, like DCVC founder Zachary Bogue, who invested in micro-nuclear reactor company Oklo.

“Advanced nuclear fission is a quintessential deep-tech venture capital problem,” Bogue told CNBC in September. There is technical and regulatory risk, but if those problems are solved, “there are just massive-scale returns … all of those elements are a perfect recipe for venture capital.”

While these bets seem expensive and risky compared with venture capital’s recent focus on software and consumer tech, they’ll still bring a faster and more agile approach than the old-line nuclear industry.

Take micro-reactors.

“These are going to be very expensive at first. But the goal is to find something that is a product that’s much more flexible, can go on to the grid in many more different places and serve different functions, and go off grid also,” explained MIT’s Parsons.

Similarly, fusion startups say they will generate energy much faster than government research projects like ITER, which has already been in progress since 2007.

This quick-turn approach to investment is spurring experimentation. New generations of nuclear reactors will have different sizes, different coolants and different fuels, explained Matt Crozat, senior director of policy development at the Nuclear Energy Institute. Some reactors are being designed for companies or communities in isolated areas, for example. Others are being made to operate at high temperatures for industrial processes, Crozat told CNBC.

“It really is expanding the range of what nuclear can mean,” Crozat said. Many won’t succeed, but time and the market will figure out what’s needed and what’s possible, he said.

Because venture investors are hungry for returns, this also spurs nuclear startups to chase multiple revenue streams as they’re getting their big-bet technology up and running.

For example, Bill Gates‘ nuclear innovation company TerraPower is working on a demonstration of its advanced reactor in Wyoming in collaboration with the U.S. Department of Energy, but in the meantime is using its capacity to produce isotopes that are also used in medical research and treatments. Advanced nuclear company Kairos Power is developing the capacity to produce salt for molten salt reactors, both for itself and to sell to other companies.

‘A long history of broken promises’

But critics say venture capitalists are ignoring the troubled history of nuclear power as a business.

“Investors have forgotten or are ignoring the lessons from earlier generations of nuclear plants which cost 2 to 3 times as much to build and took years longer than was promised by the vendors,” Schlissel told CNBC. For instance, a project to put two new reactors on the Vogtle power plant in Georgia was originally estimated to be $14 billion and ended up costing more than $34 billion and taking six years longer to complete than expected, he said.

15 November 2022, Egypt, Scharm El Scheich: A nuclear symbol is displayed at a pavilion of the International Atomic Energy Agency IAEA at the UN Climate Summit COP27. Photo: Christophe Gateau/dpa

Picture Alliance | Picture Alliance | Getty Images

Harvard’s Oreskes says the nuclear industry is a “technology with a long history of broken promises,” and she is skeptical of the sudden investor interest.

“If you were my daughter, and you had a boyfriend that had made repeated promises to you over months, years, decades, constantly breaking them, I would say, ‘Do you really want to be with this guy?'”

She’s not categorically anti-nuclear, and supports the continued operation of nuclear power plants that already exist. But she’s particularly skeptical of fusion, which has been promised to be “just around the corner” for decades, and says this new round of investments in fusion “doesn’t pass the laugh test.”

Ultimately, the new crop of nuclear startups has to figure out how to create nuclear energy in a cost-competitive way, or nothing else matters, says Rothrock.

“More money means more startups and to me that means more shots on goal (improving odds of success),” he told CNBC.

“The issue in nuclear is economics. Plants are complicated and take a while to build. Some of these new startups are tackling those issues making them more simple and thus cheaper. No one will buy an expensive power plant, especially a nuclear plant. Economics drives it all.”


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Two children and two adults survive after Tesla plunges 250 feet off California cliff

View from the helicopter during a rescue operation after a vehicle carrying two adults and two children went over a cliff in Devil’s Slide, San Mateo county, California, U.S., January 2, 2023, plunging hundreds of feet, according to the Department of Forestry and Fire Protection, in this still image obtained from social media video.

CHP – Golden Gate Division | Reuters

Two adults and two children were rescued from a Tesla that plunged 250 feet off a cliff Monday morning in San Mateo County, California, officials said. 

