Since 2019, the stocks of EV companies – including vehicle and battery manufacturers and companies involved in the extraction or processing of battery metals – have consistently outperformed general stock markets, major traditional carmakers, and other segments of clean technology. Return on investment has increased more over the 2019-2023 period for these companies than it has for others, in relative terms. The combined market capitalisation of pure play EV makers boomed from USD 100 billion in 2020 to USD 1 trillion at the end of 2023, with a peak over USD 1.6 trillion at the end of 2021, though this trend was primarily driven by Tesla. The market capitalisation of battery makers and battery metal companies also increased significantly over the same period.

Behind this overall upward trend, however, there has been significant volatility. Supply chain disruptions and battery metal price fluctuations – notably in the wake of Russia’s invasion of Ukraine – as well as increasing competition, price wars among OEMs and expectations of slower relative annual growth as major EV markets mature, and of possible consolidation, are having an important downward impact on investor confidence and EV stocks.

For example, Tesla’s shares were on average 15% lower in 2023 than in 2021‑2022; BYD’s average stock also fell 15% in 2023 relative to 2022; and the combined market capitalisation of pure play EV carmakers fell by nearly 20% on average relative to 2022, while that of major incumbent carmakers remained flat. Many emerging EV players – such as VinFast from Viet Nam, Polestar from Europe, and Canoo, Fisker, Lucid and Nikola from the United States – are missing sales targets and trading low. Fiercer competition and shrinking profits also have an impact upstream, among EV battery makers: in the first weeks of 2024, CATL was trading near a three-year low, with a market capitalisation at its lowest point since the end of 2020. In the first quarter of 2024, the combined market capitalisation of pure play EV players fell below that of major incumbents, even if their financial stock performance remained robust.

As we reported last year in GEVO-2023, companies and investors are exploring new opportunities upstream in EV supply chains, especially as competition intensifies. Carmakers are seeking to secure direct deals with battery makers and companies involved in the mining and processing of critical minerals. Investors including large banks and funds are pouring capital into the metal industry.

In 2023, Stellantis announced a partnership in Argentina to secure projected copper demand, investing USD 155 million. Volkswagen, Glencore and Chrysler each invested USD 100 million in a Special Purpose Acquisition Company operating nickel and copper assets, supported by several global investment banks for an overall USD 1 billion deal. In 2024, Tesla and several Korean battery makers, including LG and SK, met with Chilean government agencies regarding lithium supply, primarily with the aim of supplying the US market with the support of IRA tax credits. AustralianSuper, Australia’s largest pension fund, announced plans to double its exposure to lithium stocks over the next five years, with investments in 2023, such as in Pilbara Minerals, worth AUD 560 million (USD 370 million).

As a result of increasing investor appetite and growing EV markets, the valuation of critical mineral companies has increased significantly in the last few years. Over the 2015-2022 period, the market capitalisation of companies involved in the extraction and processing of lithium increased sixfold. The margins for lithium, nickel and copper companies typically outperformed those of the top 100 mining companies over the same period, including relative to gold or iron ore.

However, the picture in 2023 and the first quarter of 2024 is changing. The volatile metal prices seen in the past few years, the increasing competition and pressure to drive down EV and battery prices, and the current overcapacity for several critical minerals (see earlier section on batteries), mean that major mining companies are revisiting growth and performance forecasts. After several years of important cash flows as a result of high prices and increasing volumes, many companies are now starting to struggle to finance both existing and new projects with their own revenues, suggesting external sources will be needed for large-scale capital expenditure.

In Australia, for example, Albemarle, Core Lithium, Liontown Resources and Pilbara Minerals announced project spending reductions, lower dividends, and job cuts in 2024. Albermarle expects capital expenditures to drop by around USD 500 million from USD 2.1 billion in 2023 to USD 1.6‑1.8 billion in 2024, and plans to reduce annual costs by nearly USD 100 million. Pilbara Minerals expects annual exploration spending to be cut by up to AUD 100 million (USD 66 million). Nickel and cobalt projects in Australia have also been delayed or halted, involving companies like BHP, First Quantum Minerals and Wyloo Metals. First Quantum Minerals expects a 30% staff cut as a result of reduced operations. In the United States, Piedmont Lithium Inc. is letting go of 25% of staff. Over the 2024‑2026 period, we could see progressive consolidation of critical mineral extraction and refining projects and businesses around lowest-cost producers.

