SES AI, a Massachusetts-based battery startup, is abandoning its ambitions to manufacture batteries at scale and redirecting the company toward artificial intelligence, CEO Qichao Hu confirmed to MIT Technology Review on March 25, 2026.
Hu's reasoning is stark. SES AI once aimed to produce large volumes of next-generation lithium-metal batteries, positioning itself as a key player in the Western energy storage supply chain. That vision has been shelved. The competitive pressure from Chinese battery manufacturers — who have driven down costs and scaled production far faster than Western rivals — has made mass manufacturing an increasingly unviable path for companies like SES.
A Blunt Diagnosis of Western Battery Manufacturing
Hu did not soften his assessment of where the industry stands. "Almost every Western battery company has either died or is going to die. It's kind of the reality," he told MIT Technology Review. That candour from a sitting CEO is unusual, and it reflects a sentiment building quietly across the sector as companies including Northvolt — once Europe's great battery hope — have faced severe financial difficulties.
"Almost every Western battery company has either died or is going to die. It's kind of the reality."
The structural problem is well-documented. Chinese manufacturers, led by companies such as CATL and BYD, have spent years investing in gigafactory capacity, securing raw material supply chains, and competing on price at a scale that Western startups cannot match without massive, sustained government backing. For a company like SES AI, which has not disclosed the full details of its new AI strategy, the pivot represents an acknowledgment that competing on hardware volume alone is a losing proposition.
From Lithium-Metal Cells to AI: What the Pivot Involves
SES AI's original technology centred on lithium-metal batteries — a chemistry that promises significantly higher energy density than conventional lithium-ion cells, making it particularly attractive for electric vehicles and aerospace applications. The company raised substantial funding on the back of that technology, going public via a SPAC merger in 2022 at an implied valuation of approximately $3.6 billion, though its market capitalisation has declined considerably since then.
The precise contours of the AI pivot have not been fully detailed, according to the MIT Technology Review report. However, the strategic logic is apparent: SES AI accumulated years of proprietary data on battery performance, degradation, and electrochemical behaviour. That dataset could plausibly feed AI models designed to optimise battery management systems, predict cell failure, accelerate materials discovery, or support customers in managing large-scale energy storage deployments — applications where software margins far exceed those available in hardware manufacturing.
This is not an entirely novel approach. Several hardware companies that found physical manufacturing economics brutal have attempted to reframe themselves as data or software businesses. The credibility of such pivots typically depends on whether the underlying data and technical expertise are genuinely differentiated.
The Broader Collapse of Western Battery Ambitions
SES AI's decision arrives at a particularly difficult moment for the Western battery industry. Northvolt, the Swedish manufacturer that attracted more than $15 billion in investment and was once seen as Europe's answer to Chinese battery dominance, filed for bankruptcy protection in late 2024. Several US-based battery startups have similarly scaled back or shut down operations as the gap between projected and actual manufacturing costs proved impossible to close.
Government policy has attempted to cushion the blow. The US Inflation Reduction Act directed significant subsidies toward domestic battery production, and the European Union has pursued its own industrial policy interventions. But subsidy programmes have not been sufficient to offset the fundamental cost advantages that Chinese manufacturers have built through years of scale and vertical integration.
For SES AI, the pivot also raises questions about the fate of its battery technology assets. Lithium-metal chemistry remains scientifically promising — the energy density advantages are real — but translating laboratory performance into commercially viable, cost-competitive cells at scale has proven extraordinarily difficult for every company that has attempted it, including well-funded rivals such as QuantumScape.
What This Means
SES AI's pivot is a leading indicator, not an outlier: Western battery startups built on manufacturing ambitions face a binary choice between finding defensible software or data-driven niches and accepting that Chinese competitors have made mass-market hardware economics unworkable for them.