Investments by big automobile firms and original equipment manufacturers (OEMs) in start-ups have increased substantially to $243 million in 2018, from $14 million a year ago. OEMs feel such investments will reduce the time it takes to launch new vehicles and help to bring new solutions for future mobility faster.
Venture Intelligence data shows that the number of deals — OEMs’ investments in start-ups — concluded in 2018 was 11, as against three in 2017. They were mostly in the shared mobility, electric vehicle technology and connected mobility space.
Big deals included a $65-million investment by electric scooter maker Kwang Yang Motor in Twenty Two Motors, followed by a $44-million investment by Essel Group in the on-demand AC bus service provider ZipGo and a $40-million fund infusion by Mahindra Group and Ford in self-drive car rental firm ZoomCar.
On the sidelines of the FISITA World Automotive Congress, concluded in Chennai recently, Pawan Goenka, managing director of Mahindra and Mahindra, said, “Soon, the automotive sector will witness a technology disruption lead by start-ups. We, as firms, know which technology succeeds and which one fails; so, we won’t try. But, start-ups don’t have this differentiation and they will keep on trying each and every thing. At one point in time, the technology which would have been proved a failure would succeed and revolutionise the industry. This is the disruption I am talking about.” He added that start-ups would create new business models, customer solutions and technology paradigms.
It would help Hyundai start operations in new environments with new customers, said Anand. Further, the customers would be able to experience Hyundai brands in a unique format, which would result in brand enhancement and enhance the usage of Hyundai cars among potential customers, he added.
With such strategic partnership investments, OEMs are looking to tap innovative future services to gain the first foothold in the market.
For start-ups, besides the money, the expertise and market penetration that OEMs bring are additional advantages. Anupam Agarwal, co-founder at Revv, in August said that with Hyundai’s deep understanding of Indian consumers and their progressive stance on tech-driven mobility solutions, their partnership would bring the company closer to achieving its vision in the mobility market.