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Despite Tesla’s success, VCs remain slow to invest into electric vehicle startups
This post was originally published on NextMobility.co
As investors continue to become more interested in the future of mobility, electric vehicle startups are commanding significant investment money to disrupt the 120-year-old automotive market. But are Venture Capitalists forking over enough money to move the industry forward in a meaningful way? A new report by tech intelligence platform CB Insights reveals that EV tech startups received $2.2B in funding in 2016. While the amount may seem large, it pales in comparison to the ride-sharing industry, which fetched $10.8B in funding. So the real question is, why are investors still so hesitant to fund the emerging mobility industry?
An Industry Hurt by the Past
Justin Kan, from Y Combinator, on stage during the 2014 TechCrunch Disrupt Europe/London at The Old Billingsgate on October 20, 2014 in London, England. (Photo by Anthony Harvey)
To really understand why VCs are still hesitant to fund electric car startups, it’s important to hear from leaders in the VC space. I reached out to famed startup guru, Justin Kan, to understand why the industry is still hesitant. Kan was the founder of Twitch, sold to Amazon for nearly $1B in 2014, and the brother of Daniel Kan, who is the co-founder of Cruise Automation, which was sold to GM for $1B last year. Kan responded on his new video Q&A platform, Whale, that, “It’s super, super hard to build a car. I think lots of people think that Elon Musk is a unique individual, uniquely capable of building an electric car. But there are many examples of people who have tried and failed, for example, Fisker.”
Kan isn’t wrong; the industry was riddled with very public failures, of which CB Insights highlights in their report. The history of very costly failures could be scaring many investors away from the sector, but when will the public perception change?
Tesla Inc. is arguably the most successful EV startup to date, as the company has now grown to employ over 30,000 workers worldwide and become the most valuable US automaker. Tesla had several VC firms backing the company before they went public in 2010, including DFJ, Capricorn Investment Group, Daimler, Google, DFJ Growth. But most notably, the company saw tens of millions of capital injected by its founder Elon Musk while the company was starting up.
Graphic from CB Insights’ report
While investors are still fighting to get their money in ride-sharing and autonomous vehicle technology companies, it has been clear that electric vehicles hold the best platform for the future of mobility companies. In the report from CB Insights, they highlight the synergies that electric vehicles and autonomous vehicles share. Electric vehicles have fewer components, enabling autonomous electric vehicles to travel nearly 18x more miles than internal-combustion engine vehicles without repairs or expensive operational costs.
Graphic from CB Insights Report
“What would happen if a whole city converted all at once to self-driving cars? … people will be like, ‘This is paradise.’ You just push a button and a car pop ups and takes you wherever you want to go. You have more pedestrian space, and the air smells better.” – Chris Dixon, Partner at Andreessen Horowitz
Investors are certainly taking another look at the industry as more EV startups emerge on the scene with highly qualified engineers, and serious product and production plans underway. Lucid Motors is a prime example of an electric car startup that is emerging as a leading contender within the premium electric vehicle space. The Silicon Valley-based startup is currently looking for funding on its initial factory construction, to the tune of $240M. The company has raised $131M to date, led by CTO Peter Rawlinson, who also led the development of Tesla’s Model S sedan.
Only time will tell if investors have forgotten about failed EV startups from the past, and willing to make bets on the industry. After all, VCs did invest $120M in Juicero, an in-home juicing machine, that turns out to be completely useless.
Read the CB Insights complete report here.
Elon Musk has been pretty open about the idea of FSD being the difference maker for Tesla’s future.
If Tesla succeeds in achieving FSD, it could become the world’s most valuable company. If it doesn’t, then the company would not be able to reach its optimum potential.
FSD Supervised’s safety benefits:
- But even if FSD is still not perfect today, FSD Supervised is already making a difference on the roads today.
- This was highlighted in Tesla’s Q4 2024 Vehicle Safety Report.
- As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
- For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.
This morning, Tesla FSD proved to be an absolute godsend. I had to take my brother-in-law to the hospital in Sugar Land, TX, which is 40 miles away, at the ungodly hour of 4 AM. Both of us were exhausted, and he was understandably anxious about the surgery.
— JC Christopher (@JohnChr08117285) January 29, 2025
The convenience of…
FSD user’s tale:
- As per an FSD user’s post on social media platform X, FSD Supervised was able to help him drive a relative to a medical facility safely even if he was exhausted.
