VC predictions for the electric car industry in 2023

  • 2023 is expected to bring even more momentum to the electric car industry than 2022.
  • Insider asked six venture capitalists what they expect to see in 2023.
  • They said to look for a windfall of battery.

The electric vehicle industry has picked up a lot of momentum in 2022: Automakers are spending over $515 billion switching from gasoline engines to electric motors, which requires a lot of battery, charging, and , supply chain and manufacturing. .

Even with challenges – and the loss of confidence of some executives in the electric vehicle sector – the industry cannot back down from its ambitions. To get a sense of what to expect from the industry in 2023, Insider interviewed six venture capitalists who are watching the many big companies, startups, sectors and trends brewing in the world of electric vehicles. Here’s what they think.

Redwood Materials employees disassemble a battery module.

Redwood Materials, a recycling start-up, plans to open its second plant in the first quarter of 2023.

redwood materials



A boon for batteries and an overhaul of supply chains

Venture capitalists believe the push for electric vehicles — particularly in the United States — can only be more successful with improvements in battery supply chains and manufacturing. It’s no surprise that this is the area they expect to see the most growth in 2023.

Stakeholders, car buyers, policy makers and more can anticipate all sorts of battery opportunities, especially as the industry has long been reinventing the way it does.

“What is going to be relevant both in 23 and probably for the next seven to 10 years is how do we relocate – or just consolidate, period – our EV and battery supply chains in general?” said Aidan Madigan-Curtis, partner at Eclipse Ventures. “There’s a lot of pressure on those supply chains to figure out how we’re doing things efficiently.”

“One of the areas we are most keen to explore is in mineral discovery,” she said, adding that she also expects raw material processing and battery cell production to grow. . “Packmaking is where we see the biggest opportunity right now.”

In addition to supply-side opportunities, expect improvements in battery technology. Automakers are exploring different types of batteries to stay ahead of the competition.

“Expect to see higher energy-density, faster-charging batteries and pack-level innovations get more traction,” Khosla Ventures partner Rajesh Swaminathan told Insider.

Tesla charge

A VC thinks the industry could be at a tipping point with charging infrastructure.

Robert Knopes/UCG/Universal Images Group via Getty Images



Load, load, load

Historically, charging has not been a lucrative business. To satisfy early electric vehicle buyers, automakers have teamed up, made mergers and acquisitions, and taken other strategic steps.

Now the industry could be at a tipping point.

“Infrastructure capital is coming,” said Brian Walsh, director of Wind Ventures. “This is an indication that the risk of deploying EV charging infrastructure has reached a point where it is no longer venture capital” – or otherwise risky.

Although it has been difficult to determine exactly where to install charging stations, as more people buy and drive electric vehicles, companies have a better idea of ​​where charging would be most beneficial. .

“The second wave is happening now, and it’s going to correct or close many gaps” in existing infrastructure, Walsh said. “We can also predict, as Amazon’s fleet, for example, grows where they will need to have charging hubs.”

Faraday's future

People gather around Faraday Future’s FF91 electric car at CES in 2017. Five years later, the company has faced all sorts of challenges.

AP Photo/Jae C. Hong



A déconfinement is yet to come

Chris Stallman, a partner at Fontinalis, predicted that more automaker commitments, government support and public interest will continue to bolster the transition to electric vehicles in 2023. Stallman has confidence in the industry, even with a shake-up possible.

“Customers and investors are becoming more demanding, and automakers, dealers and consumers are coalescing around what they really want and need,” Stallman told Insider.

Keep an eye out for companies that just won’t be able to make it. “The reality is that not all companies are likely to be successful, but some will definitely be successful,” Stallman said.

Alexei Andreev, managing director of AutoTech Ventures, said there could be a shake-up in the battery industry, where hundreds of startups are vying to compete with the giants.

“It’s all about capital formation and investment decisions. If I’m LG, if I’m Samsung, if I’m SK or BYD or Panasonic, they’re doing what they know best,” Andreev said. at Insider in the fall. “But as a startup, I have no chance to compete with these established players.

“My point of view is that it will be a miracle if even one of them can do it,” added Andreev.

AV cruise

The autonomous vehicle industry has taken several hits in 2022, but General Motors is still optimistic about Cruise.

Cruise



Self-driving

The autonomous vehicle industry took a few hits in 2022: Argo AI, a startup backed by Ford and Volkswagen, shut down, while GM subsidiary Cruise was investigated, TuSimple battled layoffs and management turnover, and Aurora debated a sell out.

But Maven Ventures partner Robert Ravanshenas said he expects municipalities to start capitalizing on what AVs can offer cities next year. He predicted self-driving consumer transport would pick up again next year, following big advances in 2022 by Waymo and Cruise.

“As a result, all elements of the transport supply chain,” he added, “will start developing second-rate technologies that improve the experience in autonomous vehicles.”

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