Buckle up as FinTech accelerates the electric vehicle industry



The demand for electric vehicles (EVs), including cars, business trucks, and even fleets, has been increasing in recent years. The constant innovations in the manufacture, maintenance, and marketing of EVs require increased infrastructure and capital infusion to accommodate the demand among consumers and enterprise businesses. Can various technological innovations, industry developments, and financing accelerate the electric vehicle industry?

To date, there are currently over 40 different electric vehicle models for sale in the United States alone, and this number is growing globally–comprising three types, Battery Electric Vehicles (BEV or simply EV), plug-in hybrid electric vehicles (BHEV), and Hybrid Electric Vehicles (HEV). The growth of the electric vehicle industry is increasing at a promising rate. Its current market is expected to grow from US$39.8 billion in 2018 to nearly US$1.5 trillion by the year 2025. According to JP Morgan, most electric vehicles and hybrid electric vehicles will account for almost 30 percent of cars on sale by 2025. That is an expected sell point of 97 million vehicles globally by that year. At 0.4 percent as of 2018, EVs have a long way to go.

This not only dominates the electric vehicle industry but also allows for more innovation and advancements surrounding sustainable transportation. Consecutively, electric vehicles are expected to increase from 3 million to 125 million by 2030. This number equates to one car for every person in Japan, currently the 11th most populated country in the world. The electric vehicle industry is continually evolving through new technology innovations.

Growing trends in the electric vehicle industry

Thanks to these new innovations, the electric vehicle industry has been growing and thus providing more opportunities for sustainability. One innovation in motion is the modernization of the battery technology used to power EVs. This will potentially lower the cost of vehicles, thus enhancing its marketability.

Battery prices alone have decreased by 80% since 2010 with hopes of potentially dropping further by 45% by 2021

“According to the Bloomberg Electric Vehicle Outlook, the battery made up at least 57 percent of the total cost of an EV in 2015. In 2019, it was at 33 percent. By 2025, the battery will be only 20 percent of total vehicle cost. Batteries currently cost US$176 per kilowatt-hour, and this will fall to US$87 per KWh by 2025 and US$62 per KWh in 2030.” says Kenny Au, Founder at Elevate Ventures, a Hong Kong-based venture builder. “The continuous improvement of battery technology and chemistry will cut battery costs and make electric vehicles less expensive than internal-combustion engine vehicles within the next decade.”

Moreover, the direction of the industry in the coming years is going toward fully electric vehicles, which will edge out hybrid technologies that still utilize fossil fuels. However, at this time, the battery is still the most expensive resource, and EV manufacturers are still finding ways to optimize this expense to ensure better marketability.

“The batteries are still the most expensive component and are still heavy and big. Gasoline still holds more energy per kilogram than any battery on the market,” says Krešimir Hlede, Chief Operating Officer of Greyp Bikes, a sister company of Rimac Automobili, which is a tech company that produces electric bicycles. One major hurdle in powering EVs is still the price of batteries and battery tech, and manufacturers can address this with better research and innovation, which can be costly.

How FinTech addresses the current challenges in the EV industry

FinTech provides innovative ways for businesses to raise capital and engage the investor community According to Hitachi Research Institute, the increasing digitalization of securities and equities enables capital providers to link up with innovators directly at a lower cost than the traditional capital markets.

For example, EV companies can take on equity investments through tokenized securities, which can help finance research and development into the powertrain development. By raising capital through tokenization, these companies can help cover the costly expense of producing or purchasing the batteries that comprise a big cost component of electric vehicles.

“Security tokens that tokenize tangible and intangible assets, such as corporate equity, will revolutionize capital raising via Security Token Offering (STO),” explains Aaron Tsai, Founder and Chief Capitalist at MAS Capital Inc. and MAS Capital Universal Exchange (MASEx), a global exchange for digitized securities. “Investing in projects and secondary trading of security tokens will break-down the jurisdictional barrier on a global basis. The crypto tokens and security tokens will also integrate the unbanked into the global security token investment.”

By offering equities through security tokens, EV companies can tap into both institutional investors and secondary markets in order to fund innovations. This is one strategy that Greyp Bikes utilized in financing for product innovations. “We decided to do the world’s first ETO (Equity Token Offering). It is a great way to fundraise, create a base of brand ambassadors and stay in touch with a large group of followers and consumers,” Hlede added. Thus, FinTech offers an opportunity to continue financing for growth and innovation in this industry.

The future of the EV industry

Given their impact on reducing carbon emissions, electric vehicles are the future. “As electric is going to be the future and every country starts working on this so there will be a lot of innovation in terms of technology, which will help in reducing the price and making EVs more usable,” said Ankit Khatry, Chief Operating Officer and Co-founder of Emflux Motors, an electric mobility company, based in Bangalore, India.

Thus, while the industry starts to gain traction, manufacturers and innovators will need all the support it can get in terms of capital, and FinTech solutions are in the best position to provide this much-needed resource.

With the help of technological advancements such as cheaper batteries and funding through the help of FinTech, the electric vehicle industry can keep moving forward and reaching its full potential.

Image credit: Pixabay