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Rimac Automobili, the Croatia-based electric car company, scored almost $90 million in funding from Hyundai Motors and Kia Motor, signalling that big auto players like Korean Hyundai Motor Group want to take advantage of the “huge appetite” for clean-tech electric cars.
Electric cars will surpass gasoline- and diesel-powered cars with an estimated global sale of 56 million by 2040, according to an analysis by Bloomberg New Energy Finance. Volkswagen plans to roll out a small electric-powered car costing a little less than $30,000 in 2020.
Commercial vehicle is also pivoting towards electric. BNEF predicts that electric vehicles will make up more than half of light commercial vehicle sales in the United States, Europe and China by 2040. German government is rolling out a system that allows trucks to draw electric power from overhead cables.
With the new investment, Rimac will increase its production capacity of automobile components while maintaining its niche in ultra-high-performance electric vehicle technology, Marta Longin, head of Rimac’s marketing and communications, told Karma Network.
“What we are aiming to do is to inspire other manufacturers, and spark more of such innovations,” some of which will trickle down to mass-volume products, Longin said. “Most of all, we want to show the world how electric can be fast, fun and exciting. Consumers, with growing concerns over the impact of gas-powered cars on the environment, are catching on to the possibilities of electric vehicles. In 2017, 1.2 million electric cars were sold worldwide, the first time sales topped 1 million units, according to a McKinsey report. McKinsey estimated the market could more than triple to 4.5 million units sold by 2020.
Hyundai, Kia and Rimac will work together to develop an electric version of Hyundai Motor’s N brand midship sports car and a high-performance fuel cell electric vehicle, the companies said in a statement. Hyundai values Rimac’s “startup roots and abundant experience collaborating with automakers,” Euisun Chung, executive vice chairman of Hyundai Motor Group, said in the statement.
Rimac’s second largest shareholder is Camal Group, the largest battery manufacturer in Asia, which invested $34 million in 2017. In 2018, Rimac entered a high-profile partnership with Porsche, with no investment amount disclosed.
Unlike most startups living on investment money, Rimac’s automobile component manufacture business has been profitable the first year after founder Mate Rimac moved the company from his garage in Zagreb, Croatia, in 2011, according to Road and Track.
He told the magazine last year that he would like to delay an IPO for as long as possible.
The 500-employee company is on a hiring sprint and predicts it will continue to see revenue grow. Indeed, Longin told Karma that Rimac plans to accommodate its growing workforce and increased number of visitors by investing in kindergartens and hotels.
The main challenge of expanding electrical car sales is the high cost of the battery, underlined by the technological bottlenecks. Advancing the technology and bringing down battery costs would unlock the market, according to Craig Irwin, managing director and senior research analyst from Roth Capital Partners.
He added that no car company, whether legacy carmaker or newcomer such as Tesla, has an advantage in the battery market.