Road transport electrification is reshuffling cards in global markets, as carmakers compete fiercely to capture their share of a growing pie. BYD and Tesla remain far ahead of the curve, together accounting for 35% of all electric car sales in 2023. This is more than all the major carmakers outside China combined (just above 30%), and more than all the other Chinese carmakers (just under 30%). BYD and Tesla’s rise as global front-runners has primarily dented the market share of major incumbents, which accounted for 55% of global electric car sales in 2015 but have been falling behind ever since.

In 2022, BYD had already overtaken Tesla as the world’s best-selling EV company when accounting for plug-in hybrid cars. In the second half of 2023, BYD also became the world’s best-selling battery electric car company. Counting both BEV and PHEV models, BYD’s share of global electric car markets was just over 20%. In China, BYD also became the top-selling car company with over 2.4 million new registrations or 11% of the domestic market, ahead of Volkswagen, which had been China’s best-selling brand for over 15 years. BYD’s worldwide sales exceeded 3 million, making it one of the world’s top 10 car sellers. 

In China, since the end of 2022, greater competition among front-runners has led electric car prices to fall quickly. The price of compact electric cars and SUVs dropped by up to 10% in 2023 relative to 2022. In the first quarter of 2024, Tesla once again slashed prices, by up to 6% or CNY 15 000 for its Models 3 and Y, forcing competitors to follow by squeezing margins. BYD proceeded with a 10-20% cut on model prices, such as a CNY 10 000 reduction on its flagship Qin Plus; XPeng with a CNY 20 000 cut on its G6 series; and the GM-SAIC-Wuling joint venture with a CNY 6 000 cut on its Xingguang sedan.

Tesla has been able to afford such a strategy thus far thanks to a focus on high-end models and greater profits per car sold, around USD 10 000 to USD 15 000 per electric car sold in 2022-2023 against around USD 6 000 for BYD, which also explains why Tesla’s market value in 2023 remained 7 times higher than that of BYD. BYD’s preferred strategy has been to sell cheaper models and protect margins by developing in-house battery supply chains. Other Chinese makers are now actively seeking to catch up by announcing new models. For example, XPeng announced new models for 2024 priced at around CNY 100 000‑150 000, far more affordable than the premium models typically priced in the range of CNY 300 000. However, just one-third of Chinese carmakers (e.g. Li Auto, BYD, Geely) met their sales targets in 2023, while others (e.g. Nio, Xpeng, Leap, Great Wall) fell short for the second straight year.

Competition is also getting tougher outside China. In the United States, Tesla accounted for over 45% of all the battery-electric cars ever sold as of 2023. However, Tesla’s share in new US electric car sales has been shrinking, from over 60% in 2020 to 45% in 2023. Hyundai-Kia overtook GM and Ford in 2023, and now accounts for 8% of US electric car sales, second only to Tesla. Hyundai-Kia plans to start manufacturing operations at a Georgia-based factory in 2024, qualifying for IRA benefits. European carmakers accounted for 25% of US electric car sales, their highest share since 2017, led by Stellantis. About 15% of BMW’s sales were electric, meeting its 2023 sales target, and in the same year the company went on record as saying that a tipping point for ICE cars had been reached, and that EVs would lead future growth. Meanwhile, other US carmakers accounted for 15% of electric car sales, half their share back in the 2015-2017 period, and GM and Ford announced a step back from their earlier sales objectives (see later section on Industry Outlook).

In Europe, the share of electric car sales by local carmakers has been falling since 2015. In 2023, European carmakers accounted for 60% of electric car sales in the region, compared to over 80% in 2015. Volkswagen, Stellantis and BMW aggregated to 45% of European electric car sales in 2023, but competition is getting tougher among front-runners. The share of Stellantis jumped from under 2% in 2015 to nearly 15% in 2023, while Volkswagen’s fell from 27% to 20%. Renault-Nissan-Mitsubishi Alliance accounted for nearly 40% of European electric car sales in 2015, but just 7% in 2023. Tesla’s share has stagnated around 10% between 2015 and 2023, while Chinese carmakers have seen important growth, from 5% in 2015 to just under 15% in 2023.

