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The firm highlights that the EV charging technology–which is currently at $2.1 billion–is projected to reach $8 billion by 2022.
Village Capital has published a report stating that the overall clean energy sector is back, but said that investors should look beyond its ‘regular’ sectors and focus on transportation–including electric vehicles (EVs).
Titled “Beyond the Cleantech Bubble: Our Energy US 2018 Program“, Village Capital said it is excited about the advances the transportation sector has made, specifically in battery technology for the EV market.
The firm in its report said that the transportation sector is now the number one source of pollution in the United States.
Village Capital noted five major trends in the transportation sub-sector of cleantech with the major points being the Hyperloop, hybrid-electric aircraft, ride sharing companies and the growth of Internet of Things into transit assets.
Another nod to the EV market is that China leading the pack in this sector with 650,000 EVs currently on the road and with 107,000 public EV charging outlets, the report said.
“We’re never going to stop moving: transporting people, food and other goods from place to place. In fact, thanks to a growing global middle class, we’re moving more than ever. But we can get smarter about it,” said Allie Burns, managing director of Village Capital in the report.
In terms of overall growth, Village Capital notes that this sector will grow from $129 billion in the current period to $393 billion by 2022. The investment firm notes that rise in EV creates opportunities for startups that are innovating around the vehicles themselves as well as the infrastructure surrounding them.
The two markets falling under the EV sector that the report focuses on are lithium-ion batteries and EV charging technologies. The firm highlights that the EV charging technology–which is currently at $2.1 billion–is projected to reach $8 billion by 2022.
Some of the companies highlighted under this sector include:
Battery Manufacturers: Panasonic Corporation (TYO:6752), Samsung SDI (KRW:006400), LG Chem Power (KRW:051910), GS Yuasa Technology, Toshiba (TYO:6502), China BAK Battery (NASDAQ:CBAK).
The major company noted under the charging station category is Tesla (NASDAQ:TSLA).
The other industries that are projected to experience growth thanks to a rising interest in cleantech include: aviation, sharing economy and mass transit among others.
Investor Takeaway
Burns said that the documentary ‘An Inconvenient Truth’ for which former US Vice President Al Gore won an Oscar, helped push venture capitalists into the clean energy space.
“There was lots of excitement without understanding the intricacies of investing in this space,” Burns said in a video. “A lot of people ultimately lost money and lots of companies went under and investors were scared.”
Burns further noted that between 2011 to 2016, total percentage of venture capital going into clean energy dipped from 17 percent to seven percent.
As the report notes, the EV market is set to see an upshot in the coming years as governments commit to subsidize green technology and automakers continuing to diversify the offerings. In short, interested investors in this space will have a lot to look forward in the coming years.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.
