Investors Are Fueling Auto Startups In EVs And Ride-Hailing

Chinese firms are 2018’s big winners, capturing 41 percent of new auto-startup investment

As ride-hailing services and electric and driverless vehicles become an increasing presence in how we travel, so too has the rate at which investors are fueling automotive startups, particularly those that focus on these new technologies and business models. In 2018, these automotive startup investments totaled $27.5 billion — 30 percent higher than 2017, double the level of 2015, and 20 times that of 2010. But the astonishing value of investment made last year isn’t a reflection of a spike in the number of startup opportunities. Rather, it highlights the growing value of the average investment in the last eight years. Our research shows that investors are attracted more towards sure-bet enterprises than untested startups. The average investment has quadrupled to $39 million in 2018 from $10 million in 2010. 

China-based firms also looked increasingly attractive to investors. While the growth of Chinese automotive companies is already fostered by their government, they’re also enjoying a boost from risk-averse investors. Seemingly safer thanks to the government’s support, startups in China received more than 41 percent — $11.4 billion — of all the investments made in automotive startups last year. Those funds went to 13 Chinese firms — seven of which produce electric vehicles (EVs). More than half of all EVs were sold in China last year as the government converted its city buses to electric and offered tax cuts to consumers for buying electric cars. Among the 30 highly funded startups around the world, China claims the most with 13, one more than the US. 

To learn more about the recent growth in automotive startups that is fueled largely by Chinese investors, please check-out this article written by Oliver Wyman Partner Matthias Bentenrieder and Principal Andreas Nienhaus.