As the war in Iran continues to engulf the Middle East and the Strait of Hormuz stays closed, one of the most visible global economic ripple effects has been fossil-fuel prices. In particular, you can’t get away from news about the price of gasoline, which just topped an average of $4 a gallon in the US, its highest level since 2022.

But looking ahead, further consequences for the global economy could be looming in plastics. Plastics are made using petrochemicals, and the supply chain impacts of the oil bottleneck near Iran are starting to build up. 

Plastic production accounts for roughly 5% of global carbon dioxide emissions today. And our current moment shows just how embedded oil and gas products are in our lives. It goes far beyond their use for energy. 

As I write this, I’m wearing clothes that contain plastic fibers, typing on a plastic keyboard, and looking through the plastic lenses of my glasses. It’s hard to imagine what our world looks like without plastic. And in some ways, moving away from fossil-derived plastic could prove even more complicated than decarbonizing our energy system. 

Crude oil prices have been on a roller-coaster in recent weeks, and prices have recently topped $100 a barrel.

Crude oil contains a huge range of hydrocarbons, and it’s typically refined by putting it through a distillation unit that separates the raw material into different fractions according to their boiling point. Those fractions then go on to be further processed into everything from jet fuel to asphalt binder. We’ve already seen the price spikes for some materials pulled out of crude oil, like gasoline and jet fuel.

Let’s zoom in on another component, naphtha. It can be added to gasoline and jet fuel to improve performance. It can also be used as a solvent or as a raw material to make plastics.

The Middle East currently accounts for about 20% of global naphtha production­ and supplies about 40% of the market in Asia, where prices are already up by 50% over the last month.

We’re starting to see these effects trickle down already. The price of polypropylene (which is made from naphtha and used for food containers, bottle caps, and even automotive parts) is climbing, especially in Asia.  

Typically, manufacturers have a bit of stock built up, but that’ll be exhausted soon, likely in the coming weeks. The largest supplier of water bottles in India recently announced that it would raise prices by 11% after its packaging costs went up by over 70%, according to reporting from Reuters. Toys could be more expensive this holiday season as manufacturers grapple with supply chain concerns.

Americans will likely feel these ripples especially hard if disruptions continue. The average US resident used over 250 kilograms of new plastics in 2019, according to a 2022 report from the Organization for Economic Cooperation and Development. That’s an absolutely massive number—the global average is just 60 kilograms.

The effects of higher prices for both fuels and feedstocks could compound and multiply, and alternatives aren’t widely available. Bio-based plastics made with materials like plant sugars exist, but they still make up a vanishingly tiny portion of the market. As of 2025, global plastics production totaled over 431 million metric tons per year. Bio-based and bio-degradable plastics made up about 0.5% of that, a share that could reach 1% by 2030.

Bio-based plastics are much more expensive than their fossil-derived counterparts. And many are made using agricultural raw materials, so scaling them up too much could be harmful for the environment and might compete with other industries like food production.

Recycling isn’t the easy answer either. Mechanical recycling is the current standard method used for materials like the plastics that make up water bottles and disposable coffee cups. But that degrades the materials over time, so they can’t be used infinitely. Chemical recycling has its own host of issues—the facilities that do it can be highly polluting, and today plastics that go into advanced recycling plants largely don’t actually go into new plastics.

There’s been a lot of talk in recent weeks about how this energy crisis is going to push the world more toward renewable energy. Solar panels, electric vehicles, and batteries could suddenly become more attractive as we face the drastic consequences of a disruption in the global fossil-fuel supply.

But when it comes to plastic, the future looks far more complicated. Even though the plastics industry is facing much the same disruptions as the energy sector, there aren’t the same obvious alternatives available for a transition. Our lives are tied up in plastic, with uses ranging from the essential (like medical equipment) to the mundane (my to-go coffee cup). Soon, our economy could feel the effects of just how much we rely on fossil-derived plastics, and how hard it’s going to be to replace them. 

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Qichao Hu doesn’t mince words about how he sees the state of the battery industry. “Almost every Western battery company has either died or is going to die. It’s kind of the reality,” he says.

Hu is the CEO of SES AI, a Massachusetts-based battery company. It once had aims of making huge amounts of advanced lithium metal batteries for major industries like electric vehicles—but now the company is placing its bets on AI materials discovery.

Hu sees the pivot as an essential one. “It’s just not possible for a Western company to build a sustainable business,” he says. The company is still making some batteries, but only for smaller markets like drones rather than those that would require higher volumes, like EVs. The new focus is the company’s battery materials discovery platform—which it can either license to other battery companies or use to develop materials to sell. 

Some leading US EV battery companies have folded in recent months, and others, like SES AI, are making dramatic changes in strategy. This shift in who’s building batteries and where they’re doing it could shape the future geopolitics of energy. 

The work that would eventually evolve into SES AI began at MIT, where Hu completed his graduate research. His battery work was aimed at applications in oil and gas exploration. The industry uses sensors that go deep underground, where temperatures can top 120 °C (about 250 °F). The team hoped to develop a battery that could withstand those high temperatures and last longer on a single charge. 

The chosen technology was a solid polymer lithium metal battery. These cells use lithium metal for their anode and a polymer for their electrolyte (the material that ions move through in a battery cell). Together, these components can increase the energy density of a cell significantly, relative to the lithium-ion batteries that are common in personal devices and EVs today. (Lithium-ion batteries generally use a graphite material for their anode and a liquid for the electrolyte.)

That solid-state battery technology became the foundation of Solid Energy, a startup Hu founded that spun out from MIT in 2012 and raised its first private investment in 2013.

The team eventually realized that underground oil exploration was a small market, so after several years of operation they began to focus on electric vehicles, which were starting to come into the mainstream. After the team tweaked the chemistry to work better at lower temperatures, the company built its first pilot facility in Massachusetts and eventually another facility in Shanghai.

