Wex To Invest $100M In Electric Vehicle Startups
Wex is the latest high-profile company to set sights on the burgeoning electric vehicle space. The provider of vehicle fleet management services is planning to invest $100 million, focusing on early-stage startups focused on EV routing. The company has already established an investing group or arm to invest in startups focused on energy management and charging infrastructure.
Wex EV Investment
Wex Venture Capital is the new arm that has already invested strategically in Chargetrip, a startup focused on EV routing and range prediction. The venture capital arm has also invested in ev.energy, a charging software startup.
The $100 million investment targeting startups through 2025 comes when venture capital investments have slowed. Corporate-backed venture deals were down by 2% last year, with a 25% decline for venture capital overall. A decline in financing came despite the largest number of corporate units being created by corporate backers.
With a market capitalization of more than $8 billion, Wex has what it takes to diversify its business footprint beyond manning vehicle fleets and providing fuel cards. Likewise, the company has, in the recent past, increased its focus on transitioning toward electric vehicles. The transition comes as the total number of vehicles that the company manages has grown to over 18 million.
As more customers move to electric vehicles as part of a drive to curb emissions, Wex has had no option but also to align its business with the ongoing changes. A decline in the costs of electric vehicles and a growth in models that customers can buy has seen an uptick in electric vehicles in most of the key markets where Wex operates.
Therefore, it makes sense for the company to invest in EV startups to supplement its fleet management business. However, it has emerged the company is planning to make small returns from its investments in EV startups. Its primary goal is to gain a strategic advantage in the sector to boost its fleet management business.
Growing EV Investments
Wex’s investment into EV startups comes at a time when automakers are racing against time to secure key supplies for making electric batteries. The likes of Tesla, General Motors, and Ford are increasingly investing in mining companies with solid exposure to lithium deposits around the world.
By investing in the mining companies, the automakers hope to secure key lithium supplies crucial to the development of electric batteries. Such supplies are essential to providing leeway for the automakers to develop highly affordable electric cars as the race for market share heats up.
In addition to investing in lithium miners, some automakers are also investing in smaller EV companies in the race to strengthen their competitive edge in the market. German Automaker Volkswagen is fresh from investing $700 million in XPeng as it seeks to strengthen its push for market share in the lucrative Chinese EV market.
The $700 million investments could provide the much-needed stopgap that should help address Volkswagen falling market share in China. On the other hand, XPeng gains a prestige backing from one of the largest automakers that should help calm nerves after delivering disappointing earnings results. The partnership could also help the Chinese company reach profitability sooner than expected.