After years of failure, new entrants in vehicle technology are showing fresh signs of life. Investors are returning, ideas flowing and the race to reshape the industry seems to be back on
The mid-2010s felt like a new-idea gold rush. As the chief technology officer of a major equipment manufacturer, my team and I were constantly evaluating the many startups that promised to transform the industry overnight. Investors piled in, valuations soared, and expectations skyrocketed. But the last few years have been sobering. Many of those promising companies – despite having good technology and viable working products – failed to reach profitability quickly enough and fizzled out. The reason? Our industry remains conservative, and fresh ideas and processes, even good ones, need time to take root. Because of this, impatient capital markets, once flush with enthusiasm, turned cautious in the higher interest-rate environment. Funding dried up. Many of the most exciting players, including a very promising one that I advised, disappeared, unable to bridge the gap between innovation and sustainable business.
And yet, here we are again. The startup scene is once more showing signs of life. Recently, we’ve seen high-profile large capital raises from automation-focused companies like Monarch, Bedrock and Carbon and a successful recapitalization at Agrointelli where I serve on the board. I believe these aren’t just isolated wins – they’re signals of a broader shift. Investors are once again betting on the future of vehicle technology.
“The start-up story in vehicle technology isn’t over”
We’re also seeing new entrants like HeavyTech, a company run by a colleague of mine, whose native electric and hybrid machines – designed from the ground up rather than retrofitted from diesel power – promise better operational efficiency and lower costs. Others are exploring direct sales models to offer low-cost alternatives, bypassing traditional distribution channels.
Driving the comeback
So, what’s driving this resurgence? At abcg, we believe several dynamics are converging. First, recent policy changes in the US suggest labour shortages will become more acute. That makes automation not just attractive, but necessary. Companies like Monarch, Bedrock and Agrointelli are riding this wave, offering solutions that promise to fill the labour gap.
Second, the current frothy AI market is creating tailwinds – even for companies that aren’t using generative AI directly. The buzz around AI is helping automation startups gain attention and funding, as investors look for the next big thing.
Third, new entrants in electrification are designing their businesses for a world where battery electric vehicles (BEVs) must stand on their own economic merits. Subsidies may help, but they’re not the foundation. These startups are building machines that deliver cost savings and operational advantages – because that’s what the market demands. I’m convinced that such native electric machines are where the industry needs to go.
New opportunities for new players
We’ve long believed that if the major OEMs didn’t move fast enough, others would step in. That moment may be arriving. The combination of policy shifts, labour dynamics, and technological maturity is creating fertile ground for innovation.
Of course, as in the 2010s, not every startup will make it. The road from prototype to profitability remains long but this time it does feel different. Capital is returning, technology maturing and the industry conditions are aligning in ways we haven’t seen for nearly a decade.
The startup story in vehicle technology isn’t over. In fact, it may just be entering its next chapter – one defined not by hype, but by hard-won resilience, sharper focus, and real commercial impact. The energy is back, the sparks are flying and this time, the revival might just stick.
This article first appeared in the October issue of iVT