EV funding gains traction

Fire and fear notwithstanding, the EV startup segment has seen a steady inflow of funds from investors globally. Sumana Sarkar speaks to a few of the PE firms and other stakeholders to understand the investment rationale driving these funding rounds.

-  Sumana Sarkar

EV sales are picking up at a fast and a furious pace and if there is another aspect of EVs that’s able to keep pace with it, it is no doubt the investment in EVs. While retail sales of EVs hit their highest in FY2022 and just Q1 sales of FY23 account for 49 percent of FY22’s total, PE investment in EVs has seen more than 10 percent jump this year so far.

In the first 6 months of 2022, the EV startup space within the auto sector clocked close to 10,000 crore ($1.25 billion +) of PE investment. While in absolute terms, it is a huge amount, one can understand the extent when seen in comparison to the previous few years.

In 2021, 11 big-ticket investment deals worth $519 million were recorded. This is nearly half of what has been seen in the first 6 months of 2022 while 13 investments worth $165 million took place in 2020, and in 2019, 22 deals worth $490 million happened.

Investment drivers

The question then is so what’s driving the investments? One of the most important factors has been the positive stance or push being given by the central and several state governments. This has acted as a definite booster for the growth of Indian electric auto startups. Therefore, companies are raising funds to improve their R&D structure, advanced technology integration, innovation, testing and international expansion. What’s further abetted the fundraising is the possibility of 100 percent ownership via FDI, a growing awareness about sustainable mobility and the larger goals of sustainability and the need to cut down emissions.