China is home to hundreds of startups betting on the electric car revolution, but only 1 percent will be able to survive in an industry that requires significant investment in technology, according to NIO Capital.
The venture capital fund, which is partly backed by Chinese electric-vehicle company NIO, is nonetheless very cautious on buying into EV startups, said Managing Partner Ian Zhu. The Shanghai-headquartered firm is seeking to raise 10 billion yuan ($1.5 billion) for an onshore fund and favors investing in joint projects between auto startups and traditional carmakers because they combine innovation with real manufacturing capabilities, he said.
“It’s a very complicated system that needs abundant investments and a large group of people to be able to build a car from scratch,” Zhu said in an interview in his Beijing office on Aug. 3. “Therefore, the survival rate of all these EV startups will be very low.”
