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Automotive Start-up Ranking Database unveils new innovation and strategic opportunities

Where are the biggest opportunities for growth in the Automotive industry?

Startups have identified how to solve some of the biggest challenges the Automotive industry faces.

Start-up funding provides some signals of how big the opportunities are for growth and the strategy of players to close the “need gap”.

Some of the biggest challenges the automotive industry faces are:

1. How to fast-track the sustainable developmentof batteries to support the growing demand for Electric cars: enter battery recycling, clean batteries
2. How to monetize the innovation in autonomous driving: e.g. with Autonomous Trucks, robo-shuttles, L4 subscriptions.
3. How to support the digital transformation ofoperations and products with AI and software.

Auto2x Automotive Start-up Investment Database tracks more than 3000 entities to unveil new opportunities for funding, M&A and collaborations.

Electric Vehicle and Battery start-ups attract $9.2 Billion in 2023, led by recycling 

Electric Mobility includes electric cars or scooters, batteries, battery-recycling and EV-Charging. EV battery startups still attract significant capital, despite the slowdown in VC funding.

In the first 10 months of 2023, VC funding in startups working in Electric Vehicle batteries has already surpassed the 2022 level of $7.8 Billion.

The funding is also in trajectory to surpass the 2021 high of $12 Billion, despite the fact that global venture investment has decreased this year.

Redwood Materials has secured $4.4 Billion total funding. The Nevada-based battery recycling startup founded by former Tesla CTO JB Straubel, picked up $1 billion in Series D funding.

The company also acquired REDUX Recycling GmbH, a German battery recycler, in the end of September 2023.

Chinese EV startup Hozon or Neta Auto, raised about $960 million (7 billion yuan) in pre-IPO funding round.

Stack AV, a US startup working on autonomous systems for the trucking business founded by Argo AI’s execs, is now backed by SoftBank with more than $1 Billion.

Early-stage Automotive start-up funding shrunk by 10% in 2022 to $11 Billion

Funding in early-stage Automotive startups, which includes Pre-Seed, Seed, A and B Series, slowed down from $12.2 Billion in 2021 to $10.9 Billion in 2022 and just $1.5B in Q1 2023, according to data from Crunchbase.

The selection of the two-year period reflects the activity since the startup of the COVID-19 pandemic and the development of the “New Normal” in the automotive industry in terms of an accelerated shift to energy independence, sustainability and software-driven business models.

• Chinese startups continue to attract the lion’s share in terms of funding in premium electric vehicles backed by domestic car brands GAC, Geely and Dongfeng and autonomous driving startups, DeepRoute.ai and Didi.
• US startups secured $5.7 Billion in the 2-year period, from $2.4 Billion in 2021, to $3.1B in 2022 and $0.17 in Q1 2023.
• European startups raised $3.2B, of which $1.0B went to Electric Vehicles and $0.7B for Autonomous Vehicles.

Automotive start-up funding reached $24 Billion from Q1 2021 to Q1 2023, led by electrification

Funding in start-ups working on Electrification amounted to $12 Billion for the 2-year period. This includes electric vehicles, energy storage like batteries, battery business models and EV charging.

Funding in early-stage start-ups working on next-generation Electric Vehicles more than doubled in 2022 to $7.2 Billion, from $3.6 in 2021; while funding in Autonomous and Shared Mobility business models shrunk, Auto2x

The Top funding rounds in Electric Cars and EV charging infrastructure between Q1 2021 and Q1 2023 went mostly to Chinese premium EV brands of major Chinese manufacturers.

1. Chinese EV Manufacturer GAC Aion New Energy Automobile raised $2.5 Billion in Series A in October 2022, which made it China’s most-valuable EV start-up with RMB 103.3 billion at that time;
2. U.S-based TeraWatt Infrastructure raised $1 Billion in Series A to scale EV Charging across America, said the company in a press release in September 2022.
3. Geely’s Zeekr premium Electric vehicle manufacturer raised $750 Million Series A round in February 2023, which led to a $13 Billion valuation. Zeekr will use the funds raised in Series-A to accelerate global development of its propriety technologies whilst also aiming to expand its global market footprint by entering the European market in 2023, according to Geely.
4. Dongfeng Motor’s high-end EV brand Voyah raised $702 Million in Series A Round in Novermber 2022, setting its post-financing market valuation at nearly 30 billion yuan at that time.

