Are VC Investments Turning The Needle In Favour of Electric Vehicles (EVs) Adoption?
ClimateAngels | Jan 22, 2022
As electric vehicles (EVs) adoption charts unprecedented levels in 2021, it raises the question – is it venture funding that moved the needle?
Transport is a leading cause of carbon emissions globally, accounting for a 71% increase in green house gases (GHGs) since 90s. The transition to electric vehicles (EVs) is a preferred tool for countering its effects.
Emma Cox, the lead author of the PwC analysis on the state of climate tech, said that Mobility has proven to be a profit generator for investors. The industry saw an investment of 138 Billion USD in the last decade alone, contributing 43 out of the 78 climate tech unicorns.
The number of mobility unicorns also shot up from 30 in 2020 to 43 in 2021. The insightful research report also states that nearly two-third (~66.67%) of the investment in the climate tech sector during 2020 and 2021 went towards mobility and transport innovations.
For example: Most active investors in Mobility and Transport include industry giants like Sequoia and Toyota.
Source: State of Climate Tech In 2012 – PwC
While there might be other compelling reasons for increased EV adoption as–increasing prices of petroleum and diesel, preferential policies, falling battery prices, etc. But innovation spurred by private equity & VC seems to have tipped the needle towards the industry.
According to the Transport and Environment organization, Petrol and Diesel cars release 3x more Carbon Dioxide compared to EVs. As the climate change movement gets mainstream attention, and more countries put in place regulations that favour the use of alternative sources of energy to transition to becoming net-zero economies, the adoption of EVs comes forward as a possible solution to the otherwise rather inevitable doom.
Source: Transport & Environment
Thriving e-mobility paves the green road to net zero
A total of 2.65 Million EVs found new homes during the first half of 2021, showing an increase of 168% compared to 2020. The EV mania seems even more profound when one looks at data from the past decade from 395 cars sold in 2010, the last quarter of 2021 to nearly 1.5 million EV sales in the last quarter of 2021, EVs have come very far indeed.
The reports cited show a massive increase in the share of investments in Mobility and Transport challenges associated with climate tech.
They also paint the grave picture citing the fact that despite the record capital flowing in, other Climate Tech solutions – representing more than 80% of emissions reduction potential by 2050 – received just 25% of the climate tech investments between 2013 and H1 2021.
Source: Bloomberg Intelligence
The decade sees soaring Climate Tech investments, mobility gets lion’s share
On one hand there’s so hype about the positivity in the Climate Tech sector, and on the other reports fail to mention the perspective change brought about in the general public by the extensive Venture Capital Investments into electric vehicles (EVs).
Climate change is one of the most pressing issues that the human race is facing today. Government actions alone are not enough to overcome the challenges posed by the climate change.
Market-based solutions like electric mobility have the potential to mitigate its negative impact and are the need of the hour. Climate Technologies and other tech environment friendly tech products like EVs can drive global decarbonization. Not only this will create significant economic value, but it also see its mass adoption and generate compelling returns on investments (ROIs).
Given the investing focus on mobility & transport, it comes as no surprise that the largest number of unicorns across the different challenge areas in climate tech belong to this segment – 43 unicorns from a total of 78 unicorns in climate tech.
VCs are thus, encouraging a new breed of entrepreneurs – Climatepreneurs; champions of Mother Nature – globally innovating in the clean mobility & transportation sectors.
More Into Climate Tech and Climate Tech Investments From Climate Angels
Climate Angels: An angel investment syndication platform for pollution reduction and climate Tech Start-ups. We’re powered by India’s leading entrepreneurs and Climatepreneurs, VCs, and Investors to mitigate the effects of pollutions and climate change.
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References
1. Will This Generation Of “Climate Tech” Be Different?
2. Climate Tech Investments | Forbes India
3. Year in Review Charts: Electric Cars, Sustainable Debt, Climate Tech, Renewables – Bloomberg
4. State of Climate Tech 2021
5. The State of Climate Tech 2020