By 2021, the battery industry was booming, Hu recalls, and EVs were the hottest industry to be in. There was a ton of interest in next-generation battery technology from major automakers at the time, and Solid Energy started developing technology with GM, Hyundai, and Honda.

Larger vehicles, like SUVs and trucks, seemed like a good fit for next-generation batteries, Hu says. Massive vehicles like the ones Americans like to drive would need lighter batteries so they could have a reasonable range without being prohibitively heavy.

The company also shifted its chemistry focus, and in 2022 it announced a battery with a silicon anode rather than a lithium metal one. That shift could help make the battery easier to manufacture.

Since then, growth in the EV market has slowed, at least in the US, partly because of major pullbacks in funding from the Trump administration. EV tax credits for drivers, a key piece of support pushing Americans toward electric options, ended in late 2025. With the market for large electric cars in trouble, Hu says, “now we have to look at every market.”  

The AI materials discovery platform on which it’s pinning many of its hopes is called Molecular Universe. The company seeks not only to provide its software to other battery companies but also to identify new battery materials and either license them or sell them to those companies.

COURTESY OF SES AI

The platform has already identified six new electrolyte materials, according to the company. Hu says one is an additive that could help improve the lifetime of batteries with silicon anodes. 

One of the challenges with silicon anodes is that they tend to swell a lot during use, which can cause physical damage and prevent efficient charging and discharging. To address the problem, the industry typically uses a material called fluoroethylene carbonate (FEC), which can help form an elastic film on the anode so the battery can still charge effectively. That additive can degrade at high temperatures, though, producing gases that can harm a battery’s lifetime. The SES platform identified a compound that works like FEC but doesn’t release those gases.

The company’s long history and deep battery knowledge could help make its platform a useful tool, Hu says. He sees the actual model as less crucial than SES’s domain expertise and data from years of making and testing batteries. 

“By not actually making the physical battery, we’re actually able to scale and then generate revenue faster,” he says. 

But some experts are skeptical about the near-term prospects for AI materials discovery to revive the industry. “New materials development, as much as we thought that was what people wanted (and, frankly, it should be what the cell makers want)—I don’t know that that seems to be the real linchpin of the battery industry’s progress,” says Kara Rodby, a technical principal at Volta Energy Technologies, a venture capital firm that focuses on the energy storage industry.

Investors are pulling back, and a slowdown in public support is making things difficult for some parts of the battery industry, she adds: “I don’t know that the ability to discover any new material is going to unlock anything new for the battery industry at this point in time.”

Just a few years ago, the battery industry was hot, hot, hot. There was a seemingly infinite number of companies popping up, with shiny new chemistries and massive fundraising rounds. My biggest problem was sifting through the pile to pick the most exciting news to cover.

That tide has turned, and in 2026, what seems to be in unlimited supply isn’t battery success stories but stumbles or straight-up implosions. Companies are failing, investors are pulling back, and batteries, especially for EVs, aren’t looking so hot anymore. On Monday, Steve Levine at The Information (paywalled link) reported that 24M Technologies, a battery company founded in 2010, was shutting down and would auction off its property.

The company itself has been silent, but this is the latest in a string of bad signs, and it’s a big one—at one point 24M was worth over $1 billion, and the company’s innovations could have worked with existing technology. So where does that leave the battery industry?

Many buzzy battery startups in recent years have been trying to sell some new, innovative chemistry to compete with lithium-ion batteries, the status quo that powers phones, laptops, electric vehicles, and even grid storage arrays today. Think sodium-ion batteries and solid-state cells.

24M wasn’t trying to sell a departure from lithium-ion but improvements that could work with the tech. One of the company’s major innovations was its manufacturing process, which involved essentially smearing materials onto sheets of metal to form the electrodes, a simpler and potentially cheaper technique than the standard one. 

The layers in the company’s batteries were thicker, which cut down on some of the inactive materials in cells and improved the energy density. That allows more energy to be stored in a smaller package, boosting the range of EVs—the company famously had a goal of a 1,000-mile battery (about 1,600 kilometers).

We’re still thin on details of what exactly went down at 24M and what comes next for its tech. The company didn’t get back to my questions sent to the official press email, and nobody picked up the phone when I called. 24M cofounder and MIT professor Yet-Ming Chiang declined to speak on the record.

For those who have been closely following the battery industry, more bad news isn’t too surprising. It feels as if everyone is short on money these days, and as purse strings tighten, there’s less interest in novel ideas. “It just feels like there’s not a lot of appetite for innovation,” says Kara Rodby, a technical principal at Volta Energy Technologies, a venture capital firm that focuses on the energy storage industry.

Natron Energy, one of the leading sodium-ion startups in the US, shut down operations in September last year. Ample, an EV battery-swapping company, filed for bankruptcy in December 2025.  

There were always going to be failures from the recent battery boom. Money was flowing to all sorts of companies, some pitching truly wild ideas. But what recent months have made clear is that the battery market is turning brutal, even for the relatively safe bets.

Because 24M’s technology was designed to work into existing lithium-ion chemistry, it could have been an attractive candidate for existing battery companies to license or even acquire. “It’s a great example of something that should have been easier,” Rodby says.  

The gutting of major components of the Inflation Reduction Act, key legislation in the US that provided funding and incentives for batteries and EVs, certainly hasn’t helped. The EV market in the US is cooling off, with automakers canceling EV models and slashing factory plans.

There are bright spots. China’s battery industry is thriving, and its battery and EV giants are looking ever more dominant. The market for stationary energy storage is also still seeing positive signs of growth, even in the US. 

But overall, it’s not looking great. 

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