High Voltage Deals: Driving EV Innovation Through M&A

There are multiple strong market drivers for the electric vehicle (“EV”) industry. The EV sector is experiencing rapid growth, driven by technological advancements, regulatory support, government incentives, and shifting consumer preferences toward sustainable transportation. In Singapore, for example, the EV charging network will see the launch of an ultra-fast charger by Huawei in Q4 of 2025. This new development is expected to boost the electrification of transportation across the country. 

In a bid to capitalize on the global EV momentum and gain competitive footholds in the EV industry, companies are increasingly engaging in mergers, acquisitions, joint ventures, and strategic alliances. Such ventures help firms expand their technological capabilities, enter new geographic markets, and achieve economies of scale. In this article, we offer an overview of the key legal considerations for embarking on M&A ventures and conducting legal due diligence in the EV sector. 

Why M&A is Critical in the EV Industry 

There are various commercial motivations for companies to engage in M&A. For instance, companies might be keen on technological acquisition. Smaller startups that have developed innovative solutions, such as in AI applications, battery technologies, autonomous driving systems, or charging infrastructure, may be attractive targets for larger EV companies to acquire. For example, it was announced in 2024 that Volkswagen is investing up to US$5.8 billion in a joint venture with Rivian Automotive with the intent of co-developing the next generation of battery-powered vehicles and software while allowing Volkswagen access to the start-up’s technology for its own EVs. In 2021, Shell acquired EV charging infrastructure startup Ubitricity, which specialises in integrating EV charging into existing street infrastructure. This acquisition marked Shell’s foray into the on-street EV charging market.

Similarly, firms might achieve vertical integration by acquiring suppliers or charging networks to control larger segments of the value chain. For instance, automakers may acquire parts suppliers or battery manufacturers to secure supply chains amid global shortages. In 2024, General Motors committed US$625 million to a joint venture with Lithium Americas Corp., with the aim of developing the Thacker Pass lithium mine and securing access to critical minerals needed for the EV manufacturing process. In 2019, Volkswagen invested €900 million in a joint venture with battery manufacturer Northvolt to build a factory for manufacturing lithium-ion batteries. Such ventures aim to enhance competitive positioning. 

Additionally, with EVs gaining popularity globally, M&A also allows companies to quickly enter new geographic markets or customer segments. This often takes the form of strategic acquisitions or partnerships with local EV manufacturers or technology providers to help global companies enter emerging markets. In 2017, Volkswagen launched a joint venture with JAC, a Chinese automaker, to develop, produce, and market EVs for the Chinese market. 

Due Diligence Considerations 

Legal due diligence examines factors such as intellectual property (“IP”) rights, regulatory compliance, employment issues, and contracts of a target company or business. Drafting and negotiating merger agreements involve complex provisions on representations, warranties, covenants, and dispute resolution. The results of the legal due diligence exercise are critical to the terms drafted into the M&A agreements and deal structure.  

Regulatory compliance

EV manufacturers and service/technology providers in the EV sector must navigate a complex landscape of environmental regulations, licensing regimes, emissions standards, and safety requirements. 

The Singapore regulations on electric vehicle charging systems and their operators are largely encapsulated in the Electric Vehicles Charging Act 2022 (“EVCA”). The EVCA is a fairly recent enactment, which came into effect on 8 December 2023. The EVCA is supplemented by various subsidiary legislation, including the Electric Vehicles Charging (Electric Vehicle Chargers) Regulations 2023 (“EVCR”), Electric Vehicles Charging (Licensing) Regulations 2023, and Electric Vehicles Charging (Minimum Electrical Load and Charging Points) Order 2023.

The EVCA and its subsidiary legislation apply to manufacturers, suppliers, operators, and service providers of EV charging systems. The EVCA assigns to these entities various responsibilities and obligations in relation to EV charging systems at various points in their value chain. The EVCR sets out the legal basis for safety requirements, licensing regime, and enforcement regime for EV charging systems, thereby supporting the expansion of the network of accessible EV charging points in Singapore in a systematic way.  

The due diligence process is important to uncover any regulatory non-compliance by the target business. Instances of non-compliance could pose legal and reputational risks to the prospective buyer and affect the valuation of the acquisition. Due diligence on EV Charging Operators (EVCO), for instance, will usually focus on compliance with licensing requirements for the provision of EV charging services or the operation of EV charging stations. The main licensing requirements revolve around maintaining the service uptime of chargers in the network, purchasing adequate public liability insurance for operational coverage, and providing charging-related data to LTA. Where potential risks are identified, the relevant purchase agreement should include the appropriate representations and warranties.  

Intellectual Property  

In the structuring of an M&A deal, proper transfer and licensing of IP rights of the target business are essential to avoid future disputes and mitigate risks. The EV industry is characterized by rapid innovation, often driven by startups and emerging tech companies. IP rights are critical in the EV sector, where technological innovation is a key competitive advantage. IP assets such as patents for batteries, autonomous systems, or proprietary software are critical assets in M&A negotiations. Proper deal structuring can help protect these assets and license them effectively, fostering innovation while managing risks. 

