The Brief | January 31, 2024

The Brief: The Brief: Is the EV glass half-full or half-empty?

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Greetings Agents of Impact! In today’s Brief:

  • Mixed signals for electric vehicles
  • Leveraging federal funds for community lending
  • Habitat for Humanity’s impact investing

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Featured: Electrify Everything

Is the EV glass half-full or half-empty? “Nobody said it was easy,” as Coldplay reminds us. “No one ever said it would be so hard.” That’s how BloombergNEF’s Corey Cantor kicked off his talk, “What could derail US EV adoption?” at this week’s BNEF Summit in San Francisco. The vibe shift on US adoption of electric vehicles comes even as sales topped 1.4 million last year, up more than 50%. Signals like Ford’s major pullback in its EV battery investment plans and GM’s delays in the introduction of the Chevy Equinox SUV suggest past performance may not be a reliable indicator.

  • Headwinds. Cantor cited consumer perceptions of high prices, low battery range, and the continued shortage of (working) charging stations. This year’s US presidential election introduces political risk, not just to EV tax credits in the Inflation Reduction Act, but also to fuel economy standards and executive orders around government fleet purchasing. Made-in-America rules mean many EV models are not eligible for the IRA tax credits, anyway. And EV adoption in the US has become as polarized as everything else; sales are markedly higher in “blue” states than “red”. Ford’s sales of its F150 Lightning are at only about 20% of the company’s targets. When it comes to EVs, “success, not failure, is the historical outlier,” Cantor said.
  • Good news. Hyundai-Kia, Volvo, Mercedes-Benz and BMW report that EVs are making up a dramatically higher share of sales. Tesla and Rivian are readying mass-market models for next year. More affordable models are on the way, like the Kia EV9 and the Volvo EX-30. Federal grants for public EV charging infrastructure are starting to go out the door. BNEF projects US EV sales will reach 1.9 million vehicles this year. The better question, Cantor suggested: “How can stakeholders take advantage of a changing, unsettled US EV market?”
  • Charged up. The demand for reliable EV chargers means charging companies that can execute “are setting impressive benchmarks” in revenues and profits, said Henry Lee of UBS, which has invested in Xeal, EV Passport, Blink Charging and others. In New York, Revel Transit integrates a network of fast-charging hubs with its ride-hailing service to maximize utilization. The city’s mayor Eric Adams has called for the city’s 100,000 ride-sharing vehicles to be all-electric by 2030. Michael Battaglia of Blink, which owns 5,000 chargers in the US, said utility load-sharing and vehicle-to-grid schemes can help EV charging networks recoup costs. Elemental Excelerator’s Dawn Lippert said AI and new technologies are disrupting EVs like everything else. Elemental’s portfolio company uses remote drivers to deliver EVs to customers in Las Vegas.
  • Keep reading, “Is the EV glass half-full or half-empty?” by David Bank on ImpactAlpha. 

Dealflow: Community Investing

Sorenson Impact Foundation inks five investments for underserved communities. The Utah-based foundation closed last year with a handful of new program-related investments. Totem, a Native-led fintech startup, provides benefit disbursements and payroll management for Tribal governments and enterprises. Redemption Bank, a Black-owned holding company in the Salt Lake City area, is acquiring a previously white-owned bank in order to expand access to capital for people of color. In Latin America, the foundation backed the NESsT Lirio Fund, a debt fund that provides working capital to small businesses in the Andes-Amazon region of Latin America (see, “Missing middle lending to social enterprises in Latin America”). Other fourth-quarter investments, which ranged from $250,000 to $1 million per deal, include San Francisco-based Participant Assistive Products, which makes wheelchairs for children with cerebral palsy, and New York-based Kiip, which helps low-income individuals obtain social services.

  • Bridging gaps. Post-pandemic, Sorenson Impact Foundation shifted its program-related investment strategy “towards investment into frontier and emerging markets that experienced unprecedented capital flight,” said Sorenson’s Savannah Johnson. The fourth-quarter deals brought the foundation’s 2023 total to seven program-related investments totaling $2.75 million (disclosure: Sorenson Impact Foundation is an investor in ImpactAlpha).
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Cultivo clinches $14 million to unlock capital for nature-based projects. The San Francisco-based B Corp. uses AI and satellites to pinpoint high-quality and investable nature-based projects. Cultivo develops sustainable grasslands and reforestation projects on behalf of investors to track carbon removal and biodiversity benefits. “Companies are wanting to secure a future supply of high-quality carbon removal credits to mitigate volatility and quality concerns seen in the voluntary carbon markets,” said Cultivo’s Manuel Pinuela. Cultivo says its current pipeline could remove more than three gigatons of carbon from the atmosphere over two decades.