The car was traveling southbound on the Pacific Coast Highway when it went over the cliff at Devil’s Slide, south of the Tom Lantos tunnel, and landed near the water’s edge below, the Cal Fire San Mateo-Santa Cruz Unit said. 

The car flipped and landed on its wheels in the fall, CAL FIRE/Coastside Fire Incident Commander Brian Pottenger said. Witnesses saw the accident and called 911. 

As crews were lowered down, they were able to see movement in the front seat, through their binoculars, meaning someone was alive.

“We were actually very shocked when we found survivable victims in the vehicle. So, that actually was a really hopeful moment for us,” Pottenger said. 

Fire officials called for helicopters to help hoist the survivors to safety. As they waited, firefighters rappelled to the scene and rescued the two children.

Rescue teams are seen at the scene as a Tesla with four occupants plunged over a cliff on Pacific Coast Highway 1 at Devils Slide on January 2, 2022 in San Mateo County, California, United States.

Tayfun Coskun | Anadolu Agency | Getty Images

The California Highway Patrol shared video on social media showing helicopters lower first responders to the scene to extricate and rescue two adults inside. 

All four were hospitalized. The San Mateo Sheriff’s Office said the two adults suffered non-life-threatening injuries and the two children were unharmed.

It’s not clear what caused the car to go over the cliff. CHP is handling the investigation. 

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Tesla shares tumble more than 10% following deliveries report

Tesla vehicles are shown at a sales and service center in Vista, California, June 3, 2022.

Mike Blake | Reuters

Shares of Tesla dropped 13% on Tuesday morning, a day after the electric auto maker reported fourth-quarter vehicle production and delivery numbers for 2022.

Deliveries are the closest approximation of sales disclosed by Tesla. The company reported 405,278 total deliveries for the quarter and 1.31 million total deliveries for the year. These numbers represented a record for the Elon Musk-led automaker and growth of 40% in deliveries year over year, but they fell shy of analysts’ expectations.

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Some analysts see a buying opportunity in Tesla for 2023 despite persistent demand pressures


According to a consensus of analysts’ estimates compiled by FactSet, as of Dec. 31, 2022, Wall Street was expecting Tesla to report around 427,000 deliveries for the final quarter of the year. Estimates updated in December, and included in the FactSet consensus, ranged from 409,000 to 433,000.

Those more recent estimates were in line with a company-compiled consensus distributed by Tesla investor relations Vice President Martin Viecha. 

Some Wall Street analysts think Tesla’s deliveries miss spells trouble for the electric vehicle maker, but others see a buying opportunity for the company in 2023.

Baird analyst Ben Kallo, who recently named Tesla a top pick for 2023, maintained an outperform rating and said he would remain a buyer of the stock ahead of the company’s earnings report, which is scheduled for Jan. 25.

“Q4 deliveries missed consensus but beat our estimates,” he said in a Tuesday note. “Importantly, production increased ~20% q/q which we expect to continue into 2023 as gigafactories in Berlin and Austin continue to ramp.”

Analysts at Goldman Sachs said they consider the delivery report to be an “incremental negative,” and view Tesla as a company that is “well positioned for long-term growth.” Goldman reiterated its buy rating on the stock in a Monday note and said that making vehicles more affordable in a challenging macroeconomic environment will be a “key driver of growth.”

“We believe key debates from here will be on whether vehicle deliveries can reaccelerate, margins and Tesla’s brand,” the analysts said.

Shares of Tesla suffered an extreme yearlong sell-off in 2022, prompting CEO Musk to tell employees in late December not to be “too bothered by stock market craziness.”

Musk has blamed Tesla’s declining share price in part on rising interest rates. But critics point to his rocky $44 billion Twitter takeover as a bigger culprit for the slide.

Morgan Stanley analysts said they think the company’s share price weakness is a “window of opportunity to buy.”

“Between a worsening macro backdrop, record high unaffordability, and increasing competition, there are hurdles for all auto companies to overcome in the year ahead,” they said in a note Tuesday. “However, within this backdrop we believe TSLA has the potential to widen its lead in the EV race, as it leverages its cost and scale advantages to further itself from the competition.”

CNBC’s Lora Kolodny and Michael Bloom contributed to this report.

