Is Los Angeles the best place for electric vehicle startups?
What makes an optimal city for electric vehicle (EV) startups? Los Angeles has a location more suited to individual drivers or carpools than to public transportation. It also has highly talented designers and people with manufacturing expertise. Finally, we have a population who embraces cleaner forms of transportation. For these reasons, Silicon Beach is the perfect place for EV startups.
One county; diverse city experiences
LA is unique when compared with other large metropolitan areas in the United States. Unlike New York, Boston, San Francisco, and Chicago, LA is larger than some European countries. Because it’s so spread out, you can select from a wide range of places to live within a somewhat reasonable commute. (The perception of “reasonable” is inversely correlated to time spent on the 405 or 101 during your daily commute). So whether you want to live in a sleepy beach town, a suburb, a bustling city, or trendy Hollywood, you can find a place to truly call home. This, in turn, increases the diversity of the people companies can attract.
Comparing LA directly to the Bay Area, LA is still a lot less expensive. Since the bay area is becoming saturated with the tech market, there’s a prime opportunity to attract the talent that you want from the bay area to startups in LA. We are close enough to the Bay Area that we already have talent spillover. Many people are migrating from the Bay Area to LA in search of a significantly lower cost of living.
And with good reason. Rent prices in San Francisco are, on average, around 79% higher than rent in LA. Buying a home is a greater disparity. A comparable home in San Francisco will cost around 118%-130% higher than in LA.
Optimal talent for electric vehicle startups
LA has always been known for its established ties to the aerospace industry, with companies like Northrop Grumman, Raytheon, and SpaceX employing thousands of talented engineers. What is not as well known is that LA has also been strong in two other industries relevant for the EV market: traditional manufacturing and automotive design. In fact, the Southern California region has historically strong manufacturing ties, and has long been a hotbed for concept design studios, including Tesla, BMW, Mercedes, and Honda to name a few.
Additionally, LA has had its fair share of EV startups in the past, including Tesla, Fisker, Coda, and now Faraday Future. So LA not only has the infrastructure and support talent for an EV startup, it also has a significant supply of EV specific engineers. Having talent at your fingertips solves the problem of costly relocation and the process of convincing a potential employee to uproot themselves and their family to establish a life in LA.
Follow the money
Although cleantech investing has declined recently, LA is one of the top four metropolitan areas in the United States that account for 54% of venture capital deal flow to cleantech. And as Silicon Valley’s interest in cleantech has waned, LA has been increasing its commitment to cleantech in recent years. In 2011, the Los Angeles Cleantech Incubator (LACI) was founded as the first installation of a Cleantech Corridor in Downtown LA. Our Cleantech presence has only increased since then, and we’re not done yet.
It also helps to have a consumer base with an affinity for clean transportation. One of the original forays into cleaner cars is the Toyota Prius. The car has enjoyed a fair amount of popularity in California, particularly in LA, Orange County, and San Diego as well as San Francisco. Californians also have a long established relationship with luxury vehicles. That means a large opportunity for companies like Tesla who focus on high end electric cars in addition to their newer economy cars.
Silicon Beach is many things; the startup sleeper now gaining the spotlight, a haven for tech enthusiasts, and a consistently incredible place to live. It also has all of the factors necessary to be the best place for EV startups. California accounts for over 50% of electric vehicle sales in the United States.