Casting a wide shadow over the world of electric-vehicle startups — and the source of much of their money — is China.
As in the U.S., demand for EVs in China remains relatively weak: The 336,000 plug-in and battery-electric vehicles sold in China in 2016 made up just over 1 percent of the market. But China has far more aggressive mandates in place for battery-electric vehicles: By 2020, they will need to make up as much as 8 percent of the country's total vehicle sales.
That has caught the attention of the entire automotive industry — legacy automakers and year-old startups alike — who see a gold rush in the Chinese EV market and the ripple effects it will have across the globe.
"This is an incredible catalyst and a draw for if ever there was a prize for everyone to start really pushing toward EVs, China is providing that impetus and that draw," Peter Rawlinson, chief technology officer at Lucid Motors, told Automotive News.
Numerous EV startups, including Lucid, Faraday Future, Nio and SF Motors, all have at least partial backing from Chinese sources, and all have mentioned at least building and selling EVs in China.
Nio made headlines in November, when Reuters reported that the Chinese company raised more than $1 billion in its latest fundraising round, valuing the company at about $5 billion.
"The most well-financed startups that are hoping to become manufacturers themselves are primarily based out of China," said Kerry Wu, senior analyst at CB Insights. "There's also a lot of deep-pocketed strategic players who are looking to edge into this space."
Those strategic players are looking beyond just building a vehicle and are investing in connected-car technologies, EV-charging infrastructure and autonomous capabilities.
Compounding the appeal of China for EV startups is the strength of the country's luxury market, which is the fastest-growing in the world. Many EV startups are following Tesla's model of introducing high-dollar luxury cars and crossovers before moving into higher-volume, lower-cost segments.
"We see China as a big long-term prize," Rawlinson said, "since it so dominates the world's luxury car sales."
Nevertheless, it's the U.S. where many companies continue to base their technical operations, drawing on a deep pool of engineering and design talent from legacy automakers as well as other industries.
"China could become a leader in terms of sales," said Henrik Fisker, who founded Fisker Automotive and now Fisker Inc., "but I remain confident that America could stay a leader in terms of the technology itself and the development of technology because the demand in the U.S. for high-quality [products] and efficiency is still going to remain higher than anywhere in the world."
