Private funding in the Indian startup ecosystem zoomed past $12 Bn across 993 deals in 2024, clocking a 20% surge over the previous year. Electric vehicle startups, however, failed to ride the rebound and funding decelerated nearly 31% to $624 Mn across 43 deals, according to Inc42’s ‘India’s Electric Vehicle Startup Report 2025’.

This was the second straight year when investors refrained from making heavy bets on EVs. Funding in EV startups had surged nearly 255% in 2021 before it scaled an all-time high of $1.08 Bn from 60 deals in 2022. A year on, investments began losing momentum and dipped to $901 Mn raised from 44 deals.

The EV startups, without fleet aggregators, mopped up over $3.7 Bn across 236 deals between 2014 and 2024. While late-stage startups raised $1.08 Bn from over 19 deals, their growth-stage peers charmed the investors to pump in $2.21 Bn through 89 deals in the last 10 years.

The year gone by saw Ather Energy become the second EV unicorn in India after it raised $71 Mn from existing investor National Investment and Infrastructure Fund (NIIF) at a post-money valuation of $1.3 Bn in August. A month before that, the IPO-bound startup had raised a debt of $7 Mn from InnoVen Capital.

Ola Electric’s $50 Mn and Euler Motors’ $24 Mn funding came from venture debt rounds. The trend of raising debt seems to have spilled over to 2025 as well, with Euler Motor raising a $20 Mn debt from responsAbility in January.

Lighthouse Canton, a global investment institution offering wealth and asset management services, writes in its ‘Venture Debt Report’ that about 67% of EV startups rely on venture debt for more than half of their funding needs. “The electric vehicle sector, which is capital-intensive and faces unique challenges, has become heavily reliant on venture debt to drive its growth,” it says.

The VC highlights the central role played by venture debt in helping EV companies expand production, set up charging infrastructure, and invest in battery technologies that are crucial for expansion. “With traditional lenders like banks often viewing the EV sector as high-risk, venture debt makes for a vital alternative,” it says in a statement.

What’s Slowing Down The Funds Flow?

The downturn in EV-bound funding also saw a significant drop in the average ticket size. In 2024, the average slipped 39% to $14.5 Mn from $23.7 Mn a year back. There is also a noticeable loss of interest in homegrown EVs among end-consumers, resulting in a decline in sales.

According to the Vahan Dashboard, the sale of two-wheeler EVs, which make up 85-90% of the EV pie, skidded 23% to 6.62 Lakh........

© Inc42