Autonomous Driving start-up funding rebounded in 2023

After a turbulent 2022, when funding in Autonomous Driving start-ups plummeted to $2 Billion, down from $3.5 Billion in 2021, 2023 saw recovery to $2.91.

Autonomous Driving start-up funding is in decline, but big deals in Level 4 Software development are still happening

Early-stage start-ups working on autonomous vehicles secured $6 Billion funding in the 2-year period between Q1 2021 and Q1 2023, Auto2x

The Top-3 automotive start-up funding rounds in Autonomous Driving / Autonomous Vehicles came from Chinese start-ups working on Level 4 autonomy which provides un-supervised driving.

• Chinese autonomous driving start-up Deeproute.ai raised $300 Million in Series B in September 2021 to expand its Level-4 Autonomous Driving for Robotaxis and Trucks to urban logistics and fleet operation;
• Didi Woya secured $300 Million for L4 Autonomous Driving Robotaxis in a Series B round in July 2021. In April 2023, Didi Global announced its intention to develop its own robotaxis by 2025.
• WeRide raised $300 Million in Series C funding for its L4 Autonomous Driving Robotaxis in June 2021.

European Autonomous Driving start-ups secured $0.71 Billion funding since 2021, across 87 rounds.

• Wayve, a UK start-up working on Level 4 Autonomous Driving Software), raised $200 million in Series B from investors including Microsoft.
• Einride (Level 4 Autonomous Trucks),
• Vay (Tele-operation),
• EasyMile (Level 4 Autonomous Driving Software) and
• Oxbotica (Level 4 Autonomous Driving Software)

Half of the early-stage funding raised by European start-ups is supporting the development of Level 4 Autonomous Driving Software, while 17% is for Autonomous Trucks, Auto2x analysis

To learn more about the status and outlook of Autonomous Driving read our report Autonomous Driving roadmaps Level 1-4 of 30 major Carmakers by 2030.

Start-up funding in Autonomous Driving reaches $869 Million in Q1 2024

Autonomous Driving Software, AMOD, computing and software-defined sensors are in demand.

The distribution of funding by core technology taxonomy and business segment reveals a heavier share in software and mobility services, which hold the big potential in revolutionizing safety and convenience.

• Approximately 30% of funding went to Autonomous Driving Software for validation and features of autonomous driving;
• 24% went to Autonomous Mobility on Demand, such as robo-shuttles;
• 12% for compute to manage the requirements for data processing performance;
• 7.7% Next-generation radars, including digital radar-on-chip and software-defined radars
• Autonomous Trucking start-ups received just 4% of the funding pool, reflecting the challenges this segment faces with commercialization.

1. More than $265M or 30% of Q1 2024 funding went to Autonomous Driving Software
   • In March 2024, Autonomous vehicle software developer Applied Intuition raised $250 in Series E, with Porsche Investments Management among the investors
   • Haomo raised $14 Million in Series B1 round. HPilot, Haomo’s advanced driver assistance system, is equipped in more than 20 vehicle models, accumulating a combined mileage of over 120 million kilometers.
2. Autonomous Mobility on Demand (AMOD) attracted $210 Million, or 24% share
   • Led by P3 with $110 Million and Zelos with $100 Million.
3. Twelve percent (12%) of funding went to Compute
   • In February 2024, Recogni raised $102 Million in Series C to advance next generation AI Inference System for Generative AI and Intelligent Autonomy with high-performance computing and power efficiency.
4. Almost $40 Million in Autonomous Trucks, or 4% of the total
   • Chinese start-up Qiangua Technology raised $14.1 Million, similar to RITS.
5. adar sensors for perception attracted 7.7% share or $67.5 Million
   • In addition to Uhnder’s digital radar-on-chip, in March 2024, Neural Propulsion Systems (NPS) completed $17.5M Series B for software-defined radar and gets strategic investment from GM Ventures.

