India‘s electric vehicle demand has significantly increased due to new regulatory measures and the escalating costs of fossil fuels. That said, experts predict that PE investment in India’s electric vehicle sector might exceed $1 billion this year, as per Economic Times.
Investors had 26 deals worth $906 million
Based on Venture Intelligence’s data, investors committed $906 million across 26 deals in the nine months leading up to the end of September. These include battery production, battery swapping, and charging stations. On the other hand, 31 deals totaling $1.8 billion in investment were in 2021.
National Investment and Infrastructure Fund (NIIF) executive director and CIO Padmanabh Sinha told ET:
“We believe that EVs are at an inflexion point across multiple vehicle categories–the total cost of ownership is already favourable for two-wheelers and is near par for three-wheelers.”
By 2030, the Narendra Modi-led government aims for electric vehicles to account for 30% of private automobiles, 70% of commercial vehicles, and 80% of two- and three-wheelers.
Indian companies that received funding
Manufacturer of electric vehicle components, Vecmocon secured $5.2 million this month from backers, including Blume Ventures and Tiger Global.
Likewise, individual driver financing platform Revfin completed a $10 million Series A funding anchored by Green Frontier Capital (GFC). It is India’s first venture capital fund to concentrate on investments connected to climate change.
Moreover, Lightspeed led a $13 million Series A funding round for Exponent Energy in August. Notably, it was its first investment in the domestic EV market. The Bengaluru-based company aims to utilize the funds to expand its e-pump network to 100 locations in each city, beginning with Bengaluru.
“As electric vehicle volumes go up, not only is there a need for technology at various levels, but also an opportunity for funds to make investments in this sector,” said Arun Vinayak, co-founder, and CEO of Exponent Energy. “While startups could be a challenge to legacy automakers, we believe that they are crucial to the automotive industry as technology evolves.”
According to Sinha of NIIF, there would be a lot of prospects to invest in companies within the value chain. Ather Energy, a manufacturer of electric two-wheelers, received a $128 million investment from NIIF and Hero MotoCorp in May. The fund will be used to raise Ather’s manufacturing from its current rate of 10,000 units per month to 35,000 units.
On the other hand, Tata Motors received $1 billion from the international PE firm TPG last year for its line of electric passenger vehicles.
According to Blume Ventures director Arpit Agarwal, the country’s accelerating electric vehicle adoption is encouraging for investors. In fact, five investments have already been placed in the industry by Blume Ventures. Agarwal also claims that because of EVs’ reduced “total cost of ownership,” commercial two- and three-wheelers and other segments are witnessing rapid traction.
Meanwhile, British International Investment made a $250 million (Rs 1,925 crore) investment in Mahindra & Mahindra at a $9.1 billion valuation (up to Rs 70,070 crore).
Government initiatives impact India’s EV sector
Pranav Pai, a founding partner at 3one4 Capital, said, “Capital is now backing innovation in most verticals in the space–from commercial EV OEMS to EV fast charging.”
He further asserted that government initiatives like the Make in India program, the production-linked incentive (PLI) and Faster Adoption of Manufacturing of Electric Vehicles (FAME) could turn India’s EV market into a source of economic growth.
As the technological ecosystem experiences a recession, venture capitalists and private equity investors are making a swarm of investments riding on the electric vehicle drive.
Fear of missing out
An investment promotion and facilitation agency’s executive claims that the Indian funds are progressively contemplating early-stage Capital for startups due to a “fear of missing out.” The executive also noted that many smaller funds are considering broadening their investment portfolio towards a more eco-friendly sector.
Notably, Blume’s report reveals that the number of electric two-wheeler sales in India is predicted to increase 24 times from its current rate to 17.69 million units by 2030.
