Start-ups in electromobility: tough road for newcomers

The switch from combustion engines to electric cars opens up market niches. But startups in Germany are having a hard time filling this gap.

Set to hit the road next year – the Sion solar electric car from Sonomotors Photo: Sono Motors GmbH/AP Images

Munich-based start-up Sonomotors has raised a whopping 50 million euros in recent weeks with its crowdfunding campaign. "Now we can tackle the next milestones. So building the production plant and developing the prototype for series production," says Jona Christians, one of the three founders* of Sonomotors, happily. Next year, the Munich-based start-up plans to launch an electric car with integrated solar modules. The vehicle will then be able to drive an additional 34 kilometers using solar energy.

Along with e.Go and Streetscooter, Sonomotors is one of the only new companies in Germany to develop a completely electric car. The automotive industry’s shift from the internal combustion engine to the electric motor should open up new niches. But worldwide, only Tesla has been able to catch up with the established players; in Germany, the initiatives are in their infancy.

Gunther Schuh, professor of production systems at RWTH Aachen University and CEO of electric car maker e.Go, sees the reason for this primarily in the German financing culture: "To get a car on the road, we need equity capital, and not in homeopathic doses." e.Go has been delivering its small car since the end of 2019; it cost at least 250 million euros to develop, he said. "Germany is not Silicon Valley or Shanghai. When financiers are asked to invest 50 or 100 million in a company, the questions of revenue and profit come up immediately," says Schuh. That’s the savings bank mentality.

The founders of Sonomotors have also hit the funding wall. "We negotiated with investors last year. What came out was that they found our patent of an electric solar vehicle highly interesting, but were not interested in a low-cost vehicle," says Christians. This contradicted the concept of the entrepreneurs, who would like to sell the station wagon for 25,500 euros. Instead, they chose an alternative profit-sharing strategy and launched a crowdfunding campaign.

Elaborate road registration for passenger cars

But what is still missing is road approval for the passenger car. This includes tests in more than 70 categories as well as proof of origin for the more than 6,000 individual parts used. "Developing a nice prototype and driving it around the test site is about 5 percent of the work," says Gunther Schuh. His start-up is the only one in Germany to get car registration so far. Because of this effort, young entrepreneurs can’t just walk past the established carmakers.

Start-ups therefore have more opportunities when it comes to developing software or components for niche segments, says Martin Doppelbauer, professor of hybrid electric vehicles at KIT Karlsruhe. "The established car companies don’t buy from startups for their series production." The fear of fluctuating production quality or the company going bankrupt is too great, he says. But for special developments and the racing industry, he says, they are interesting.

Despite the hurdles, Christians and Schuh believe new carmakers are indispensable. "Without us, there would still be no electric cars around 20,000 euros," says Schuh. Christians sees not only investors but also politicians as responsible: "The support for electromobility is not designed for small companies." Manufacturers must pay half of the subsidy that buyers* receive for a new electric car. "Big carmakers can finance that. We can’t."

Where they’ll be in five years, none of the startups know. "If we don’t make it, no one will make it in this area of electric mobility," Schuh suspects. This year, he hopes to deliver 5,100 cars. Sonomotors has 10,000 pre-orders.

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