Early-stage Start-up funding in Autonomous Driving increased 3-fold from in Q1 2024, from Q1 2023

Early-stage funding in Autonomous Driving Start-ups, which includes Pre-Seed, Seed, Series A and B, only amounted to $483 Million in Q1 2024, up from $183M in Q1 2023.

The 3-fold increase in funding year-on-year, couple with the fact that early-stage funding accounted for almost half of the overall Q1 2024 funding, is a positive signals towards investor interest in autonomous driving start-ups.

The largest deals came from Series A from P3 and Zeros in autonomous mobility.

Automotive start-up funding in Shared Mobility and new business models slashed in half in 2022

Automotive start-up funding in Mobility business models, which include mobiility-as-a-service, financing, insurance and maintanance secured $6 Billion and autonomous vehicles ($6B) accounted for most of the funding.

To learn more about the strategies of carmakers in shared mobility and their business models in sharing, EV charging, parking and financing, read our report.

Web 3 funding is on the rise

Early-stage automotive start-up funding in Web3, which supports the decentralization, privacy and transparency, rose from $29 Million in 2021 to $36 Million in 2022.

Early-stage European start-ups in WEB3 raised $5.2 million in fundings between 2021 and Q1 2023. Funding amount tripled in 2022 to $3.7 million, from $1.2 million in 2021.

Which AI technology use cases attract the biggest funding amount in Automotive?

Early-stage funding in AI Automotive start-ups shrunk by 31% in 2022 to $0.96 Billion, from $1.40 Billion in 2021. AI funding amounted to $2.4 Billion between Q1 2021 and Q1 2023, across 189 funding rounds.

In Q1 2023, automotive start-up funding amounted to $57 million, down from $398M in Q1 2021 and $539M in Q1 2022.

AI Automotive start-up funding accounted for 10% of overall early-stage Automotive Start-up funding in the 2 Year-Period, down from 12% in 2021.

AI in Autonomous Driving holds the lion’s share in terms of funding with 85% share of the total funding in the 2-year period ($2 Billion).

Robotaxis and Robobus providers led by China’s WeRide and DeepRoute.ai, together with Level 4-Autonomous Driving Software developers, such as UK’s Wayve, were the main AI use cases in terms of funding amount.

Top5 AI start-ups in Autonomous Driving by funding amount between Q1 2021 and Q1 2023

1. WeRide with $300M,
2. DeepRoute with $300M and
3. Metropolis with $208M ranked in the Top3 by funding amount in between Q1 2021 and Q1 2023.
4. Sotorea raised $204 Million and
5. UK’s Wayve raised $200 Million.

AI for mobility business models follows with $0.25 Billion led by UK insurtech provider Flock.

China retains the lead of top start-up innovation hub by funding

Early-stage Chinese Start-ups secured $6.7 Billion in 2021, $5.3 Billion in 2022 and $0.9B in Q1 2023

China leads Automotive Start-up funding with $12.9 Billion secured across 120 rounds between Q1 2021 and Q1 2023.

• Electrification accounted for 57% of the 2-year total with $7.4 Billion peaking in 2022 ($4.5B). GAC, Zeekr and Voyah led the way.
• Mobility Business Models accounted for 24% peaking in 2021 with $2.9 Billion, with T3 Mobile Travel Services raising $1.2 Billion in 2021.
• Autonomous Driving secured $2.3B in the 2-year period, from $1.6B in 2021 to $0.6B in 2022 and $0.1B in Q1 2023. Inceptio Technology’s Series B led funding with $0.5B, followed by Deeproute and Didi Woya.

Chinese carmakers are very active in the development of New Energy Vehicle offerings and new mobility business models.

China is driven by its ambition to transform from a production-based economy to an innovative economy and allocate a vast amount of private-venture capital.

New Energy Vehicles are crucial to this plan. NEVs include Battery Electric Cars, Plug-in-Hybrids and Fuel-Cell vehicles.