Global competition is expected to further intensify in the coming years, especially as Chinese carmakers look to export in the context of battery and EV oversupply. Just as for steel and solar PV, China’s subsidised industrial strategy for EVs, which was initiated 15 years ago, has led to significant excess capacity. Capacity utilisation stood below 70% among the top 10 sellers in the first months of 2023. There are also far more EV companies in China than can possibly survive in a competitive market. In 2014 alone, ten years ago, over 80 000 companies registered in China entered the electromobility sector. In 2023, over 80% of electric car sales in China were concentrated in just over 30 companies. In 2024, the Chinese Ministry of Industry and Information Technology noted its concern that too many carmakers remain unprofitable. Nio, for example, recorded net losses of USD 3 billion in 2023.

As shrinking margins push the least profitable out of the race, China’s EV industry is consolidating around a smaller number of robust champions – and they are looking abroad for expansion. Chinese auto exports grew steeply in 2023, up 60% relative to 2022, making China the world’s largest car exporter, ahead of Japan and Germany. Despite high import taxes (e.g. 27% in the United States and 10% in the European Union) and tight regulatory scrutiny (e.g. the anti-subsidy EU investigation on EV imports since October 2023 and possible introduction of new tariffs from July 2024), Chinese OEMs often remain more competitive than incumbents. They could be well-placed to capture market share in the near term, especially in the small car segment. In early 2024, for example, BYD chartered its first cargo ship, with a capacity of 7 000 cars sailing to Europe.

European and US carmakers are under growing pressure as Chinese carmakers start to export at scale, and are adjusting corporate strategy accordingly. In February 2024, for example, Ford and GM expressed that they could even be open to partnering to compete against Chinese carmakers, and BYD in particular. Ford estimates losses on EV investments of up to USD 5.5 billion in 2023, and expects even tougher future competition from more affordable Tesla models and Chinese carmakers. Another example comes from Stellantis, which – considering the growing importance of Chinese pure play EV manufacturers on the global market – recently became an important shareholder of China’s Leapmotor brand.

Venture capital (VC) funding to EV start-ups has boomed in the past decade. Financial investors such as banks and VC or private equity funds see in EV start-ups a potential for significant future returns. Many companies – including major incumbent carmakers – also use corporate VC to fund start-ups to develop new technology, or to acquire concepts developed by new entrants. Whereas in the past century, most carmakers typically developed ICE technology and manufacturing through in-house R&D, investing in start-ups has now become a notable trend. This allows incumbents to bolster their own position and maintain a competitive edge in quickly evolving markets and regulatory environments.

In 2023, however, global VC investments in clean energy start-ups fell considerably relative to 2022, and EVs and batteries were no exception. Early-stage investments (i.e. seed and series A, referring to the first rounds of financing and the earlier stages of development) in start-ups developing EV and battery technologies dropped 20% to USD 1.4 billion in 2023. Meanwhile, growth-stage investments (i.e. series B and growth equity, which refer to the later rounds of financing as start-ups increase activity) dropped 35% to USD 10.1 billion.

Several important factors are contributing to this downward trend. As competition intensifies in EV and battery markets, and as incumbents ramp up their own investments and manufacturing plans, barriers to entry for new actors get higher, and so do investor perceptions of risk. The front-running start-ups that raised funds over the 2015-2020 period are now maturing and transitioning to other sources of capital, leaving fewer alternatives for newcomers – early-stage VC for electric carmakers dropped radically in 2023. Geopolitical tensions, supply chain disruptions, high energy prices, and rising inflation and interest rates limit the availability of higher-risk capital. We also observe a cooldown following the post-Covid-19 boom of 2021-2022, which was fuelled by investment restraint during the pandemic and the expectation of significant economic recovery packages afterwards.

