EV companies raised $666 million from PE/VCs in 2022

EV sector in India attracted $1.7 billion from the PE/VC investors in India. This amount has reached $ 666 million in 2022 so far. 

In terms of investments, EV industry has attracted $6 billion in 2021 and is expected to gain $20 billion by 2030. EV market has observed strong attention from PE/VC investors in India with investments increasing from $ 181 million to $ 1,718 million (recording an annual growth rate of 849%).

According to a report titled 'Electrifying Indian Mobility' prepared by Indian Venture and Alternate Capital Association(IVCA), India's apex body representing the interests of PE/VC industry,  in collaboration with EY and IndusLaw.

In the last 2 years, there haves been investments to the tune of $550million, a huge increase from the funding received in 2019 ($390 million), in EV manufacturers like OLA Electric, EULER, Ather Energy for the development of newer and safer electric vehicles. The technology is still in a nascent stage, and there is a lot of development needed in terms of range, faster vehicles, quick charging, and batteries maintaining composure under temperature. Euler is working on e3W with higher payload, range and gradeability. Ather Energy is also funded by Hero Motorcorp for the development of e2W Technology and vehicles.

EV market has observed strong attention from PE/VC investors in India with investments increasing from $ 181 million to US$ 1,718 million (recording an annual growth rate of 849%). Strong investments in the EV segments can help boost operations in last-mile delivery, which if implemented across scale, can enable in generating operational savings for the fleet operators.

Rajat Tandon, President, IVCA stated that while the Indian start-up ecosystem is focused on technological adaptation and  environment, social aspects have also topped their themes for innovation. This is likely to give further boost and momentum to the growth in ESG and Climate specific funds. Fast adoption of EV across all the segments is truly the path to the green frontier. The IVCA-EY-IndusLaw report reveals some such interesting facts and data as it elaborates various challenges and opportunities that prevail in the sector. I would like to thank EY and IndusLaw team for collaborating with IVCA in putting together this report and for their detailed work.”

The report also highlights the global best practices for EVs, the current Indian policy environment, and PE/VC investments in this sector so far, investment opportunities in India for both investors and entrepreneurs. The EV industry is likely to create more than 10Mn direct jobs and 50 million indirect jobs by 2030. In every aspect, the sector offers tremendous opportunities.

Many new and first-time investors are joining the bandwagon. However, experts feel that there is a need for the government and larger investor community to come together and work towards more sustainable solutions.

Srihari Mulgund, New Age Mobility Partner, EY-Parthenon, said that “Electrification of Indian mobility presents a ‘once-in-a-lifetime opportunity’ to reimagine the future of the Indian automotive sector. Electrification has leveled the playing field across the value chain and Indian players must acknowledge this new dynamic and increasingly work towards becoming a global automotive powerhouse of the future. Technology will be a key enabler for a successful transition and given that technology is evolving faster than ever, the players need to make multiple bets to survive and grow during this transition. Hence, capital becomes a strategic lever as we embark on this journey to electrify mobility.” 

Kartik Ganapathy, founding partner, IndusLaw, said that “In a world ripe with innovation but rife with various stresses, it appears that the time is right for electric automobiles.  IndusLaw is happy to be a part of the movement towards cleaner greener locomotion. There are challenges to solve and improvements to be made, and writing this report was a signal of IndusLaw's intent to be part of an enduring and sustainable solution. It was great to work on this publication with IVCA and E&Y, and we hope this report finds its place in the literature on the subject of EVs.”

EV industry

EV registrations amounted to ~330k units, a jump of 168% from 2020. The sales were led by 2- and 3-wheelers – ~48% and ~47%, respectively – followed by passenger vehicles at ~4%. E-rickshaw/e-kart category (top speed less than 25km/ hr) takes the major share among three wheelers with ~45%, according to the report.

E-buses are included in others with a share of 0.36%. The spike can be attributed to the need for personal mobility, increased awareness of the environment and rise in prices of gasoline (which have increased by INR 43 in the three years from 2019 to 2022). 

The second phase of Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME II)

incentives have also helped in the increased adoption of e2W. Q1 2022 has already seen sales of almost 110k units.

As of CY21, electric vehicles accounted for 1.1% of total vehicle sales and is expected to account for 39% of total automotive sales by CY27 growing at a ~68% CAGR over the next 5 years. The majority growth in EVs is expected to come from the travel segment, especially E3Ws and E2Ws due to fixed duty cycle and companies (E-commerce, groceries, shops) committing to going completely electric in their last mile deliveries.

Lack of charging infrastructure is one of the biggest challenges for the EV sector. Currently, there are only 1,742 charging stations in the country. This number is expected to increase to 100,000 units by 2027 to accommodate the increasing demand by ~1.4 million EVs expected to be on the roads by then.

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