Caught My Eye…
This week, the House passed H.R.1, the "One Big Beautiful Bill Act," a sweeping reconciliation bill that includes major tax cuts, new defense spending, and rescissions of unspent funds from the Inflation Reduction Act. The House version reflects a reordering of fiscal priorities, away from austerity and toward debt-financed industrial policy. It prioritizes permanent tax cuts, military modernization, and border enforcement. A large portion of the funding is directed toward expanding the defense industrial base, with investments in munitions production, shipbuilding, hypersonics, and space systems. New provisions also reduce regulatory burdens on energy and infrastructure projects, aiming to accelerate domestic fossil fuel production and permitting timelines. The bill also includes structural changes to social safety net programs, with new work requirements and benefit restrictions across Medicaid, SNAP, and student aid. Taken together, the bill channels public resources toward national security and supply chain resilience, while deprioritizing decarbonization and entitlements. The Senate is expected to take up its version of the bill in early June, with negotiations likely to begin immediately to reconcile differences with the House version.
China’s CATL, the world’s largest EV battery maker, raised nearly $5 billion in a secondary Hong Kong listing this week to fund its overseas expansion. The company plans to use the proceeds to accelerate construction of new factories in Hungary, Spain, and Germany, building on its partnerships with European automakers like BMW and Stellantis. This marks a push for CATL to scale beyond China, where it already supplies one in every three EV batteries worldwide and a growing share of grid storage systems. CATL has also expanded its presence in the U.S. through grid-scale deployments and a technology licensing deal with Ford. The company spent over $2.6 billion on R&D last year, nearly three times what LG Energy Solution (the leading non-Chinese competitor and the world’s second-largest battery maker), invested, positioning it to lead advances in fast-charging and sodium-ion battery chemistry. CATL’s rise is part of a broader Chinese lead in the battery supply chain. China now produces more than three-quarters of the world’s lithium-ion batteries and refines the majority of global lithium, cobalt, and nickel. That dominance is the result of a decade of industrial policy, direct subsidies, and state-backed control over upstream resources. With a vast domestic EV market and vertically integrated supply chains, Chinese battery firms benefit from both scale and strategic alignment. The U.S., by contrast, is in the early stages of building domestic capacity. The 2022 Inflation Reduction Act catalyzed over $130 billion in new clean energy manufacturing investment, including dozens of battery and EV-related facilities in states like Michigan, Kentucky, Georgia, and Nevada. Two incentives have been central: the 30D consumer EV tax credit, which encourages local assembly and sourcing, and the 45X production credit, which offsets the cost of U.S.-made battery cells and modules. Together, they have helped re-anchor parts of the EV supply chain in the U.S. and created tens of thousands of jobs in the process. However, the current version of the Big Beautiful Bill could repeal or restrict both credits, cutting off key incentives just as factories are being built, putting much of the U.S. battery boom at risk.
Venture firms including Khosla Ventures, General Catalyst, and Thrive Capital are testing a new investment strategy, involving acquiring mature, low-tech service businesses and modernizing them with AI tools internally. These targets, such as call centers, accounting firms, and homeowners associations, offer steady cash flows and entrenched customer bases that could be made more efficient with internal AI tools and automation. General Catalyst has already backed seven such companies, including Long Lake, a platform rolling up HOAs, which has raised $670 million. Khosla Ventures is evaluating similar deals and may partner with experienced PE firms to handle execution, aiming to stay capital-light while providing AI startups with built-in distribution. The shift reflects a broader recalibration in venture, as firms look for more scalable and capital-efficient ways to monetize AI in mature companies. Rather than waiting for AI startups to crack enterprise sales from the outside, VCs are beginning to buy the customer base directly and apply AI internally to expand margin and throughput. This could shorten the path to revenue and avoid long procurement cycles. For VCs, it reduces dependence on binary outcomes by backing proven businesses that can still benefit from internal AI tools and automation. The model, if it works, could emerge as a new hybrid category that sits between traditional venture and private equity, designed to industrialize the rollout of AI into mature businesses.
Other Reading
Credit Card 90-Day Delinquencies Rise to Record High (Payments Dive)
Nvidia Pushes Further Into Cloud With GPU Marketplace (Wall Street Journal)
Oracle to Buy $40B of Nvidia Chips for OpenAI’s 1.2 Gigawatt Data Center (Financial Times)
Introducing Claude 4 (Anthropic)
On X…
