SES AI, the lithium-metal battery startup backed by General Motors and Hyundai, is abandoning battery cell manufacturing and redirecting its resources toward artificial intelligence, according to founder and CEO Qichao Hu, who warned that the Western battery industry faces near-total collapse.

The company had spent over a decade attempting to commercialize lithium-metal batteries — a technology promising significantly higher energy density than conventional lithium-ion cells. That ambition is now being set aside. Hu's pivot reflects a broader reckoning across the Western battery sector, where startups have struggled to match the scale, cost efficiencies, and state support enjoyed by dominant Asian manufacturers, particularly in China.

A Blunt Diagnosis of the Western Battery Sector

Hu did not soften his assessment. "Almost every Western battery company has either died or is going to die," he said, according to MIT Technology Review. The statement carries weight coming from an industry insider who has navigated fundraising, automotive partnerships, and the grueling path toward battery commercialization.

The challenges are structural. Chinese battery giants such as CATL and BYD benefit from deep domestic supply chains, government subsidies, and manufacturing scale that Western entrants cannot easily replicate. Several high-profile Western battery startups — including Northvolt, which filed for bankruptcy protection in late 2024 — have already failed to survive the gap between promising technology and profitable production.

"Almost every Western battery company has either died or is going to die."

SES AI had previously positioned itself as a bridge between laboratory innovation and automotive-grade production, attracting investment and supply agreements from major carmakers. That strategy has now been abandoned in favor of applying the company's materials science data and expertise to AI applications — though the precise nature of those AI products remains early-stage, according to the company.

What the Pivot Actually Involves

The transition is not simply a rebranding exercise. SES AI intends to leverage the proprietary datasets it accumulated during years of battery research — covering electrochemical behavior, materials degradation, and manufacturing variables — as the foundation for AI tools. The company believes this data has value beyond batteries, potentially informing AI systems used in materials discovery, industrial chemistry, or related domains.

This approach mirrors a pattern seen elsewhere in deep-tech: companies that fail to reach commercial scale in hardware increasingly attempt to monetize the intellectual property and data generated during their research phase. Whether that data carries sufficient commercial value to sustain a company is an open question, and SES AI has not disclosed financial projections for the new direction.

The company has raised substantial capital over its lifetime — including a $200 million funding round in 2021 and a public listing via SPAC — meaning investors are now watching a significant reallocation of those resources toward an unproven AI strategy.

The Broader Collapse of Battery Ambitions

The SES AI announcement arrives at a particularly difficult moment for Western industrial policy around batteries. Governments in the United States and European Union invested heavily in incentives designed to cultivate domestic battery supply chains, motivated by electric vehicle targets and energy security concerns. The Inflation Reduction Act in the US directed billions toward domestic battery manufacturing, yet several of the companies expected to benefit have struggled or failed.

Northvolt's bankruptcy was the most prominent recent casualty, but it was not isolated. Startups working on solid-state batteries, sodium-ion cells, and other next-generation chemistries have repeatedly pushed back commercialization timelines, burning through capital as they do so. The fundamental problem — that scaling novel battery chemistry is extraordinarily capital-intensive and technically unforgiving — has proven resistant to venture funding and policy support alike.

Hu's decision to exit the sector entirely rather than attempt another funding round or strategic pivot within batteries suggests a judgment that the economics are not fixable in the near term for Western players.

AI as a Lifeboat, Not Just a Pivot

The reframing of battery research data as an AI asset is intellectually interesting but commercially unproven. Materials science AI is a legitimate and growing field — companies and research institutions are using machine learning to accelerate the discovery of new compounds, predict battery degradation, and optimize manufacturing processes. Google DeepMind's AlphaFold demonstrated the potential of AI to transform materials and biology research, and the broader field has attracted serious investment.

However, the leap from possessing proprietary battery data to building a viable AI business is considerable. The market for materials science AI tools is nascent, potential customers are often large industrial companies with long procurement cycles, and SES AI will face competition from well-funded AI labs and established software companies moving into the space.

The company has not announced specific products, customers, or revenue targets under the new strategy, which makes independent assessment difficult at this stage.

What This Means

SES AI's exit from battery manufacturing is a concrete signal that Western battery startups face existential competitive pressure from Asian manufacturers — and that AI is increasingly the destination of last resort for deep-tech companies holding valuable data but unable to win in hardware markets.