The Electric Vehicle (EV) startup market is accelerating at breakneck speed. Predicted to reach a value of $61.73 billion by 2029, in Europe alone. Electric car startups are leading the charge on the conversion into sustainable mobility. Encouraging a huge commitment from investors and governments around the world. Let’s take a closer look at what makes EV startups stand out at this moment in time.
Startup bubbles are bursting left and right with markets on high alert and the scale-up pace slowing down. A niche, like EV, that wasn’t exactly the most popular kid in school, is gaining strong momentum. The key factor? It’s sustainable!
Plans and investments by countries around the world make EVs a growing industry, no matter what happens in the broader tech world. People are demanding green mobility at accelerated rates. So, EV and all its parts are stepping up to deliver, driving growth and motivating investors.
Want more evidence? All the big players are in with the US, Europe, and Asia all having ambitious EV plans. Plus, most well-known automotive brands have EV investments to power their roles in the future of mobility.
Why does the EV market have all the green lights?
EV is in the driver’s seat and climbing to the top fast, but what are the key factors bringing this industry to the forefront of investors, consumers and the tech ecosystem as a whole?
Steadfast in an uncertain tech market
The post-pandemic tech ecosystem has been hit by some rocky times. Startups have seen growth slowdown and investment caps that are pointing to a need for more regulated scale-ups, something that EV startups can offer.
Companies in this field are responding to a need in the market, one that is only growing. The market is open to new ideas and developments, which makes investment safer and smart. No, we are not saying all EV companies will make it but there are enough growth possibilities for many to find success.
This steadfast quality is extremely attractive in a volatile market, especially when it’s driven by trusted factors. Government-run plans for EV expansion and consumer needs on the rise, are some of the best indicators an investment party can have that they will see some ROI from their funding, and EV has both.
Potential for high and accelerated growth
Imagine the demand for EVs growing at the same rate as the concerns linked to climate change, that’s quite a pace, right? Truthfully, there’s no major city or country where sustainability isn’t being discussed or treated as a major part of planning agendas and budgets. That makes an enormous difference when it comes to industry growth.
Initiatives and adoption of EV technology have been on the fast track for the past few years and the industry is running to respond. The one thing that can effectively make that change happen is investments. VC funds and other investors are interested in making an impact, getting into the market, and becoming the names behind the leaders of mobility.
Companies in the EV field have an enormous opportunity for innovation. Electric vehicles and the infrastructure they need is complex and filled with variety for creation and development. This leaves a lot of room for VC funds to invest in attractive ideas that could be the ‘next big thing’.
EV startups were seen as disruptors to the automotive industry, and still are in some ways, but we are witnessing a change of baton between the old school and a new generation of mobility. This new phase will require all the innovation the industry can provide and one that fits each region. Some countries with lots of sunny days will need to convert that into energy while other companies will need to develop batteries for hot weather like the middle east.
Innovation is not only an opportunity in EV it will be a necessity with VCs reaping the benefits of a well-played investment.
Environmental and social impact
This is the big one. Despite economical reasons being a relevant part of why EVs are on the rise, the environmental and social impacts are the most important aspect. There is no escaping the consequences of climate change for anyone, and the time for action is now.
Many of the most important VC funds in EV are solely focused on supporting sustainable startups, and all understand the need for change in the automotive industry. One of the few industries where investment can have such a positive effect on the world.
Allining your investments with the fight against climate change and the benefits of EV tech is a sound move all around!
Variety in investment niches
Electric Vehicles require a vast ecosystem of elements in order to successfully replace fossil fuel options. This creates a healthy investment industry, a field of opportunity for startups to come up with ideas in areas like.
- EV development and manufacturing
- Charging technology and infrastructure
- Software for EV
- AI development
There is an enormous capacity for investment in EVs. That increases interest in the market and VCs’ chances of finding success with a startup.
All in all, EVs have all the fundamentals of an industry on the rise, plus overall support from consumers, institutions, innovators and governments. There is no stopping this race now.
Incentives for EV acceleration in the biggest markets
One of the most essential green flags the EV industry has is its position within official planning policies to fight against climate change. Like the rest of cleantech and environment-focused startups, EV is becoming a central fixture in the plans for the future.
Countries, cities, consumers and automotive all see EVs as part of the solution, giving the industry an incredibly strong backing and potential. Let’s take a closer look at how much EVs are going to be part of ‘tomorrow’s’ mobility plans.
The US is one of the most vehicle-reliant countries in the world and that probably won’t change soon, considering the size and scope of transportation in the country. However, they do have a plan for what vehicles they will be driving in the future.
President Biden’s bipartisan Infrastructure Law will invest “$7.5 billion in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals, and materials.” Plus, plans to have 50% of all new vehicle sales be EVs by 2023. Once again, ambitious, and fast-paced.
Besides these incentives, the law also contemplates support for battery tech and tax credits for EV purchases and installation of infrastructure.
Across the continent, governments are encouraging the transition to electric cars and the development of EV charging infrastructure with a variety of incentives.
The EU as a whole has the goal of ending the sale of CO2-emitting vehicles by 2035. Most importantly, the biggest economies in the EU are champions of EV change, giving significant incentives and making policy changes to encourage the industry’s growth.
France is pushing for EVs along with the rescue of its auto industry by investing €8 billion, looking to produce over 1 million EVs annually by 2025, committing to having over 100K charging points and dedicating €1.3 billion to different incentive measures from tax cuts to subsidies.
Germany has set a visionary goal of reaching 10 million EVs and 1 million charging spots by 2030. To do so it has integrated a multifaceted scheme of subsidies through the Umweltbonus’, the environmental bonus program, tax benefits and EV charging benefits.
The United Kingdom plans to transition into zero-emission vehicles by 2035 and has several investment plans in the works to encourage the transition into EVs. A leader already in tech, innovation and investment can make the UK take a pole position in the industry. One of its biggest hopes is battery technology, with several companies opening gigafactories in the country. The EV revolution could be powered by the UK.
Driving towards the future
The achievement of a successful overturn from fuel to electric depends on many components and we are surely getting there. The EV ecosystem and its investors are placing the players in a winning position to complete the transition.
One of the key factors in making EVs a strong weapon in fighting climate change will be creating the right circuits of supply and development. Sourcing energy from sustainable sources, building locally and cutting emissions in every way possible. Making EV a true disrupter in the way we move.