EV start-ups in India record highest funding in a decade, sees a jump of 117%

EV start-ups in India raised a total of $1.66 billion in 2022, a jump of 117 per cent from 2021, a recent report by market intelligence platform Tracxn said. It added that the sector recorded only four $100 million+ investment rounds in 2022, compared with just two in 2021. Late-stage funding in the sector also rose 124 per cent to $1.02 billion in 2022. Early-stage funding, too,  witnessed a massive growth of 160 per cent from $202 million in 2021 to $526 million in 2022. The average ticket size of early-stage investments rose sharply by 112 per cent this year, according to the report.

In terms of funding, the Indian EV space is the fourth-highest after the US, China and Sweden. The report found that Blume Ventures, Micelio, and GrayCell Ventures are the top seed-stage investors in this space in India, while the biggest early-stage investors are Tiger Global Management, Sequoia Capital, and Qualcomm Ventures. The top late-stage investors are GIC, The Rise Fund, and Tekne Capital Management.

“In the latest budget government has introduced more such policies that will surely help the sector like the customs duty on capital goods and machinery for manufacturing EV batteries has been exempted and the duty on lithium batteries has been decreased from 21 per cent to 13 per cent as part of the Union budget for 2023- 2024, which will eventually result in lower pricing and more investment in the industry,” said Neha Singh, Co-founder of Tracxn.

In its Electric Vehicles - India Feed Geo Report, Tracxn said that this increase is largely due to the spike in late-stage funding rounds, which accounted for almost 62 per cent of the total funding in this space in 2022. The report is based on Tracxn's extensive database and provides insights into India’s electric vehicles (EV) space. The Indian EV space is the third-largest in terms of the number of companies, next to the US and China.

India reached a major milestone of 1 million EVs sold in 2022, with electric 2-wheelers constituting a majority portion of the sales. Favourable government policies, an increasing number of options, and the growing infrastructure for EVs have led to the increased adoption of EVs this year.

“The subsidies for EV batteries have also been extended by another year. The funding for the FAME II programme has also been increased. Although there is still a long way to go until EVs are widely used in India, we believe the government's plans are wise steps that will support the industry's rapid future growth,” Singh adds.

The sector, the report adds, recorded four $100 million+ investment rounds in 2022, compared with just two in 2021. Also, no new Unicorns have been created and no IPOs have taken place in this space. “Electric Car Manufacturers, Electric Scooter Manufacturers and Station Based Electric Bike Rentals were the top performing business models in this segment,” it said.

Among the cities, Bengaluru has attracted the maximum investment ($2 billion) till date in the EV sector, followed by Mumbai ($525 million) and Gurgaon ($274 million).

Also read: Can now cover distance between Delhi-Dehradun in 2 hours, says Nitin Gadkari