Electric vehicle volumes are soaring in the U.S. — with registrations up 60% in the first quarter of the year — even as the country’s auto market contracted 18% as continued parts shortages constrained inventories.
Between January and March, U.S. consumers registered 158,689 EVs, according to Experian. With EV volumes rising and automakers selling fewer fossil-fuel vehicles, EVs captured 4.6% of the market in the first quarter.
Tesla took four of the top 10 spots, and the marque’s Model Y, Model 3, and Model S swept the top three, according to a report from Automotive News. The Ford Mustang Mach-E took fourth place, and Hyundai’s Ioniq 5 and Kia’s EV6 took fifth and sixth, respectively. (Experian reports registration data because Tesla does not disclose sales figures for the U.S. only, and other automakers don’t break out sales of EV versions of certain models.)
None of the recent upstarts, including Rivian or Lucid, broke their way into the top 10, though that’s not surprising. Both companies have only recently entered production on their first vehicles, which are pricey enough to limit the size of their potential market.
Still, as those companies and other large firms like Volkswagen and GM begin to ramp production, consumers will soon be able to choose from a range of models at a variety of price points.
Batteries have become VC and PE’s most electric investment opportunity
That’s all but certain to drive further gains for EVs — and even more opportunities for startups to capitalize on the growth.
The most obvious winners in all this will be battery technology startups. Venture capitalists and private equity firms have been closely following automakers’ growing commitments to electrification and have been lavishing money on promising companies. In the last five years, they’ve made nearly 1,700 investments in battery startups totaling $42 billion, according to a TechCrunch/PitchBook analysis. Three-quarters of those deals closed in the last two years.
The biggest winners among them have been manufacturing startups like Sweden’s Northvolt, which has reeled in more than $4.3 billion since June 2019. The large sum is in part because manufacturing is expensive and in part because the risks to investors — especially compared with R&D firms — drop dramatically once you start building a factory.
But startups honing new battery technologies aren’t being left out. For example, Sila, which has perfected its silicon anode technology to the point where it’s now powering a fitness wearable, raised $590 million early in 2021. And QuantumScape, which is working on a lithium-metal battery, raised $200 million from Volkswagen in the summer of 2020.
Those companies and more are likely to benefit as car companies seek competitive advantages in batteries, from longer range to faster charging rates to lower costs. Silicon anodes, for example, can help batteries store more energy, while solid-state batteries have the potential to enable even faster charging rates.
Battery makers aren’t the only ones to be benefiting from the surge in interest in EVs. Companies that supply materials for batteries, electronics, and electric motors are getting a boost. KoBold Metals, which uses AI to prospect for cobalt, nickel, copper, and lithium — all used by EVs in significant quantities — raised $192.5 million in February. Vulcan Energy Resources, which extracts lithium alongside geothermal energy operations, signed a deal with Stellantis late last year to supply it with the metal. And Redwood Materials, started by Tesla co-founder JB Straubel, raised $700 million last summer to ramp up its lithium-ion battery recycling business. The company takes spent cells and turns them into materials that battery manufacturers need to make new ones.
There will be winners beyond the factory floor, too. All those new EVs will need places to charge. While many will do so at people’s homes, there will be a growing need for DC fast charging to enable road trips and for people who may not have regular access to a charger at home.
Revel is targeting the latter group with a pledge to build 200 fast-charging stalls in New York City by year’s end.
“Everybody keeps talking about the EV transition,” Revel founder and CEO Frank Reig told TechCrunch last week. “Everyone keeps talking about how auto OEMs are saying they’re never going to produce another gas vehicle again. They’re falling over themselves to outdo one another. No one’s talking about where all these vehicles are going to charge.”
In that way, EVs are following a similar trajectory to gas-powered cars over a century ago. Before the introduction of the Ford Model T in 1908, and for several years after, drivers would stop by grocery and hardware stores to buy cans of gasoline. But large companies and entrepreneurs alike recognized the opportunity, and less than 20 years later, there were more than 200,000 gas stations across the country. As EV adoption speeds up, expect something similar to happen.
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