Business

The Koch family had a reputation as climate change sceptics but now they back the battery sector…big time

Koch Industries, the eponymous energy conglomerate run by CEO and chairman Charles Koch – the family has an estimated $120 billion fortune – is fast becoming one of the biggest investors in the US battery sector.  

Over the last 18 months, Koch Strategic Platforms, part of the investment arm of Koch Industries with a mandate to invest in energy transition, as well as healthcare and automation, has invested approximately $750 million in US battery supply chains and electric vehicles. 

It’s an interesting pivot for fossil fuel magnate Charles Koch, a renowned libertarian and climate change sceptic, whose network of political donors has allegedly sought to influence government policy on the topic as far back as 1991.

Koch Industries now sees batteries as a key tenet of its next stage of strategic growth and, crucially, a source of profits

Koch Industries has now become one of many fossil fuel producers cognisant of the need to evolve and support energy transition over the coming decades. It now sees batteries as a key tenet of its next stage of strategic growth and, crucially, a source of profits. Of the $3.5 billion Koch Strategic Platforms, $1.7 billion has focused on energy transformation technology.

Several Koch companies such as Molex, Koch Engineered Solutions, and KBX Logistics, are supporting KSP’s investment programme. Molex, a Koch company that manufactures electronic connectors and drives innovation in the US battery space, is working with Nevada battery maker Lithion to increase the capability of its systems. KSP invested in Lithion in June 2021. The firm manufactures battery cells and rechargeable and non-rechargeable battery modules. 

Battery technology and energy storage are one of the biggest areas of investment as the global economy embraces the energy transition with the assistance of government funding. Since the start of last year, according to Crunchbase, the 20 biggest battery backers (led by Northvolt, profiled by Family Capital) have collectively raised more than $8 billion. 

Manufacturing and distribution Infrastructure will be a key element of how the US battery industry grows, requiring gigafactories to meet the scale and production challenges as electric vehicles become more commonplace.

To feed this growth, KSP has invested in a string of other ventures, including a 50:50 joint venture last October with Norwegian company, FREYR, which specialises in the production of next-generation battery production hubs. When completed (earmarked for 2023), the new facility will provide 50 GWh of battery cell manufacturing capacity. 

Other KSP investments in batteries include a $100 million deal with Vancouver-based Standard Lithium last December; a $100 million investment in long-duration energy storage supplier, Eos Energy Enterprises Inc in July, and a $165 million transaction in NASDAQ-listed Solid Power, alongside Riverstone Energy Limited, Neuberger Berman and Van Eck Associates Corporation. Solid Power is a solid-state battery producer backed by Ford.

Koch Disruptive Technologies represents another extension of Koch Industries’ investment programme in energy transformation and electric vehicles. Charles’s son, Chase Koch, is president and founder of KDT, which invests in high growth technology companies, providing early-stage seed through to late-stage growth capital. In August 2021, for example, the platform led a Series B funding round in Gatik, an autonomous vehicle start-up company, to expand its autonomous trucking fleet across North America. 

Electric vehicle battery production and recycling are set to become a supercharged growth sector over the next decade, so it’s unsurprising individuals like Charles Koch are becoming more active. A younger generation of businessmen are far more inclined to prioritise greener, sustainable investment programmes and if, as expected, the US battery industry grows meaningfully, it will serve to further increase their wealth.   

It’s a far cry from the early years of Koch Industries.

After more than a decade of setting up cracking units in the former Soviet Union and oil refineries in Germany during the 1930s, Charles’s father, Fred Koch established Wood River Oil and Refining Company in 1940. The firm was renamed Koch Industries in his honour in 1968. Charles has never wanted to take the company public – “over my dead body” as he once said – but it has hardly mattered. Koch Industries is one of the biggest private companies in the US and generated a substantial fortune for the family.

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