Private equity investors plowed at least $647.5 million into automotive-related startups in February.
Of that, almost 71 percent, or $457.5 million, went to companies working on battery technology, one of the safer bets in the electric vehicle space thanks to the federal government’s industrial policy and incentive programs.
While automakers invest billions on EV development and production, new suppliers of batteries or battery components are emerging to support their efforts, and venture capital is an important way for those companies to raise money to fund research or build out operations.
“EV batteries are a safe investment compared to, say, autonomous vehicles and robotaxis, which are kind of tenuous at this point,” Mike Ramsey, a transportation and mobility analyst at Gartner Inc., told Automotive News.
The tax and funding provisions for EV batteries and chargers in the Inflation Reduction Act and Infrastructure Investment and Jobs Act have “supercharged” the sector, Ramsey said.
“They definitely undercut the risk for capital investment,” Ramsey said.
Battery startup Our Next Energy Inc. set the pace with a $300 million haul. Our Next Energy’s series B funding round was led by Fifth Wall, primarily known for its real estate investments, and mutual fund company Franklin Templeton. The Novi, Mich., company plans to use the funds to build the second phase of a $1.6 billion battery cell factory slated for completion in 2024.
“We are transitioning from a startup funded by venture capital to a manufacturer fueled by growth capital,” company founder and CEO Mujeeb Ijaz told Automotive News when the deal was announced in February. “That’s important in this environment where urgent demand for U.S.-based cell manufacturing is on the rise, supported by the Inflation Reduction Act, in a true public-private partnership.”
Ijaz said he is already working on a series C funding.
LG Chem, South Korea’s largest chemical company, invested $75 million in Piedmont Lithium, with the purchase of a little over 1 million newly issued shares of the Belmont, N.C., company’s common stock at $68.40 per share.
LG Chem also agreed to buy 200,000 metric tons of spodumene concentrate — a type of lithium ore — from Piedmont Lithium and Australia’s Sayona Mining joint venture North American Lithium, in Quebec over four years at market prices. The deal also includes priority negotiation rights for LG Chem to buy 10,000 metric tons of lithium hydroxide per year produced by Piedmont at its proposed Tennessee or North Carolina lithium processing facilities.
The South Korean company plans to produce cathode materials, which go into batteries, for undisclosed North American customers. LG Chem will take advantage of the Inflation Reduction Act of 2022, which gives companies a 10 percent tax credit for manufacturing materials and components for EV batteries in the U.S.
Chicago’s NanoGraf raised $65 million from venture capital to make lithium batteries more energy dense. The company, which previously produced silicon anodes for EVs in Japan, will now make them in Chicago because of the 10 percent tax credit.
Startup Liminal, which makes battery inspection systems for the manufacturing process, raised $17.5 million in February.
The Emeryville, Calif., company will use the funding to scale production of its EchoStat inspection system, which it bills as an automated factory-integrated system for testing the performance of EV batteries.
Swedish battery developer and manufacturer Northvolt contributed to Liminal’s latest funding round.
Via, a New York City “transit tech” software company that works with cities and businesses to optimize networks of buses, shuttles, wheelchair-accessible vehicles and autonomous vehicles, raised $110 million off a $3.5 billion valuation. Israeli venture capital fund 83North led the funding round. Other investors include Exor N.V., Pitango, Janus Henderson, CF Private Equity, Planven Entrepreneur Ventures, Riverpark Ventures and ION Crossover Partners.
ZEVX, a Gilbert, Ariz., EV powertrain and fleet vehicle company, completed a $20 million funding round led by Reynolds Capital, the investment arm of Reynolds and Reynolds Co., which specializes in automobile dealership software, services and forms. The deal includes the appointment of Reynolds and Reynolds executives David Shimek and Sidney Haider to ZEVX’s board of directors.
Hypercraft Inc., a Provo, Utah, startup specializing in electrification of racing vehicles and watercraft, raised $6.5 million in seed funding at a valuation of $51.5 million. The funding round was led by Provo-based early stage venture fund RevRoad Capital.
Spartan Radar, an automotive software startup that uses radar technology for driver-assist systems and self-driving vehicles, closed on $17 million in funding in February.
The Los Alamitos, Calif., company plans to use the funding to deliver its flagship Ago software-based program to market and hire employees for its new product team and commercial vehicle division in Detroit.
Austin, Texas, technology and life sciences venture capital firm 8VC led Spartan’s series B funding round.
Phantom AI, a startup founded by Tesla and Hyundai alums, secured $36.5 million for its series C funding round. The Mountain View, Calif., company is creating a software-based vehicle-agnostic and customizable platform for electric vehicles.