  • Nature-based credits. The Series A round was co-led by MassMutual Ventures and Octopus Energy Generation, which formed an agreement with Cultivo to deploy up to $40 million in nature-based projects in North America, Europe and Australia. Brookfield’s Mark Carney sits on Cultivo’s board of directors.
  • Check it out.

Dealflow overflow. Investment news crossing our screens:

  • Schroders’ Greencoat group agreed to buy 53 solar farms in the UK from Toucan Energy for £700 million ($890 million). The farms have peak energy capacity of 514 megawatts. (PV Tech)
  • Crux scored $18.2 million from Andreessen Horowitz, Lowercarbon Capital and others to link clean energy developers with tax credits available under the Inflation Reduction Act. (Axios)
  • Aster raised $2.4 million from Cake VC, Cornerstone VC, Zeal Capital Partners and others for patient management software for women’s health providers. (Aster)
  • Berlin-based Future Energy Ventures raised €110 million with backing from E.ON and the European Investment Fund to invest in early-stage decarbonization technologies for cities and for the energy sector. (Future Energy Ventures)
  • New York-based GreenSpark clinched $9.4 million for software to help metal recyclers improve their operations. (FinSMEs)

Impact Voices: Catalytic Capital 

How US community lenders are tapping impact capital to leverage federal investments. The US government is making historic investments in minority deposit institutions, community development finance institutions, and low-income credit unions. Will private investors step up to provide the capital these institutions need to expand economic opportunity and advance climate justice in underserved communities? “To capitalize on this historic opportunity to grow their balance sheets and invest in their local economies, they will need to leverage this government funding with deposits and long-term private debt,” Hana Freymiller and Neil Gregory of West Potomac Capital write in a guest post on ImpactAlpha.

  • Mission alignment. Freymiller and Gregory estimate MDFIs need to raise over $150 billion in private capital over five years to fully leverage US government investments. The historic funding includes the Emergency Capital Investment Program, which provided $9 billion to community lenders. The $27 billion Greenhouse Gas Reduction Fund will provide new capital to CDFIs for community climate projects. Mission-driven financial institutions need to build capacity to deploy the funding. “Impact investors seeking to support economic opportunity and climate justice in the US could be a good match for these financing needs,” argue Freymiller and Gregory.
  • Read their full post

Investing at the intersection of affordable housing and climate resilience. Habitat for Humanity is best known for marshaling volunteers to build affordable homes across the world. It also is among a growing number of legacy nonprofits – including UNICEF and Save the Children – that have launched impact funds to advance and scale their missions. In a guest post on ImpactAlpha, Habitat for Humanity’s Jitendra Balani, Naeem Razwani and Elizabeth Vivirito call for affordable housing investors to join forces with climate investors to meet the challenges of a rapidly warming world. It’s necessary to work “at the intersection of communities that earn less than an area’s median income and the places where climate change is most likely to produce inequitable outcomes,” they write.

  • Centering underserved communities. The Greenhouse Gas Reduction Fund awards expected this spring will enable community lenders to mobilize financing for local climate resilience projects, including home improvements (see “Green bank partnerships center affordable housing in climate action”). At least 60% of the financing activities must be targeted to low- and moderate- income communities. “It’s a bet that other countries and multinational financial institutions should also make – and an opportunity to center affordable housing in their approaches,” writes the Habitat team.
  • Get their full take

Agents of Impact: Follow the Talent

Alexis Shivick, previously with Vanguard Charitable, joins Reinvestment Fund as risk and compliance manager… The Fund to Build Grassroots Power, a supportive fund for networks and alliances in the US advancing environmental and climate justice, is recruiting an executive director… Autodesk is hiring a sustainability specialist for impact and ESG… Ford Foundation is looking for an impact investing fellow in New York… Viridian Group is on the hunt for an energy transition investment associate… Forum Mobility has an opening for a finance manager in San Francisco.

Platinum Pacific Partners seeks an impact investing associate in Sydney… The Families and Workers Fund is hiring two program fellows… NASCAR is hiring a community impact and sustainability coordinator in Charlotte… Bain Capital Double Impact becomes a signatory of the Impact Principles… The Robert Wood Johnson Foundation seeks proposals by Monday, Feb. 12 for research on the “intersection of financialization and structural racism” in the US healthcare system.

👉 View (or post) impact investing jobs on ImpactAlpha’s new Career Hub.

Thank you for your impact!

– Jan. 31, 2024