Indian Startup Ecosystem Soars to New Heights in 2024, but EV Sector Struggles to Keep Pace
The Indian startup ecosystem has once again proven its resilience and growth potential, with private funding crossing the $12 billion mark across 993 deals in 2024, marking a 20% increase compared to the previous year. However, not all sectors shared in the success, as electric vehicle (EV) startups faced a significant slowdown, with funding dropping nearly 31% to $624 million across 43 deals, according to Inc42’s India’s Electric Vehicle Startup Report 2025.
This marks the second consecutive year of declining investor interest in the EV sector. The industry had witnessed a meteoric rise in 2021, with funding surging 255%, followed by an all-time high of $1.08 billion raised across 60 deals in 2022. However, the momentum began to wane in 2023, with investments dropping to $901 million from 44 deals and the downward trend continued into 2024.
A Decade of EV Funding: Highs and Lows
Between 2014 and 2024, EV startups (excluding fleet aggregators) raised over $3.7 billion across 236 deals. Late-stage startups accounted for $1.08 billion from 19 deals, while growth-stage startups attracted the lion’s share of investments, securing $2.21 billion through 89 deals over the same period.
Despite the recent slowdown, the EV sector has seen notable milestones. In August 2024, Ather Energy became India’s second EV unicorn after raising $71 million from its existing investor, the National Investment and Infrastructure Fund (NIIF), at a post-money valuation of $1.3 billion. Just a month prior, the IPO-bound startup had secured $7 million in debt funding from InnoVen Capital, signaling confidence in its long-term potential.
What’s Holding Back EV Startups?
Industry experts point to several factors contributing to the funding slowdown in the EV sector. High capital expenditure, supply chain disruptions, and slower-than-expected adoption rates have made investors cautious. Additionally, the absence of clear policy support and infrastructure challenges, such as the lack of widespread charging stations, have further dampened enthusiasm.
While the broader startup ecosystem continues to thrive, the EV sector’s struggles highlight the challenges of scaling in a capital-intensive and infrastructure-dependent industry. However, with increasing global focus on sustainability and India’s commitment to achieving net-zero emissions by 2070, the long-term outlook for EV startups remains promising.
As the Indian startup ecosystem continues to evolve, the coming years will be critical for EV players to regain investor confidence and capitalize on the growing demand for clean energy solutions. For now, the sector remains a mixed bag of opportunities and challenges with the potential for a rebound if key hurdles are addressed.