Are Investors Failing the Industry?

Here is the first part of the analysis:

A Few Baskets Get Most of the Eggs

Why do some E2W/L-category vehicle startups get massive funding, while many die without support? What do investors look for? Does everything make sense? What makes startups attractive? We dug through 15+ years of funding data to identify trends. Then, the question: What is the RoI for investors?

Insight EVTeam InsightEV

Things that have changed since last week

Before we start, let's share the revised graphic from last week. We had to revise the graphic because Ather announced the magnitude of their IPO. The company is doing a USD 350m IPO on the Indian bourses.

This change means:

1. Ola's share of overall funding has declined somewhat to 23.62%.
2. Ather's share in the overall funding has increased sharply to 14.92%. It is in the second position now.
3. Gogoro (13.1%), Zero Motorcycles (9.14%), and Livewire (6.15%) continue to round up the top five.
4. The top five now account for 66.93% of all funding, up from our estimate of 65% last week.

Geographical Split of Funding

Low entry barriers, a technology that is (relatively) easy to work with, and a global supply chain to support make E2W/E3W mobility an immensely fertile ground. Since the worldwide ecosystem is still in its early stages, incumbents are also in their infancy, and startups dominate every geography. The number of products with a global reach is very small. Even popular products like the Gogoro S2, the Bajaj Chetak, or the Stark Varg are geographically concentrated. No Chetaks are sold in Europe, and no Vargs are sold in India. In fact, the Hondas (ICON e: and CUV e:) would be the first truly global products.

...if we do not consider the ubiquitous Chinese factory made scooter...

Looking at the global pie, India dominates the funding, attracting nearly 51% of all investments. There are two primary reasons for this: first, India is the largest two-wheeler market in the world, and second, China invested in electric two-wheelers two decades ago, data points that were not considered in this study.

India is followed by North America, which accounted for more than 22% of all funding. Taiwan accounted for 13% of all funding, and Gogoro all of it.

The surprise in the study is the ASEAN market. As a combined geography, ASEAN is third in the pecking order when it comes to two-wheeler sales. However, for E2W investments, ASEAN received only 2.41%. This is due to a late shift to electric mobility in the region. Most investments have started happening in the last five years, and there are still only a few start-ups that are working on E2Ws. The landscape is heavily dominated by Honda and Yamaha, both of which are also very politically active. Apart from Vietnam, none of the other economies has made a serious foray into self-created electric mobility. There are electric scooter sales, but the current market is dominated by importers, who bring Chinese scooters into their respective geographies.

Europe attracted 4.79% of the investments. This is not to say that there are not enough European startups. It's just that investors haven't found European startups attractive.

Then there is Africa, with a nearly 2.34% share in global funding. Africa is at the start of its journey in electric mobility. The start-ups are decent, the opportunities are promising, but most investments are still at the Series A or Series B levels, with investee companies in their early stages. This landscape may evolve to much larger in the next 10 years.

A deeper dive into the investments by geography reveals trends and highlights the different outlooks that investors have for the respective geographies.