Chennai: The Indian electric vehicle (EV) sector has caught the eye of local and global investors. The surge in interest comes on the back of supportive government policies, increasing awareness of the importance of sustainability, and rising petrol prices.
The year 2021 has already recorded 11 investment deals worth $519 million in the sector compared to 13 investments of $165 million value in entire 2020, according to data from Venture Intelligence (see graphic). The investment tally includes renewable energy companies Fourth Partner Energy and Fortum that also operate in the electric mobility space.
Hero Electric raised around $30 million in the first part of its series-B round led by Gulf Islamic Investments (GII) and existing investor Oaks Asset Management to expand production capacity in July. Battery tech startup Log9 Materials raised around $8.5 million from various investors. Euler Motors, the maker of three-wheeler cargo EVs, raised around $7 million from various investors this year. Ola Electric’s $100-million debt from Bank of Baroda this year is the largest debt financing for the sector.
Industry trackers said as EVs gain critical mass, there is more willingness among investors this year to bet on startups in this segment. Conventional automakers warming up to EVs has also improved investor appetite. Globally, the shift to electric mobility has picked up with growing concerns of climate change. However, unlike the West and China, where personal transportation is going electric, here two-wheelers along with three-wheelers and buses will likely write the India EV story, analysts said. Neeraj Mohan, head of EY-Parthenon India (EY’s consulting arm), said that technological breakthroughs have brought down the cost of EVs to within reach of the mass market.
As early movers such as Ather Energy, Magenta Power, Ampere and Okinawa report an uptick in sales, and with the buzz generated by Ola Electric’s vehicles, more private investment is expected to flow into the sector.
Nakul Kukar, co-founder and CEO of fleet-electrification solutions provider Cell Propulsion (which raised $2 million this year), said global VCs and corporate venture arms have been relatively more active in the segment. “We plan to raise our series-A early next year, by when we shall have over 20 offline stores up and running,” BLive co-founder & CEO Samarth Kholkar said.
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A positive outreach by manufacturers including improved charging infrastructure along with price parity with conventional vehicles on the back of government incentives and falling battery prices are driving demand for EVs, particularly for two- and three-wheelers from logistics and ecommerce players, industry officials said.