Published on February 13th, 2020 |
by Maarten Vinkhuyzen
February 13th, 2020 by Maarten Vinkhuyzen
The Global e-Mobility Funding Report for the third quarter of 2019 showed a total of $2.7 billion raised by 45 electric vehicle (EV) companies across the world. This funding amount is even higher in reality since another 18 EV-related companies didn’t disclose any financial details.
EVBoosters, the initiator of this free accessible report and a CleanTechnica partner, estimated that the overall transactions reached a total of $4 billion for the third quarter of 2019. This is based on the average value per transaction of $65 million in 2019.
In the first three quarters of 2019, at least 134 e-mobility companies raised $8.7 billion. According to Paul Jan Jacobs, the founder of EVBoosters and an EV market expert, the overall investments in EV companies exceeded $15 billion by January 1, 2020.
Investments in EV companies have especially been coming from venture capital firms and legacy automotive industry players.
The year 2020 will be the “Year of the EV” in Europe and probably in China, according to EVBoosters. In preparation for the sales surge that will start emerging, the smart money has been looking for EV investment opportunities in companies that will profit most from these developments. E-mobility producers and rental and ridesharing companies were the hot segments.
The 3rd quarter saw a growing number of companies and many more investors, but no whales to push the investment total to record heights. A lot of seed money (below 8 digits) was put up to explore the viability of new ideas.
The Volkswagen vs Toyota Saga Continues
The two largest auto companies continued on their very different paths in the second half of 2019. Volkswagen CEO Herbert Diess kept mobilizing the company’s employees and accelerating the company’s transition to EVs. The Volkswagen Group has been increasing its production and investment goals. Diess has been telling the world Volkswagen will keep pace with Tesla, and aims to overtake Tesla in the long run to again become the world #1.
A remarkable new entry on the e-mobility investment scene is Toyota. After ignoring the plug-in market for a long time and only starting to offer PHEVs after strong customer demand showed a desire for them, Toyota started to move into the EV market with EV production in China. It also put e-mobility funding into two shared electric mobility companies. The good thing is that Toyota is moving, albeit disappointingly slow.
Investors Playing It Safe
The e-mobility space can be divided into the production space — carmakers, battery makers, and their suppliers — and the operational space — all the different charging-related companies. Traditional service and gas-station companies have to reinvent themselves for the new electric age.
EV Production Most Popular
The largest investments were in luxury carmakers — the path that was successful for Tesla. However, this is also the path leading to competition with the most successful EV company. The market is wide open for new entrants on the other side of the market, like e.GO in Aachen, Germany — companies that make small, light cars for people with less money to spend. It is much harder to get investors interested in their EV strategies when it is an unconventional strategy, though. That is strange, because new ways of entering the market in a disruptive way are coming from companies with fresh ideas.
EV Ride Sharing Was #2
The second biggest focus was on cheap, shared two-wheelers. This is a complete new market segment. It started with bicycles for tourist in big cities; renting them for the rides, picking them up where they were needed, and dropping them off at the destination. With the electrification of bicycles, mopeds, and scooters, a new business was born. Large four-wheel companies like Hertz, Avis, and Sixt are not really active in e-mobility yet. For the four-wheel market, there are a few electric initiatives like ZITY in Madrid and Car2Go, but they need the push of the city to become a success.
Lack of Investments in Charging Operators
Lack of investments in the charging industry, especially in charging providers, signals growing shortages. For the charging industry, the chicken-and-egg question is a problem. Making chargers is a normal industrial proposition, paid when the equipment is sold. Exploiting chargers in an electricity retail company is much harder. Profits will only come after years of building the points of sales. We need the shops (chargers) to assure potential EV drivers. Without a charging network, there are not many buyers for electric vehicles. Without buyers of EVs, there are not much charging customers. Opening shops and waiting years for the customers to show up is a risky and expensive proposition. The first, like Fastned, were strongly motivated by environmental concerns. The second, like Ionity, had financial backing from carmakers. Now oil and energy companies are buying charging providers, but buying companies is not the same as building stations.
Europe alone needs to build over 10,000 DC fast charging stations ASAP. Beside these, a million level 2 chargers at parking lots and for overnight charging should also be installed. To be more precise, Europe needs one million level 2 chargers installed every year. This essential part of e-mobility development is mostly shunned by the investors, however.
Top 3 Leading & Remarkable Fundraisers
Besides the companies that succeeded in convincing investors to part with the largest sums of money, one company is the rising star of this quarter.
Lixiang was the most successful fundraiser in the 3rd quarter, with $530 million raised. It is based on the same integrated business model as Tesla. From concept, design, and production to sales, services, rental, and carsharing — all in one company. After this successful Q3 capital raise, it just announced a US IPO.
Byton is a Chinese EV company founded in 2017 by European ex-BMW and Nissan managers. In a play on its name, the first models are called the M-Byte (SUV) and K-Byte (sedan). No doubt the next will be G-Byte and T-Byte, with the Nibble as a small city car.
Byton is aiming at the same market as the Model 3 and Model Y, with more conventional styling inside and out.
The fundraising champion of last year was Rivian, collecting about $3 billion in 2019. The main investors were Ford and Amazon. Ford will use Rivian technology to accelerate its EV development. Amazon has ordered 102,000 electric delivery vans. The Rivian pickup R1T and its nephew the R1S SUV are considered among the most luxurious new models presented in recent years. What makes them special is the way the designers have used every advantage of electric driving and a large battery. No engine and no drive shaft create a host of opportunities that many designers will happily imitate.
What to say about Bird and its electric scooters. Before they became electric, those steering bars connected by a pole to a plank with 2 very little wheels were considered small children toys. For the age when kids just learned to walk. Now they are called electric scooters and are all the rage in urban environments. There are undoubtedly a lot of fun. On safety and practicality, the jury is still out.
The Uber of India is called OLA. In May 2017, Ola gave birth to an electric daughter. It was successful, but needed to do a lot more than just put electric rickshaws on its app. The problem in India, as in many countries, was the chicken and egg of chargers and EVs. They were waiting on each other. Ola Electric Mobility is doing both and has started to develop India-specific solutions, like a battery swapping service for e-rickshaws.
Combining the interests to 1) attract customers to shopping locations and 2) place billboards in highly visible places, allowing with the universal desire to get something for free, Volta Charging created a business plan of free chargers paid for by the advertisers and shops at the mall.
The combination of original and successful makes this the rising star.
Free Download Report via EV Treasury Room
The Global e-Mobility Funding Report is an initiative of EVBoosters and supported by Venture IQ, a data-driven technology company.
The report can be downloaded in exchange for contact details via the EV Treasury Room, a non-commercial digital library that lists EV market development reports and surveys from around the world. The EV Treasury Room also offers free access to all other Global e-Mobility Funding Reports.
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