Welcome to the fifth edition of Oliver Wyman’s Mobility Startup Radar. The Radar aims to identify promising players that will shape mobility’s future with new business models, innovation, and growth. It explicitly does not focus on the largest players with the strongest current market positioning. Instead, it emphasizes players with a promising outlook across four different mobility segments.

The current economic crisis is putting the brakes on funding for mobility across the board and threatening the transportation transition to electrification and mobility solutions that downplay car ownership. Startups in the mobility sector raised just short of $22 billion in the first half of 2022 versus the record-breaking $81 billion in growth capital invested in 2021. Investors are becoming more demanding, insisting startups prove the viability of their business models more quickly if they hope to secure funding during these uncertain times. By the end of the year, we expect venture capital funding to be roughly half of what it was in 2021.

The hype is over. Given the current economic and political turbulence, investors are thinking more realistically and put a higher focus on short-term profitability

Andreas Nienhaus, Partner

Size of the financing rounds

In general, fewer big bets are being placed today and investors no longer trust charts that look like hockey sticks. Startups in the middle phase of financing are finding it particularly difficult to obtain significant funds. But companies based on ideas that have been tried and tested continue to be in high demand for investors.

This is a setback for the mobility turnaround, which is urgently needed from a climate protection perspective. After all, the planet doesn’t care how financial markets perform. Ideas for more climate-friendly transport need more money now than ever, not less

Andreas Nienhaus, Partner

This year’s edition of Radar also shows the benefits more mature startups have reaped through perseverance and disruptive business models. Before turning to new ideas, venture capitalists will support the development of existing portfolio companies.

Startups with a proven track record, market fit, and the potential for an initial public offering in the next few years are a relatively safe bet for venture capitalists, who want to focus on promising bets with less downside risk

Steffen Rilling, Principal

As a result, investors tend to concentrate on fewer companies. One indication of this is the size of the financing rounds: While the average volume grew to $54 million in 2021, it was still an impressive $46 million in 2022, despite all the signals to slow down. One in 10 financings is now a so-called mega round, bringing in $100 million or more. The three largest companies that received funding in 2022 received almost half of the money: Wayve from London, which is one of the leaders in autonomous driving, General Motors subsidiary Cruise from California is next, and lastly, the Estonian micromobility provider Bolt, which has become known by their e-scooters but now integrates additional services on their platform. Investors are still willing to spend money if they see a proven business model.

Europe overtakes Asia for the first time

The European startups outperformed the Asian ones in terms of total financing volume with $4.6 billion raised. The relative slowdown of Asia reflects current political turmoil: venture capitalists in the United States are hesitant to invest in Chinese companies given the complexities surrounding public listings of these businesses in the US and the relentless battle against COVID-19.

Yet, while financing is solid and stable for European startups, the most significant technological leaps in mobility are still coming out of enterprises in the US and Asia. For instance, the Asian “super app” Grab, which combines several offers on one platform, can serve as an example as it collected more than $6.3 billion in 2021 alone.

Asia and the US have more mature and bigger startups in general. That’s because the big European car companies are often taking the lead in developing new mobility technology like autonomous driving where Asia and the US rely more heavily on startups.

In Europe, most financing went into customer service technology and the digitization of sales. In Asia and the US, financing focused on advanced technologies, such as autonomous driving, and making autos more environmentally friendly. These efforts require more financing. The result: Asia is still ahead on the number of mega-rounds of financing — those raising $100 million or more.

The connected vehicle segment defended its first place, garnering $7.1 billion in financing globally in the first half of the year. Connected vehicles are currently one of the hottest topics especially as the business models start to commercialize with business-to-consumer offerings in the US, China, and Europe.

One driving factor is the increasing degree of digitization connected with a higher share of electric vehicles. E-cars can supply more than twice as many data points during an operation compared with their classic internal-combustion engine counterparts. Because e-cars generate more data, more driving solutions have become possible.

About the Analysis

Oliver Wyman’s Mobility Startup Radar analyzes over 10,000 startups worldwide in the innovation sectors of mobility services, green vehicles, autonomous and connected driving as well as sales and aftersales. The displayed data was collected in September 2022 and includes all funding data for H1 2022 which was available up to that time. Full funding data is usually available 2-3 months after a given timeframe as sources are updated step-by-step.

