Electric vehicle sales are increasing... but investments in startups have only recovered to half of their peak value

Electric vehicle sales are increasing, but investment enthusiasm remains at a “half-recovery” level

Although the electric vehicle market continues to grow, the investment atmosphere for startups still appears more cautious compared to past peaks. While vehicle sales have increased, factors such as price burdens, trade conflicts, and subsidy policy changes have cooled overall expectations for the electric vehicle industry.

According to data from the International Energy Agency (IEA), global electric vehicle sales will reach 21 million units by 2025, an increase of over 20% year-on-year. Currently, one in four new car purchases worldwide is an electric vehicle, indicating broader adoption. However, compared to initial market optimism, the growth rate remains slower than expected.

This atmosphere is also reflected directly in investments in electric vehicle-related startups. According to Crunchbase, by 2026, companies in the electric vehicle sector have raised approximately $3.6 billion (about 5.3161 trillion Korean won). There have been about 50 funding rounds, showing some improvement from last year. But compared to the peak of about $19 billion (around 28.0572 trillion Korean won) set in 2021, there is still a significant gap.

Large investments concentrated in promising companies

This year, the most heavily funded company in the electric vehicle sector is Wave, headquartered in London, UK. Wave is not an electric vehicle manufacturer but a developer of autonomous driving technology. Based on its testing history with electric vehicles, it raised $1.2 billion (about 1.772 trillion Korean won) in February this year. Its valuation is set at $8.6 billion.

Also attracting attention is Slate Auto, based in Troy, Michigan, USA. This company develops low-cost electric pickup trucks, focusing on customizable models that can be converted into SUVs. Recently, it secured $650 million (about 959.9 billion Korean won) in Series C funding. The company is also known for support from Jeff Bezos and aims to deliver its first vehicles within this year.

Micro-mobility company Also, spun off from Rivian, is also expanding. The company focuses on electric bicycles and small four-wheeled vehicles capable of carrying cargo, and in March this year, it raised $200 million (about 295.3 billion Korean won) in Series C funding. It also plans to collaborate with DoorDash to develop autonomous delivery vehicles.

Chinese companies are also increasing their presence… funding flows into electric trucks and flying cars

Startups with Chinese backgrounds are actively raising funds. Autonomous driving electric truck developer DeepWay received $310 million (about 457.8 billion Korean won) earlier this year. Xpeng Motors’ flying car subsidiary Ariz also secured $200 million (about 295.3 billion Korean won) in new funding.

This indicates that the electric vehicle industry has expanded from purely passenger cars to logistics, delivery, and urban air mobility sectors. However, investment funds are not broadly covering the entire industry but are concentrated in promising areas and major players, reflecting a cautious market sentiment.

Public listings and mergers & acquisitions remain subdued… especially cautious in the US market

Despite continued inflows of private equity investment, exit markets are relatively quiet. In the IPO market, Chinese electric vehicle brand Boya listed on the Hong Kong stock exchange last month, and Indian electric scooter and charging company Ather Energy went public last year.

In contrast, US startups have mostly adopted a wait-and-see approach in the IPO market over the past few quarters. Aside from one case, solar-powered electric vehicle company Aptera conducted a small-scale IPO of $9 million (about 53.16k Korean won) earlier this year.

The M&A market situation is similar. According to Crunchbase, there have been few major acquisitions of unlisted electric vehicle companies backed by venture capital in recent quarters. Notable ongoing deals include the special purpose acquisition company (SPAC) merger of Swedish autonomous electric freight startup Einride.

Autonomous driving investments are even hotter than electric vehicles… future expansion possibilities attract attention

While this year’s electric vehicle investment environment is not exactly “depressed,” it is still premature to call it a strong recovery. Especially when compared to the record-high investment scale in autonomous driving startups, the gap is quite evident.

However, in the long term, the widespread adoption of autonomous driving technology could positively impact the electric vehicle ecosystem. Even if autonomous services are fully deployed, they still require a solid vehicle supply foundation. Ultimately, the electric vehicle market continues to rely on two core pillars: sales growth and technological innovation. But it seems likely that investors will continue to “selectively bet” in the short term.

TP AI notes: This article has been summarized using a language model based on TokenPost.ai. There may be omissions or discrepancies with the facts in the main content.