The mobility landscape has evolved rapidly in recent years. Heated investments in the next big electric-vehicle (EV) automaker, battery company, or shared-mobility unicorn have cooled, and the era of spiking investment appears to have plateaued since its peak at the end of 2021.
However, today’s apparent deceleration does not mean activity has stopped; rather, analysis indicates it has shifted. Beneath the surface of the future-mobility investment landscape, investors are changing their approach to investing—for example, by making larger, targeted investments or (as in the battery space) by moving their focus from next-gen technology to scaling current assets.
Here, we offer key insights on our findings from 2024 for automotive OEMs and suppliers, venture capital (VC) and private equity (PE) investors, mobility providers, energy players, and more. Our analysis is based on findings from McKinsey’s Start-up and Investment Landscape Analysis (SILA) tool, which tracks the evolution of the future-mobility investment landscape since 2010 (see sidebar, “Methodology”).1
Overall, the investment landscape in future mobility remains similar
The turn of the decade saw a rapid acceleration in investment activity. Despite a sobering cooldown in 2022, especially in the field of electrification, overall investments in future mobility have maintained momentum since 2010 and cluster around electrified, autonomous, and shared technologies (Exhibit 1). For electrified and shared mobility, investments have targeted at-scale buildup of new ecosystems and value chains. As for the autonomous cluster, autonomous driving has transitioned from a technology-centered stage to a deployment-focused stage, which needs more investments, by nature, than a pilot phase. In these clusters, large deals make up most of the volume and have driven much of the acceleration since 2010.
Most of these investments were concentrated in the United States (40 percent) and China (25 percent), far ahead of the countries with the next-highest levels of investment (such as the United Kingdom and Israel), according to McKinsey analysis. Of the $401 billion invested in companies with US headquarters since 2010, ridesharing player Uber received the lion’s share of investments at more than $40 billion.2 This concentrated funding in the United States can be linked to the fact that most of the largest venture capital and private equity investors are based in the United States. China has the second-largest investment volume at $251 billion, mainly driven by large deals (greater than $500 million per transaction, on average). The United Kingdom and Israel follow, marked by significant deal volumes, such as ARM Holdings at $31.5 billion and Mobileye at $17.4 billion.3
Europe is generally underrepresented in terms of investments. For example, Germany has many target companies (the third-highest number globally) but had relatively low investments, ranking sixth by investment volume. This could be explained by a general aversion to risk on the part of European (and particularly German) investors.
Additionally, approximately 90 percent of the investment in future-mobility technology still stems from nonautomotive players. Since 2010, only 8.8 percent of all investments into future-mobility technology companies and start-ups have come from automotive OEMs. This could be because OEMs invest internally and on automotive-specific technologies that they can integrate directly into their products. Investments in future-mobility technologies tend to go toward start-ups and small companies; such investments can be risky, especially for OEMs in thin-margin businesses. OEMs typically choose to partner with these companies rather than invest directly to mitigate risks and optimize for different capabilities.
Zooming in reveals deeper structural changes
Since 2022, investments have focused on electrified and autonomous technologies, a trend we expect to continue (Exhibit 2). Indeed, the majority of recent investments went into autonomous and electrification companies—driven, for example, by the $5 billion ARM Holdings IPO and Waymo’s $5.6 billion funding round.4 In the autonomous cluster, larger deals indicate a more targeted approach to investment, as exemplified by transactions with semiconductor companies. This is largely propelled by the recent scarcity in the supply of semiconductors, continued investment in driver-assistance systems for added value for customers, and recent appetite for processing power ignited by the growth of AI applications and by the expectation of bringing AI into mobility.
As cash becomes scarce, diminishing returns from mobility companies and a focus on profitability may gain relevance. The increase in the size of average transactions signifies a more targeted investment approach and a focus on improving the performance of new technologies, such as new types of batteries (Exhibit 3).
Of all the technologies analyzed, EVs and batteries have seen the most momentum as projects have scaled and EVs have gained maturity as a technology (Exhibit 4). In 2023, however, McKinsey analysis showed there was a shift away from next-gen technologies, indicating that the growing investment is geared toward scaling: Next-gen companies received 63 percent less equity-based funding, whereas overall investment increased 20 percent. This makes sense, given that EVs and batteries inherently require more investment than other technologies due to the significant capital expenditures needed to set up production—especially as compared with small ADAS components, smaller micromobility vehicles, and software-driven technologies.
In line with this, while capital markets show high volatility (for example, the autonomous cluster grew rapidly with Nvidia’s valuation, and the electrified cluster was affected by Tesla’s stock performance), valuations in general have increased in more recent investments as the number of competitors has decreased.5 One hypothesis is that higher valuations are an indicator of higher expectations as technologies mature and competition narrows the playing field. However, this would not explain why the autonomous cluster has slightly declined when, for example, semiconductors have driven so much value.
There are valuable opportunities in future-mobility start-ups, particularly as urban centers evolve around the world. Investors’ focus on autonomous and electrified technologies continues, as does regional concentration in the United States and China. Deals are becoming more targeted, suggesting a more risk-averse approach to investing overall. As technologies mature, automotive players can keep partnering with start-ups in upcoming technologies to stay at the cutting edge of innovation.
