In 2023, the electric vehicle (EV) charging infrastructure defied the funding downturn experienced by EV original equipment manufacturers (OEMs) and EV battery manufacturers by recording 79 per cent year-on-year growth, reaching a record-breaking $169.4 million.

This surge is attributed to heightened investor interest in the climate technology sector and an enhanced understanding of energy and infrastructure dynamics. 

The year 2023 witnessed the highest funding level since 2020, with data from Tracxn indicating $17.8 million across 14 rounds in 2020, escalating to 169.4 million across 16 rounds. 

Investor interest

RACE Energy, a prominent player in the EV charging segment which secured $3 million in a seed round, attributed the growth to increased investor interest in climate technology. Arun Sreyas, co-founder of RACE Energy, highlighted a sustained trend over several years, emphasising its anticipated continuation. 

Furthermore, investors’ improved comprehension of diverse sectors within the EV, energy, and infrastructure realms contributes to this growth. Sreyas said that investors, typically capital-light, are showing increased interest due to their familiarity with these industries. 

Investment firm Avaana Capital underscores the rapid advancement of the EV industry, describing it as leapfrogging and experiencing unprecedented growth, leading to a manifold increase in demand. Swapna Gupta, a partner at the Avaana Climate and Sustainability Fund, emphasises the pivotal role of charging and swapping infrastructure as key enablers. 

EV charging space

While the EV charging space has seen major seed and series-A rounds being raised, as the EV space matures, there’s an estimation that growth-stage investors will increasingly participate.

According to Pulkit Khurana, co-founder of Battery Smart, which raised $33 million in a Series-A round, the segment has seen that unlocking access to growth capital becomes feasible when companies demonstrate strong unit economics and a highly-scalable proposition. 

“As time goes on, more companies will mature with these two factors and establish a solid product-market fit, creating a favourable landscape for attracting substantial growth capital,” he added.  

Given the tech-first approach in the EV industry, Sreyas believes companies may take longer to reach this stage, but it is a matter of time before more investors engage with the evolving landscape.

Looking ahead to 2024, while it is difficult to predict trends, stakeholders remain optimistic about seeing similar growth. Additionally, with the expected interest rate cut, Sreyas anticipates a ripple effect throughout the broader economy, stimulating increased investments. 

“The global macroeconomic landscape is improving, and India stands out as an even more promising market for investments. Additionally, the EV sector presents a massive opportunity in a large, rapidly growing market in our country. Thus, it is bound to continue attracting substantial investments in 2024 and beyond,” said Khurana.  

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