Despite the drop, investments remain far greater than in 2019, prior to the Covid-19 pandemic. Start-ups developing EV charging technology attracted over USD 400 million in early-stage VC, and battery and battery component makers USD 260 million, together accounting for half of early-stage VC. There was also a surge for two- and three-wheeler start-ups, which raised USD 200 million in early-stage VC in 2023, up from below USD 100 million in previous years. While early-stage funding for electric carmakers has dried up, and in 2023 fell far short of the 2018-2022 rounds, investors continue to show interest in upstream and downstream segments of EV supply chains, as well as other EV types, especially if these can scale quickly.

Notable deals in 2023 included Germany-based Jolt Energy’s first round of VC funding, which raised USD 160 million. The company seeks to bring its fast-charging technology to urban areas of Europe and the United States, and claims to provide 100 km of driving range in just 5 minutes. Similarly, German EV charging start-up Numbat raised USD 75 million in series A funding through the European Infrastructure Fund, as well as another USD 75 million in loans. Indian start-up Charge Zone also raised nearly USD 55 million to develop nearly 300 charging stations.

Chinese electric truck maker DeepWay raised USD 110 million in series A funding to start mass production, after having raised USD 70 million in 2022 to fund R&D and early-stage manufacturing. In the 2/3W space, Benin-based start-up Spiro raised USD 60 million, Indonesian Maka Motors raised over USD 37 million and Volta Indonesia USD 35 million, Brazilian Vammo raised USD 30 million, and Indian Simple Energy India raised USD 20 million, illustrating the importance of this segment in EMDEs. In India, Evera, a provider of all-electric cab services and management, raised USD 7 million to expand operations in Delhi, and Zyngo, an operator of electric last-mile delivery fleets, raised USD 5 million.

At the growth stage, battery technology developers attracted USD 5 billion, and electric carmakers USD 2.5 billion, with significant support from public investors, indicating interest from governments to help new entrants ramp up manufacturing capacity or accelerate expansion and deployment. However, growth-stage investor appetite for electric trucks and EV charging dried up relative to previous years.

Notable deals include French battery maker Verkor, which raised USD 900 million in growth equity from investors including public-private EIT InnoEnergy and BPI France, and major incumbent carmaker Renault. The company also received a nearly USD 700 million grant from the French Government and another USD 650 million in debt from the European Investment Bank to develop a 16 GWh gigafactory project in Dunkirk. To support its global expansion, Swedish battery maker Northvolt raised USD 400 million from Ontario’s asset manager, USD 1.2 billion and then another USD 150 million in debt from public Canadian investors and private banks, a USD 740 million grant from the German Government, and a USD 5 billion loan from the European Investment Bank and Nordic Investment Bank. Chinese lithium-ion battery maker Hithium also raised over USD 600 million.

Chinese electric carmakers continued raising money in 2023, such as Hozon and Rox Motor, which each raised around USD 1 billion. Like other Chinese new entrants, Hozon Automobile is looking to expand in overseas markets as well as domestically, and could go public in Hong Kong. Rox Motor launched its first model in 2023, an electric SUV priced under USD 50 000. Premium electric carmaker Avatr raised USD 400 million, after having raised a similar amount in series A funding in 2022.

In the electric taxi fleet space, India-based BluSmart, a start-up providing ride-hailing services, raised two rounds of USD 42 million and USD 24 million in growth equity in 2023, and another USD 25 million in 2024. However, there has been fierce competition with larger taxi fleet apps and operators in the past few years in EMDEs. In 2023, for example, electric ride-sharing app Beat, owned by Free Now, withdrew from Latin America.

Similarly to for other clean energy technologies, start-ups for EVs are predominantly headquartered in the United States, Europe or China. There is, however, significant variability across different EV technology areas. Over the 2018-2023 period, in cumulative terms, about 70% of the VC investments in start-ups developing electric cars were made in China, 20% in the United States and 10% in Europe. Meanwhile, about 95% of the VC investments in electric trucks, buses, and commercial vehicles were made in the United States.

