SA国际传媒

Venture investors are charged up about how to power this generation鈥攁nd the next one鈥攐f electric vehicles. Venture funding for EV battery-related technology surged last year, and 2022 seems ready to pick up where it left off.

In 2021, EV battery startups鈥攂oth hardware and software companies鈥攔aised more than $3.6 billion, according to SA国际传媒 data. Even subtracting the more than $3 billion raised by Chinese battery cell manufacturing giant , the remaining total is nearly triple the $174.7 million raised in 2020, according to SA国际传媒.

What also is worth noting is how deal flow has increased, as the ecosystem around EV batteries, such as battery design and charging technologies, has grown. While previous years saw only about a dozen deals each year, 2021 more than doubled that average number.

Some of the largest deals鈥攁side from Svolt鈥檚 rounds鈥攊n the space last year include:

• Woburn, Massachusetts-based , which has developed a hybrid lithium metal battery, closed a $139 million Series D led by ;
• Louisville, Colorado-based solid-state battery-maker raised a $130 million Series B led by the , and . The company went public via a SPAC late last year; and
• Singapore-based charging infrastructure provider closed a $100 million venture round.

The new year also has started strong, with three deals raising almost $290 million, including Woburn-based battery-maker raising $200 million as part of a Series D round led by and .

Big names

What is noticeable about many of those rounds mentioned are the backers: large car makers.

鈥� has shown a car company is really now a battery company,鈥� said , CEO of Israel-based 鈥攚hich is looking at using different materials in batteries to optimize charging. 鈥淎ll the carmakers realize that now.鈥�

Large automakers have determined they need to be closer to鈥攐r even own鈥攖he supply chain that powers this, and the next, generation of EVs, said Myersdorf, whose own company just closed a $60 million Series D last month.

鈥淵ou can鈥檛 separate the tech from the performance of the car,鈥� he said. 鈥淎 car now is really the battery and software, everything else is just off the shelf.鈥�

Seemingly every carmaker and equipment manufacturer seems to be placing a bet in the battery game, including , , , , BMW, Ford, , Mercedes-Benz and Stellantis.

Those players also do not seem to be slowing down. This week Bloomberg that Ford is planning additional investments of up to $20 billion into electric vehicles over the next five to 10 years.

鈥淭raditional OEMs just realized this could be like the asteroid that killed the dinosaur,鈥� said , CEO and founder of SES, which is set to enter the public market tomorrow on the after a $3.6 billion SPAC merger.

Hu said automakers realized starting around late 2019, after 鈥檚 share price exploded, that changes to the EV market were needed. That was followed by the pandemic, when automakers struggled in the first half of 2020, further pushing a change in strategy and even workforce, Hu said.

鈥淭hey used COVID as an opportunity to make changes,鈥� he said.

However, which changes they are investing in can vary.

The great debate

One of the reasons more money is pouring into the space is not just the deep pockets of automakers, but the fact those companies are investing in different types of batteries.

While lithium ion batteries are currently the norm, the promise of a new solid-state battery intrigues investors. In the most simplistic terms, solid-state batteries have a solid electrolyte while lithium ion has a liquid one. The main benefit would be that solid-state batteries are considered safer, while also offering higher energy density.

鈥淚 think momentum for the industry really kicked in in late 2019 or early 2020,鈥� said , founder and CEO of Factorial, a solid-state battery developer. 鈥淭he battery and vehicle market is at an inflection point.鈥�

To illustrate the heat solid-state batteries alone is generating among investors, Huang said her company had initially planned to raise $150 million in its recent round, but eventually increased that to $200 million after receiving so much strategic interest.

The company plans to use the cash to accelerate commercial production and deployment of its solid-state battery technology, which Huang said can offer up to 50 percent greater driving range than current lithium-ion technology.

The market 鈥渉as been hot,鈥� Huang said. 鈥淚鈥檓 thrilled to see the excitement.鈥�

The downside to solid-state batteries is that true solid-state batteries are still several years away for electric vehicles. While there have been quasi or semi solid-state batteries being developed for the markets鈥攗sing substances like gels鈥攖rue solid-state batteries may not be here for more than a decade.

Nevertheless, interest abounds in the solid-state space. Both and , which received strategic investments form automakers like Ford and Volkswagen, respectively, both have gone public via SPACs in the past couple of years.

More batteries, more ides

While no one is complaining about the uptick in investment interest, some in the EV battery space point out much of the investment money is being poured into the hardware side of the industry鈥攊.e. companies developing new types of batteries鈥攚hile more research and money could be spent in other parts of the ecosystem.

Myersdorf said solid-state batteries are still a decade away and, even then, new processing equipment and changes to factories will be needed.

Money could be spent elsewhere to improve what is now in the market, but many investors are fixated on the next new thing, he said: 鈥淧eople want to know what is coming next, that鈥檚 where they want to invest.鈥�

, co-founder and CEO of Oakland, California-based , which builds battery management software for enterprises, said instead of designing new batteries, more effort could be concentrated on using data to make current batteries more predictable and efficient.

His 3-year-old company has raised more than $15 million in venture funding to date and he is amazed by the interest the space is seeing, but also believes more ideas are needed.

鈥淭here鈥檚 too much money and not enough ideas that can achieve scale in time to mitigate the climate crisis,鈥� he said.

Methodology

Electric vehicle battery startups are defined by the industries of both electric vehicle and battery, as according to SA国际传媒 data.

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