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Corporate Investors are Investing Billions in EVs and Related Startups in the U.S. & China

Corporate Investors are Investing Billions in EVs and Related Startups in the U.S. & China

Author: Eric Walz   

As the auto industry moves toward electrification, big corporations not normally associated with investments in the auto industry have been pouring money into electric vehicle startups working on electric vehicles, batteries and EV charging infrastructure.

Money has also been flowing to startups developing their own electric vehicles that will give traditional automakers new competition just like Tesla has done.

According to a Reuters analysis of publicly available data, Around 250 startups involved in some aspect of electrification have attracted more than $20 billion in venture capital from a broad group of corporations across multiple industries.

"Electrification will set off a number of economic changes in the traditional value chain in and around vehicles," said Reilly Brennan, managing director of San Francisco-based Trucks Venture Capital said to Reuters.

Because of those changes, in addition to funding EV development, investors see revenue opportunities in related markets, such as consumer products and home energy, Brennan said.

The new investments have come from corporations across a wide variety of industries, including automotive, energy, electronics, aerospace and telecommunications.

The steady improvements in lithium-ion battery technology are expected to led to a higher number of EV's on the roads, while environmental regulations further limit the production of internal combustion engines, making battery firms that supply the automotive industry an attractive investment.

Big Oil Companies Want in on EV Charging Infrastructure

As reported by Reuters, big oil companies, such as BP and Royal Dutch Shell, see EV-related investments partly as a hedge against dwindling demand for fossil fuels for privately owned vehicles, according to venture investor Evangelos Simoudis, managing director of Synapse Partners.

Oil companies also see an opportunity to provide electric vehicle charging at gas stations that instead of dispensing gas and diesel fuel will transform to become EV charging locations in the future.

Simoudis, who advises corporate executives on new mobility innovation strategy, said that even aerospace companies have a vested interest in startups working on advanced battery systems. U.S.-based Boeing and France's Airbus are both working to develop electric planes and are seeking out investments in advanced battery technology.

Investments from Telecommunication Companies

Large telecommunication companies, such as Verizon Communications Inc, will play a role in connected electric vehicles, as the rollout of 5G technology is expected to create entirely new business and retail opportunities as cars become rolling internet connected devices.

The technology known as V2I (vehicle-to-infrastructure), will create new opportunities for retail businesses to connected with passengers in nearby cars, as well as provide entertainment options to passengers riding in autonomous cars.

Semiconductor makers such as Nvidia, Intel Corp and Qualcomm see their computer chips being used in an increasing number of applications in future electric and self-driving vehicles, Simoudis added.

Nvidia's DRIVE hardware is one of the most robust autonomous driving systems under development. DRIVE is a scalable computing platform that enables automakers and tier 1 suppliers to accelerate production of automated and autonomous vehicles.

The most active corporate investor in electrification is Intel, which has backed battery startups Prieto, Qnovo and Enovix and EV charging startups WiTricity and Chargifi.

Reuters has discovered that dozens of the startups focused on EV charging and infrastructure have been funded by many of the same corporate investors, including Chevron Corp and Switzerland-based ABB AG, which is investing heavily in EV charging infrastructure.

Investments from Major Automakers

Major automakers looking to secure batteries for their future electric models have invested heavily in EV battery startups, including General Motors, BMW AG, Daimler AG, Nissan Motor Co, Hyundai Motor Co and SAIC Motor Corp.

German automaker Daimler is investing heavily to secure a "global battery network" to ensue a to supports its electric vehicle plans. In December, the automaker announced it plans to buy $23 billion worth of battery cells by 2030 from suppliers LG Chem, SK Innovation, as well as China's CATL.

China's EV Push

The biggest investments are being made in electric vehicle startups, especially those in China. As a result of China's "Made in China 2025" plan to transition the country to battery-powered vehicles and clean China's air pollution, hundreds of new EV startups have popped up.

Beijing provides generous subsidies and state investment in the electric vehicle sector, including building a widespread EV charging network.

According to data from IHS Market in July 2018 and reviewed by the Wall Street Journal, 487 electric vehicle startups are looking to enter the Chinese market. Sales of electric vehicles in China are expected to surpass 5 million units by 2025, up from 700,000 in 2017.

In June 2018, China's Development and Reform Commission announced a new $47 billion fund designed to support the development of EV technologies.

Corporate investment in China's startups has come from big Chinese companies such as automaker FAW Car Co and battery maker Contemporary Amperex Technology Co (CATL), which have backed EV startup Byton, a new automaker expected to deliver is first EV later this year.

Chinese technology giants Baidu and Tencent have both funded WM Motor, while China's e-commerce company Alibaba has invested in Xiaopeng Motors, another new EV startup.

In the United States, GM and BMW have backed electric bus maker Proterra, while Caterpillar Inc, best known for heavy construction machinery, has invested in California-based electric car maker Fisker Inc.

All of this money pouring into the automotive industry may eventually led to consolidation among companies, with only the most innovative rising to the top. However, this will likely not deter additional investments from pouring in as the auto industry moves quickly towards electrification.

Eric Walz
Eric Walz
Originally from New Jersey, Eric is an automotive and technology reporter specializing in the high-tech industry in Silicon Valley. Eric has over fifteen years of automotive experience and a B.A. in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the automotive industry and beyond. He has worked on self-driving cars and as a technical writer, helping people to understand and work with technology. Outside of work, Eric likes to travel to new places, play guitar, and explore the outdoors.
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