Automotive startups: Shaping the future of mobility

North America and Greater China are the leading innovation hotspots for automotive startups. North America leads with more than $71 billion in total startup funding from 2009 to 2024, supported by a strong venture capital environment and investors network. This funding has propelled advancements in electrification, autonomous driving, SDVs and battery technologies.

Greater China follows with $54 billion in funding, surpassing all other regions in average funding per startup. This growth is supported by aggressive government policies around electrification and smart transportation, along with a rapidly growing consumer base.

Europe presents a more fragmented investment approach distributed across multiple countries. Despite lower total funding compared to North America and Greater China, Europe boasts the highest concentration of early-stage startups, particularly in SDVs, reflecting its collaborative innovation model and regulatory emphasis on sustainability.

As per S&P Global Mobility's AutoTechInsight Startups database, global funding for automotive startups has reached approximately $170.8 billion, exhibiting a compound annual growth rate (CAGR) of 23% from 2009 to 2025. Startups focused on OEM strategy, battery technologies, autonomous driving, materials and lightweighting, and SDVs all received substantial funding during this period (see chart below).

OEM strategy, autonomous driving and battery technologies startups received an average funding of $216 million, $126 million and $122 million per startup. This reflects investor confidence in electrification, software-enabled mobility and energy storage for EV adoption. Funding for emerging domains, such as materials and lightweighting, as well as SDVs remains robust, emphasizing their importance in vehicle efficiency and software integration, respectively.

Conversely, domains such as lighting and thermal management attract less investment, suggesting more niche or mature market segments.

Investment follows innovation. From 2020 to 2024, 60% of patent filings for automotive startups were focused on SDVs, autonomous driving and battery technologies, indicating that these domains are significant innovation engines.

SDVs show particularly significant innovation, driven by developments in ADAS software, user interfaces, cybersecurity and over-the-air (OTA) updates. Autonomous driving startups also focus on ADAS, in addition to AI algorithms and simulation/testing technologies.

Although fewer new startups are entering the battery domain, battery development remains a leading driver of innovation — particularly in materials chemistry, recycling, thermal management and diagnostics. Other domains, which includes chassis, lighting, thermal and propulsion holds a small share (4%) of patents filed in recent years.

Investment in automotive startups comes from a mix of traditional venture capital, corporate venture arms and strategic investors from the automotive and technology sectors. Leading investors include Plug and Play, Techstars Ventures, Y Combinator, BlackRock, Fidelity Investments and major automakers, such as Toyota.

Plug and Play and Techstars Ventures stand out for their extensive investments in SDV startups, backing more than 40 each. Meanwhile, traditional automotive companies are investing in EV manufacturing, shared mobility and autonomous driving.

As investment accelerates, partnerships between startups and established players are becoming just as critical to driving innovation. These collaborations offer startups access to advanced technologies and resources, while enabling incumbents to stay ahead of emerging trends.

Nvidia leads in startup partnerships with more than 60 collaborations, primarily in SDVs and autonomous driving, highlighting its strategy to embed AI and computing platforms in next-generation vehicles. OEMs such as BMW, Mercedes-Benz, Toyota, Hyundai and SAIC Motor take a more balanced approach, engaging in both direct investments and partnerships (see chart below). Asian OEMs tend to maintain larger startup portfolios, reflecting aggressive innovation strategies.

The automotive startup ecosystem is poised for continued growth and transformation. A surge of early-stage ventures, coupled with robust funding and innovation in SDVs, autonomous driving and electrification, signals a future dominated by software-centric, connected and sustainable mobility solutions.

Regions such as North America and Greater China will continue to lead innovation, while Europe’s collaborative model may yield unique solutions addressing regional challenges. The maturation of battery and autonomous driving startups suggests a market moving toward commercialization and large-scale deployment.

OEMs, suppliers and technology companies must double down on partnerships and strategic investments. As automotive and digital domains converge, agility and collaboration will be key to staying competitive.