Mobility Tech Sees VC Interest Despite Global immobility
Image Source: Ather Energy
At a time when human mobility has been severely curtailed by a global pandemic, VC funds are witnessing an opportunity in the challenge. A new report on funding activity during the second quarter of 2020 indicated that micro-mobility was one sector that was high on the agenda with expectations that robust solutions would draw commuters away from public transport.
The e-bike and e-scooter industry could benefit in the long term as economic activity resumes and urban commuters remain wary of public transit. China-based Hellobike, Mobike, and DidiChuxing reported normalized ridership levels as COVID-19 cases dwindled and employees began returning to work, says a report from Pitchbook on emerging mobility technologies.
“We expect better-capitalized providers to gain market share as newer startups struggle to manage reduced activity and suspend operations. In the long term, micro-mobility could play an important role in helping cities incorporate social distancing practices for commuters, while also solving existing issues related to congestion and emissions,” says the report.
The analysts believe the total market size for plug-in hybrid and battery-powered vehicles to grow dramatically starting from $95 billion in 2019 to $398 billion in 2025. They further expect electric vehicles to account for 1.7% of all new vehicle sales by that year. Though electric car and bike sales fell 12% year-on-year in 2020, it is likely to grow in 2021 propelled by public initiatives for clean energy investments.
Among the long-term drivers of mobility tech, the researchers believe that adopting connected, autonomous, shared and electric vehicle technology would drive investments with issues related to social distancing pressuring incumbents and nascent businesses in the near to medium term.
“With automakers and transportation companies more likely to be in cash-preservation mode, we expect financial investors and large tech companies with strategic interests in the future of transportation to pick up the slack in financing the ecosystem’s future development,” it says.
Though fears of a slowdown in electrification of the transport sector due to the pandemic existed, investment continued into electric vehicle technology, which mirrored the rise in share value of publicly traded enterprises in this space such as Tesla, Nikola etc. While Tesla has continued to set impressive milestones, traditional automakers, such as Nissan, VW, and Volvo, continue to aggressively prioritize electrification.
On the self-driving automobile front, the big tech companies have found the current downturn to be useful in setting aside some time to gain a foothold in this ecosystem. As automakers face the financial crisis, tech giants such as Alphabet, Amazon and Intel have made investments in the self-driving vehicle business. While Alphabet-owned Waymo raised $3 billion, Amazon took over robotaxi startup Zoox for $1.3 billion while Intel acquired mobility platform Moovit for $900 million during the period.
As countries are increasingly introducing rules to curb emissions from petrol and diesel-powered vehicles, there would be a move towards providing subsidies to encourage electric vehicles with China, Denmark, France, India, Israel, Norway, the UK, and Sweden making soft commitments to phase out new gasoline and diesel vehicle sales by the 2030-2040 timeframe.