India, the only EMDE other than China that has a significant share in global VC markets, accounted for 70% of the investments in start-ups developing electric 2/3Ws. Over the 2018-2023 period, Indian EV start-ups raised USD 2.7 billion, of which over 70% was for electric 2/3Ws. Policy support has contributed to building investor appetite for the EV sector, and the high investment levels seen in 2022 and 2023 will warrant further examination in 2024 and beyond if the FAME subsidies are reduced or phased out. The investment potential in India’s EV sector is estimated at around USD 200 billion, suggesting there are still considerable opportunities ahead for Indian entrepreneurs and start-ups.

With regards to batteries, start-ups based in the United States attracted most VC investments – from 30% to over 80% of global investments over the 2018-2023 period. Investments in battery makers, however, were split evenly among major VC markets, with 30% each for China, Europe and the United States. It is noticeable that battery VC remains extremely limited in historic battery-producing countries such as Japan and Korea, where technology innovation through start-ups is generally less common.

As VC investors look for new opportunities across EV supply chains, novel battery concepts and critical mineral extraction and refining are gaining momentum. Over the 2018-2020 period, cumulative early-stage VC flowing to battery and component makers stood around USD 430 million, nearly 75% of which was for lithium-based battery chemistries. Over the 2021-2023 period, cumulative investments for batteries not only more than tripled, to nearly USD 1.4 billion, they also diversified. Lithium chemistries accounted for just 60% of the total, while the share of emerging concepts such as metal-hydrogen, redox-flow, solid state and sodium-ion batteries rose, growing from less than 15% to more than 25%.

Not all the start-ups active in the battery space today will eventually serve EV supply chains. In fact, many companies in our sample have so far announced that long-duration power storage is their primary target market. However, there are important spillover opportunities between those two closely related technology fields. For example, sodium-ion batteries can be used for both grid-level storage and EVs, and learnings in one sector can inform technology development in the other.

Notable early-stage VC deals in novel battery chemistries in 2023 included rounds by Chinese WeView (USD 90 million), United States-based Noon Energy (USD 30 million) and XL Batteries (USD 10 million), and Singapore’s VFlow Tech (USD 10 million), all of which are developing redox-flow batteries. Peak Energy, based in Colorado, was established in 2023 and raised USD 10 million in seed money to develop sodium-ion batteries. Similarly, Inlyte Energy raised USD 8 million in seed funding, after having received at least USD 250 000 in grants from the US Department of Energy (DoE) Advanced Research Projects Agency–Energy (ARPA-E) in 2022.

In the battery recycling space, notable deals in 2023 included a USD 540 million round of growth equity funding to US-based Ascend Elements, a start-up that also received two grants from the DoE totalling USD 480 million in 2022. The company, which raised another USD 160 million in 2024, aims to build North America’s first cathode precursor manufacturing facility using black mass, the typical output of lithium-ion battery recycling. Chinese Tianneng New Materials raised a series A of USD 140 million, and French MECAWARE USD 40 million.

As reported last year, critical minerals VC is also expanding, standing just under USD 400 million in 2023, or nearly twice as much as in 2021 or 2022. This technology field attracted under USD 75 million in cumulative VC over the 2018‑2020 period. Cobalt extraction attracted nearly USD 200 million in 2023, just like in 2022. Lithium extraction and refining attracted USD 135 million, much higher than the dip of 2022 but still below the record year of 2021. We now observe deals for nickel extraction, suggesting investors are also looking for opportunities beyond cobalt and lithium.

In 2023, several governments have also launched critical raw material funds. For example, France committed EUR 500 million to the EUR 2 billion private equity Critical Metals Fund managed by InfraVia, as part of France 2030. Similarly, EIT InnoEnergy launched the European Battery Alliance’s Strategic Battery Raw Material Fund, targeting investments of EUR 500 million. Other announcements and projects are mentioned in the later section on Industry Outlook in this report.

Notable critical mineral deals in 2023 included a series A of USD 50 million by Canada-based Summit Nanotech to scale its more sustainable lithium extraction technology, after it received grants from public investors such as Sustainable Development Technology Canada and Natural Resources Canada. In the United States, Kobold Metals raised USD 195 million in growth equity to expand cobalt extraction, Energy Exploration Technologies raised USD 50 million for direct lithium extraction from GM Ventures, and Atlas Materials raised USD 27 million in seed money to develop nickel extraction technologies.