- During the trip, the driver only had to monitor FSD Supervised’s performance to make sure the Tesla operated safely.
- In a vehicle without FSD, such a trip with an exhausted driver would have been quite dangerous.
- “This morning, Tesla FSD proved to be an absolute godsend. I had to take my brother-in-law to the hospital in Sugar Land, TX, which is 40 miles away, at the ungodly hour of 4 AM. Both of us were exhausted, and he was understandably anxious about the surgery.
- “The convenience of sending the hospital’s address directly from my iPhone to my Tesla while still inside my house, then just a single button press once inside, and 40 miles later we were precisely in front of the hospital’s admissions area.This experience really underscores just how transformative this technology can be for society,” Tesla owner JC Christopher noted in his post.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
There are few things that prove an enthusiast’s love towards a company more than a dedicated short film. This was highlighted recently when YouTube’s SoKrispyMedia posted a 10-minute action movie starring Optimus, Tesla’s humanoid robot, as well as several of the company’s most iconic products.
The video:
- Shot like a Hollywood action flick, the video featured a rather humorous plot involving a group of thieves that mistakenly targeted a Tesla Model 3 driver.
- The Model 3 driver then ended up speaking to Tesla for assistance, and some high-octane and high-speed hijinks ensued.
- While the short film featured several Tesla products like the Model 3, Superchargers, and the Cybertruck, it is Optimus that truly stole the show.
- Optimus served several roles in the short film, from an assistant in a Tesla office to a “robocop” enforcer that helped out the Model 3 driver.
Future Robo-cop @Tesla_Optimus
— SOKRISPYMEDIA (@sokrispymedia) January 12, 2025
full video: https://t.co/TXpSRhcP5K pic.twitter.com/YFHZ7siAP7
Cool inside jokes:
- The best Tesla videos are those that show an in-depth knowledge of the company, and SoKrispyMedia definitely had it.
- From the opening scenes alone, the video immediately poked fun at TSLA traders, the large number of gray Tesla owners, and the fact that many still do not understand Superchargers.
- The video even poked fun at Tesla’s software updates, as well as how some Tesla drivers use Autopilot or other features without reading the fine print in the company’s release notes.
- The video ended with a tour de force of references to Elon Musk products, from the Tesla Cybertruck to the Boring Company Not-a-Flamethrower, which was released back in 2018.
Check out SoKrispyMedia’s Tesla action short film in the video below.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
Tesla definitely seems to be determined to release the coolest lineup of accessories for its coolest vehicle. As could be seen in an update to the Tesla Shop, the electric vehicle maker has now launched a metal key card for the Cybertruck—because why not?
Cybertruck keys:
- The Cybertruck, similar to Tesla’s other vehicles, is shipped with a regular key card.
- The vehicle could also be accessed and locked through a phone key.
- As per the Cybertruck’s Owner’s Manual, the all-electric pickup truck is capable of supporting a total of 19 keys.
The Cybertruck’s Metal Key Card:
- Tesla’s Cybertruck Metal Key Card functions much like the vehicle’s regular key card, but it is finished using premium stainless steel
- As per Tesla’s description of the item:
- “Convenient, durable, versatile. The Cybertruck Metal Key Card is a premium stainless-steel alternative to our traditional plastic key cards, making it easy to access your Cybertruck without your Phone Key. Ideal for when your phone is unavailable or when sharing your vehicle with a friend or valet.”
- The Cybertruck Metal Key Card costs $60.
- In comparison, the Cybertruck’s regular key card is sold for $40.
- The Cybertruck Metal Key Card comes with the metal key card itself, as well as a bifold key card wallet.
Tesla Cybertruck merch push:
- Being the company’s most eye-catching vehicle, it is no surprise that that Tesla has been releasing quite a lot of merchandise inspired by the all-electric pickup truck.
- These include a $250 levitating Cybertruck model, as well as a $35 Cybertruck wind-up racer, both of which are out of stock.
- Tesla also sells the $35 “CyberMug,” a $40 “CyberStein,” and a $50 “CyberVessel.”
- Other Cybertruck-inspired merchandise are the $60 Cyberwhistle Stealth, and the $50 CyberOpener.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
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