Interested in investing in EV startups? Well, you should be. Electric vehicles (EVs) are at the forefront of a new industry with the potential to revolutionize automobile production in the same way that steel revolutionized construction in America’s industrial revolution. According to some estimates, the current EV market is worth over $200 billion, and it could be worth four times that much by 2030. With numbers like that, you’re basically shortchanging yourself as an investor if you don’t try to get in early on EV startups.
Why Invest in EV Startups?
When the first electric vehicle came out in the 1990s, it was hard to imagine any all-electric car being a serious competitor to the internal combustion engine. But then again, if you look back at the Model T, it was probably just as hard for people 100 years ago to believe that the funny-looking mechanical contraptions from Henry Ford’s motor company would ever be better than a horse and buggy. Needless to say, if your ancestors had the foresight to bet on Ford Motor Co. (NYSE: F) back then, you’re probably very well off today because of it.
The tremendous growth opportunity is why you should think about buying into EV startups. Rivian Automotive Inc. (NASDAQ: RIVN), which aims to build full-sized EV pickup trucks and SUVs, just had an initial public offering (IPO) in November that raised nearly $12 billion, making it the biggest IPO since Meta Platforms Inc. (NASDAQ: FB). Rivian is just one company among others, including Tesla Inc. (NASDAQ: TSLA), Fisker Inc. (NYSE: FSR) and Lordstown Motors Corp. (NASDAQ: RIDE).
As EVs improve their range and EV companies evolve their product lines, EV startups will be integral. Incidental infrastructure, such as parts manufacturing, EV filling stations and EV repair schools will need to be built to maximize the viability of EVs as reliable transportation options. You can take advantage of a host of investment opportunities in EV startups outside of vehicle manufacturing.
The earlier you add equity in the right EV startups to your portfolio, the more it will be worth in the future. Even if the share price of Rivian is out of your reach, you still might be able to buy into an electric battery startup or a company that builds aftermarket performance parts for EVs.
Where to Find EV Startups to Invest In
For EV startups, the obvious first target for investment is in the actual carmakers. The problem with this strategy is that venture capitalists and heavy hitters have already scouted out the EV makers most likely to succeed and backed them heavily. So it could be hard for you to buy a large share of equity in EV manufacturers.
Targeting the companies that will provide logistical and technical support to EV manufacturers is another way to get in early with EV startups. If analysts’ predictions for EV sales are realized, the industry will need support, from battery manufacture to public charging stations. It’s also important to remember that there are a number of classes of EVs coming onto the market, such as heavy trucks and motorcycles in addition to cars. Electronic bicycles are also increasing in popularity.
Regardless of what area of EV startups you choose to invest in, one of the best places to look for them is equity crowdfunding platforms. Right now, StartEngine has several interesting offerings, including Rumblemotors, a startup that builds electronic motorcycles. Another interesting StartEngine offering is T4L, which is a startup subscription service for EVs. Wefunder.com also has a startup offering called Ecarra, an EV subscription service that specializes in luxury EVs.
Choosing Which Startups to Invest In
Ford, General Motors Co. (NYSE: GM) and Chrysler, which is now part of Stellantis (NYSE: STLA), are collectively known as “The Big Three,” because they are the three largest automobile manufacturers in America today. At the outset of the automotive industry, other automakers competed for market share. However, only these three managed to stand the test of time and last 100-plus years. If history is any indicator, many of today’s EV manufacturers will go the way of their failed predecessors.
For all the excitement surrounding EVs, the cold, hard truth is that only a few EV makers are going to make it. What that means for you is that investing in EV startups is as risky, if not riskier, than investing in other startups.
Trying to choose which company to invest in when you’re dealing with a nascent industry like EVs is extremely difficult. However, high risk is what brings high reward; early investors in the Big Three created generational wealth for themselves and their families.
If you are a retail investor, finding startup EV manufacturers to invest in will likely be an expensive proposition. If you don’t have that kind of capital to risk, it’s probably a better idea to invest in a startup that’s already been vetted by a reputable equity crowdfunding platform. There are several reasons this makes more sense than trying to choose which EV maker is going to still be here 100 years from now.
First, many of the EV startups on equity crowdfunding platforms will have been vetted by the financial professionals who run the platform. At a minimum, the startup’s business model, product and future potential have been assessed as being viable by people who make these types of assessments for a living. These opportunities offer manageable buy-ins. Also, many equity crowdfunding platforms have offerings in EV-related industries with potentially lower risk than EV manufacturing, such as battery makers or EV subscription services.
EVs Are the Future, and the Future Is Now
Just 20 years ago, it was almost impossible to imagine an EV like a Tesla racing down the highway, offering 0-to-60-mph performance that rivaled even the fastest traditional sports cars. Yet, that day has arrived. It’s not just Tesla either. In addition to other EV makers like Fisker and Lordstown Motors, most of the world’s established automakers have an EV in their product lineup.
This futuristic reality translates to an incredible opportunity for investors when it comes to EV startups. If you’re looking for a growth industry to invest in, you owe it to yourself to consider EV startups.
The fundamentals of investing in EV startups are the same as they are for any other industry. Learn the industry, diversify your investments and get in on the action before it’s too late. Because EVs are here to stay.
About Eric McConnell
Eric McConnell is an alternative investment writer interested in rare collectibles, fine wines, art and sports memorabilia. He developed his love for sports during his childhood, where in addition to being an aspiring professional baseball player, he was an avid baseball card collector and reader of the Robb Report.
As is the case for many aspiring young sluggers, Eric’s baseball career came to an end the first time he encountered a pitcher capable of throwing 90 mph and a wicked curveball. However, his delight in the finer things of life never waned, and after a career in real estate, Eric branched out into writing, where he joined Benzinga as an alternative investment writer in 2021.
Although he covers breaking news in all areas of alternative investments, Eric’s favorite subjects harken back to his childhood days of reading the Robb Report and collecting baseball cards. He has a passion for writing about fine art sales, whiskey auctions and sports memorabilia.