Deep Dive: Robotaxis

The first wave of excitement around robotaxis arrived after militaries around the world developed self-driving vehicles in the early 2000s. Companies then began testing the technology later that decade with the expectation that one of its primary roles would be in ride-hailing. In the United States, competitions offered prize money of up to $1 million for autonomous vehicles that managed to complete courses. Most attempts failed, but the larger players had not yet started their R&D efforts.

> $11 BN

in funding in 2021 went to end-to-end companies who deploy autonomous vehicles on the road

> $3.5 BN

in funding in 2021 went to software and AI providers who provide relevant autonomous vehicle technology

> $1.5 BN

in funding in 2021 went to manufacturers of smart components required for autonomous driving

> $1.5 BN

in funding in 2021 went to solution providers who develop relevant software within the autonomous vehicle space for consumers, manufacturers, and governments alike

The second wave started in 2012 and yielded more-promising results. That year, Nevada issued Google the first license in the US for an autonomous vehicle (incl. safety drivers) to run on public roads, and other American states allowed tests. Tesla then released its autopilot software in 2015, and other automakers began to introduce automated functions such as self-parking. In 2016 and 2017, over $80 billion was funneled into self-driving technology. But most systems did not go beyond Level 2 — where a driver is required to monitor the vehicle and to be prepared to intervene at any time.

The third wave of autonomous technology, from 2021, is the first time that self-driving technology has matured to a point at which autonomous vehicles could be commercially viable. Cars are now being made that achieve Level 4 autonomous driving: In first pilots, no driver attention is required for safety anymore.

Regulations around the world are now allowing pilot robotaxi programs using this generation of autonomous car — though driverless cars cannot yet be bought as private passenger cars. In California, where the robotaxis no longer require a safety driver, a driverless taxi service has already been launched in San Francisco. Services are already launched in Wuhan and about to be launched in Munich. One automaker is targeting a fleet of around one million automated taxis in the US alone by 2030. By 2040, the global market for self-driving cars is expected to number more than 30 million vehicles.

Finally, after a series of false dawns, there are signs that self-driving technology is arriving, with the potential to completely disruption the mobility market. However, it will take time for these systems to become profitable, and survival till then will need funds. Only those players with sufficient means will be able to harvest the fruit of their work.

Deep Dive: Charging infrastructure and services

Electric vehicle charging has become 20 times faster since 2009. Then, around the time the first mass-production EVs were being announced, a typical charging station produced 17 kW of alternating current. Today, some produce 350 kW of direct current, and the time to charge a typical 40 kWh EV battery has plunged from over two hours to seven minutes.

Three archetypes have evolved in the charging business. One is hardware providers, which design and deploy charging equipment for everything from superchargers to affordable small-scale solutions for consumers or buildings. Emerging trends include on-the-go charging that will work using inductors or contact wires as well as remote, off-grid charging units.

A second model consists of software solutions. One type is B2B services to manage networks of chargers and payment services, and it can include fully integrated software solutions. Another type is platform providers, which connect end users with charging-station operators. Recently, these platforms optimize charging in order to balance grids: EVs can be charged when demand on the grid is low, and the grid’s power supply can be balanced between numerous vehicles. In addition, newest technology forecasts electricity prices and availability, ensuring a maximum use of electricity generated from renewable sources.

Thirdly, larger businesses and mature start-ups are offering fully integrated, end-to-end charging solutions that cover hardware, installation, maintenance, and end-user payments. The next frontier for this type of provider includes battery swapping (so that drivers don’t have to wait for a battery to charge) and robots that act as mobile charging stations.

In the US, over $1 billion was invested in charging startups with these and other business models from January 2021 to June 2022. Of the funds flowing to the top 10 charging investees in the US, about 90% went to fully integrated, end-to-end charging solutions. In China, Singapore, and some European countries, charging stations have already reached significant levels of density, lowering the funding requirements for charging infrastructure and services.

As cars and other vehicles are electrified in coming years, there will be significant demand for providers of charging solutions. Venture capitalists are currently betting on providers of end-to-end charging solutions. However, more-complex problems – for example in grid infrastructure – could create demand for specialist companies.