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Tesla makes China boss Tom Zhu its highest-profile executive after Elon Musk

Tom Zhu Xiaotong, Tesla’s current executive in charge of China, speaks as a new Tesla experience store opens on Aug. 18, 2015 in Hangzhou, China.

Visual China Group | Getty Images

Tesla’s China chief Tom Zhu has been promoted to take direct oversight of the electric carmaker’s U.S. assembly plants as well as sales operations in North America and Europe, according to an internal posting of reporting lines reviewed by Reuters.

The Tesla posting showed that Zhu’s title of vice president for Greater China had not changed and that he also retained his responsibilities as Tesla’s most senior executive for sales in the rest of Asia as of Tuesday.

The move makes Zhu the highest-profile executive at Tesla after Chief Executive Elon Musk, with direct oversight for deliveries in all of its major markets and operations of its key production hubs.

The reporting lines for Zhu would keep Tesla’s vehicle design and development — both areas where Musk has been heavily involved — separate while creating an apparent deputy to Musk on the more near-term challenges of managing global sales and output.

Tesla did not immediately respond to a Reuters request for comment.

Reuters reviewed the organizational chart that had been posted internally by Tesla and confirmed the change with two people who had seen it. They asked not to be named because they were not authorized to discuss the matter.

Elon Musk needs to go back to Tesla and have others run Twitter, says Jim Cramer

Zhu and a team of his reports were brought in by Tesla late last year to troubleshoot production issues in the United States, driving an expectation among his colleagues then that he was being groomed for a bigger role.

Zhu’s appointment to a global role comes at a time when Musk has been distracted by his acquisition of Twitter and Tesla analysts and investors have urged action that would deepen the senior executive bench and allow him to focus on Tesla.

Under Zhu, Tesla’s Shanghai plant rebounded strongly from Covid lockdowns in China.

Tesla said on Monday that it had delivered 405,278 vehicles in the fourth quarter, short of Wall Street estimates, according to data compiled by Refinitiv.

The company had delivered 308,600 vehicles in the same period a year earlier.

The Tesla managers reporting to Zhu include: Jason Shawhan, director of manufacturing at the Gigafactory in Texas; Hrushikesh Sagar, senior director of manufacturing at Tesla’s Fremont factory; Joe Ward, vice president in charge of Europe, the Middle East and Africa; and Troy Jones, vice president of North America sales and service, according to the Tesla notice on reporting lines reviewed by Reuters.

Tesla country managers in China, Japan, Australia and New Zealand continued to report to Zhu, the notice showed.

Zhu does not have a direct report at Tesla’s still-ramping Berlin plant, but a person with knowledge of the matter said responsibility for that operation would come with the reporting line for Amsterdam-based Ward. Ward could not be immediately reached for comment.

Zhu, who was born in China but now holds a New Zealand passport, joined Tesla in 2014. Before that he was a project manager at a company established by his MBA classmates at Duke University, advising Chinese contractors working on infrastructure projects in Africa.

During Shanghai’s two-month Covid lockdown, Zhu was among the first batch of employees sleeping in the factory as they sought to keep it running, people who work with him have said.

Zhu, a no-fuss manager who sports a buzz cut, favors Tesla-branded fleece jackets and has lived in a government-subsidized apartment that is a 10-minute drive from the Shanghai Gigafactory. It was not immediately clear whether he would move after his promotion.

He takes charge of Tesla’s main production hubs at a time when the company is readying the launch of Cybertruck and a revamped version of its Model 3 sedan. Tesla has also said it is developing a cheaper electric vehicle but has not provided details on that plan.

When Tesla posted a picture on Twitter last month to celebrate its Austin, Texas, plant hitting a production milestone for its Model Y, Zhu was among hundreds of workers smiling on the factory floor.

Why China is beating the U.S. in electric vehicles

Allan Wang, who was promoted to vice president in charge of sales in China in July, was listed as the legal representative for the operation in registration papers filed with Chinese regulators in a change by the company last month.

Tesla board member James Murdoch said in November the company had recently identified a potential successor to Musk without naming the person. Murdoch did not respond to a request for comment.

Electrek previously reported that Zhu would take responsibility for U.S. sales, delivery and service.

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