J&A Capital Markets Report: Electric Vehicles, Batteries, and the Middle East

Electric Vehicles (EV) have risen to prominence in capital markets since 2010 with a 1,250% increase in capital deployment between 2013 and 2018. Electric vehicles constitute a significant sector within the mobility technology industry and lead capital deployed and deal count. EV deals held a 32% compound annual growth rate between 2017 and 2020. In addition to being environmentally friendly and reducing CO2 emissions, EV motors are designed with limited moving parts, resulting in lower maintenance costs and a longer lifespan than traditional vehicles. The key to future growth in the EV sector is the development of lithium-ion batteries that can compete with a conventional combustion engine’s price and performance1.

Electric Vehicles: Value Chain

FIGURE 1: Announced Electric Vehicle Capital Markets Deals (2010 – 2020)

  • A total of 4,412 deals were conducted globally by 1,802 companies within the EV sector between 2010 and 2020.
  • Over the same period, 388 venture capital deals were conducted, representing $46 billion of capital invested. The average venture capital deal size was $12 million.
  • Electric vehicle battery capital deployment increased by 2,170% between 2010 and 2020.

FIGURE 2: Announced Electric Vehicle Investments: Vertical Breakdown

Source: Pitchbook Data, Inc.
  • The leading vertical within the EV sector was automotive manufacturing, which received a total capital deployment of $185 billion across 1,663 deals.
  • Energy storage saw the second-highest deal count, with a total of $34 billion raised across 884 deals.
  • Tesla, which is vertically integrating into lithium-ion battery production, vehicle manufacturing, utilities, and renewable energy, is the market leader in EVs and has raised a total of $12 billion since the company’s inception in 2003.
  • Chinese EV companies such as NIO, Guangzhou, and BYD have raised $20 billion over the last 10 years, while Rivian Automotive, an American EV manufacturer, has raised $8 billion.

FIGURE 3: The Middle East and Electric Vehicle Capital Markets

Source: Pitchbook Data, Inc.

EVs are becoming increasingly popular in the Middle East despite the region’s established oil and gas industries. Middle Eastern EV companies are not currently competitive with North American and Chinese manufacturers, but J&A expects that customers and investors will continue to influence the sector. The rise in deal count and size since 2018 highlights the growth of investment in EVs by the Middle East.

  • Since 2010, Middle Eastern investors have deployed a total of $12 billion in 27 EV deals with an average deal size of $448 million.
  • Abdul Latif Jameel, a holding company based in Saudi Arabia, participated in Rivian Automotive’s $2 billion Series F round, which closed on February 22, 2021. Rivian Automotive is a manufacturer of autonomous electric vehicles and is headquartered in Michigan, USA.
  • Saudi Arabia’s Public Investment Fund participated in a $2 billion PIPE round conducted by Lucid Motors and a secondary private transaction with Tesla.
  • The Qatar Investment Authority participated in Xpeng’s $1.4 billion PIPE round, which closed on August 27, 2020.
  • Ontrack, a manufacturer of autonomous bicycles, completed a seed round on January 24, 2018, with Diverse Middle East FZE. Middle Eastern investors announced three early-stage venture capital rounds that included TIER Mobility and Marti Electric Scooter.
J&A expects Middle Eastern consumers and investors to continue their EV focus. Nations in the Gulf Cooperation Council have the necessary infrastructure to facilitate EV development with significant investments in renewable technologies and smart cities. Dubai has promoted many public initiatives to benefit EVs, which has led to many cities in the region adopting similar policies.