Notes by Narsi
Whether it is globally, or in India, a large portion of the climate tech funding if going towards the electric mobility space - batteries, OEMs, charging stations...
A recent PwC report pointed out how such an over-emphasis is not aligned to decarbonization goals - while 16% of global greenhouse gas emissions come from road transport, almost 65% of all VC investments into climate tech went into electric mobility! That's what I call super-skewed.
But there are reasons why there is such a big preference for e-mobility among VCs, some of them being:
1. This is a fairly well known sector - as it is an extension of the high profile automotive sector, so awareness is high
2. The sector is quite well organized, once again because of its proximity to the auto sector. This enables startups to both learn from incumbent auto companies as well as get investments and/or exits through acquisitions by them
3. Battery costs have fallen dramatically last ten years, taking the e-mobility sector close to the inflection point for growth
4. Electric mobility - along with solar/wind & energy efficiency - has a serious chance of producing significant decarbonization in the short-medium term (by 2030).
5. Electric mobility products are scalable - as they use similar assembly lines & business rules that have put automobiles in every street in the world.
Though I currently do not have clear numbers on Indian VC investments into e-mobility as a proportion of all VC investments in the country, I have a suspicion that it will be quite aligned to the global trends. (For instance, when we put together the India Climate Tech 100, the top 100 Indian climate tch startups, not surprisingly, about 20% of them are directly from the e-mobility sector, and I suspect a disproportionately larger proportion of the total VC funding would have flowed into them)
But for all that, we can't really blame the VCs, can we? They invest where they feel they can get the best returns at the lowest possible risk, and e-mobility appears to be suited quite well to this paradigm within climate tech.