Venture Capital (VC) has long been a driving force behind innovation across various sectors, but startups in electric mobility and battery technology have often been overlooked. 

This stems from the unique challenges these hardware-centric B2B startups face in meeting the typical VC criteria of 3X-10X growth within a 3-5 year timeframe. 

Unlike software startups, products in these sectors require extensive development, testing, and refinement before mass production.

A Historical Perspective

For decades, investments in cell and battery technologies were primarily undertaken by corporate R&D departments. 

Pioneering companies like French Blue Solutions and EDF have been tirelessly developing solid-state and zinc-air storage respectively, often over spans exceeding 30 years. 

This exemplifies the immense investment and patience required in this field, with no guaranteed return on investment.

The Investment Surge

In the last two years, there has been a notable surge in VC investments in batteries and electric mobility. 

By 2022, the total volume of VC investments had grown year-on-year by an impressive 30%, reaching a staggering $2.1 billion. 

This surge can be attributed to the escalating demand for electric vehicles, leading to an expansion across the entire supply chain, including the extraction of critical minerals.

Shift in the Automotive Industry

The International Energy Agency (IEA) points out a paradigm shift in the automotive industry. 

Unlike the last century, where major automakers independently developed internal combustion engine technologies, there is now a trend towards investing in startups for technological development. 

The rapidly evolving market and regulations are outpacing major players, compelling them to rely on agile startups.

Battery and Cell Development

The IEA Global EV Outlook provides an insightful table showing the growth in VC investments in specific segments of battery and EV startups. 

Notably, investments in battery module-pack production are prevalent. While these startups are popular among investors, caution is advised due to the limited market and fierce competition.

Undervalued Segment: Cell and Material Development

The segment focused on cell and material development is just beginning to gain traction. This segment, although more science-intensive and requiring substantial initial investments, holds immense promise for the next decade.

Successful development in cathodes, anodes, or electrolytes can potentially revolutionise a significant portion of the electric vehicle market.

A Future Fueled by Innovation

The electric mobility and battery supply chain sectors are currently experiencing unprecedented growth and innovation. 

This surge is driven by a confluence of factors, including consumer demand, regulatory changes, and technological breakthroughs. 

VC investments are pivotal in shaping the future of these sectors, propelling innovation, and bringing groundbreaking technologies to market.

Navigating the Path to a Greener Future

While investing in electric mobility and battery technology startups presents its share of challenges, the potential rewards are nothing short of monumental. 

From universal modules to advancements in cell and material science, and the evolution of battery management systems, we are only scratching the surface of what this rapidly evolving landscape has in store.

In this pursuit, investors must carefully navigate this terrain, recognizing the undervalued potential in cell and material development.

By doing so, they can play a pivotal role in ushering in a future powered by sustainable and innovative technologies.