The IP due diligence process could include the application of a Freedom to Operate (“FTO”) analysis to determine whether the target’s product or technology is encumbered by potential infringement issues, which could significantly impact the target’s investment value. To this end, FTO due diligence could be especially important in an IP-rich sector, such as the EV industry, as it enables an assessment of the IP health and potential liabilities of the targeted business.

The due diligence process should scrutinise any existing licence agreements with third parties, such as customers or vendors, over IP rights and assets. This enables the identification of any potential gaps or concerns to ensure the completeness of the transaction and compliance with local regulations and contractual obligations. The due diligence process may cover any charges or notices received regarding IP rights and details of any past litigation or settlements related to IP rights and assets.  

Employment Due Diligence

Human resource due diligence comprises various important facets and may be analysed using a quantitative (e.g., headcount, turnover rate), qualitative (e.g., workplace cultural hallmarks), and legal (e.g., compliance, contractual) approach. A holistic approach to employment due diligence is key to flagging any risks, such as operational, cultural, or regulatory challenges. Crucially, a buyer should also look out for any compliance lapses in human resource matters, such as those related to work permits, overtime pay, workplace safety, rest days, and annual leave. 

In evaluating prospective target businesses, a buyer should identify the key employees and conduct due diligence on their contracts. In the EV context, these could be lead engineers or subject-matter experts, whose employment the buyer may wish to ensure the retention of post-acquisition. As part of this exercise, the buyer should note the compensation structure and termination provisions in the employment contracts. 

CSR and ESG

With a deepening emphasis on corporate social responsibility (“CSR”) and environmental, social, and governance (“ESG”) factors globally, EV companies have been increasingly pushed to adopt sustainable practices and transparent governance. Stakeholders increasingly demand accountability for environmental impact, making legal and governance structures vital for maintaining public trust and investor confidence. To this end, there should be continuous transparent communication about CSR efforts and ESG goals. Regular reports documenting the progress of the target’s sustainability goals could be regarded positively by prospective buyers. If the due diligence process uncovers a poor CSR or ESG track record, this should be considered a red flag as it opens the target and the buyer (post-acquisition) to reputational and legal risks. 

In the EV context, CSR considerations might focus on ethical sourcing to make sure that raw materials, such as lithium and cobalt, are sourced responsibly and in accordance with local law, reputable environmental standards, and industry best practices. Buyers should also scrutinise the carbon footprint and waste management practices of the target business’s manufacturing processes and look out for energy-efficient systems. 

Notably, the EU Batteries Regulation (EU) 2023/1542 imposes strict requirements on economic operators supplying batteries (including EV batteries) to the market to implement a due diligence policy to address the social and environmental risks associated with sourcing, processing, and trading the raw materials used in these batteries. 

Customer contracts 

Due attention should be accorded to a target’s existing contractual obligations, particularly those pursuant to supply, service, or customer contracts. In the EV context, these agreements could be for the sale of EVs, provision of EV components, maintenance services, or software subscriptions. 

For instance, the agreements for the sale of EVs for municipalities may require the seller to:

• comply with all applicable laws and regulations;
• ensure that all vehicles conform to defined standards and specifications (or, if not applicable, it may be to the best applicable U.S. standards and specifications);
• offer the purchaser or affiliates all specifications and options with respect to standard vehicles or modified vehicles as well as new models;
• homologate all vehicles in accordance with applicable laws and regulations;
• provide comprehensive details of all warranties available with respect to vehicles (warranty type, coverage duration, terms and conditions, and costs and updates on a regular basis);
• offer at no additional cost all software updates as soon as they are available in any key markets;
• make available modifications (e.g., additional foot space options) on specific terms with upgrade/downgrade options; and/or
• ensure that vehicle systems meet the prevailing (and possibly additional new) data security and cybersecurity requirements at no additional costs.

An examination of the material contracts should focus on key terms related to pricing, delivery schedules, quality standards, warranties, substitution rights, non-conformity requirements, and cancellation/termination provisions. Some customer contracts might have unfavourable terms, such as long payment cycles, low margins, or extensive termination or upgrading rights for the customer. Identifying these allows the buyer to factor them into the deal terms and purchase price, or develop a strategy for renegotiation.

As part of the due diligence exercise, it is important to identify any “change of control” clauses that might give customers the right to terminate or renegotiate their agreements if the company is acquired. Identifying these clauses is vital to avoid significant customer churn and revenue loss post-acquisition. Customer contracts directly impact the business’s revenue streams and earning potential. The stability and predictability of a company’s customer base and associated revenue are crucial for its valuation. There might also be an assessment of whether the target company is overly reliant on a few key customers. Loss of a major customer post-acquisition could severely impact the business, and thus, it is important to review contracts to assess the degree of any customer concentration risk.

Other Legal Considerations 

Securing Investor Rights  

Investors acquiring or subscribing to shares in a target should scrutinise and negotiate on their investor rights, such as with respect to any seats on the board of directors, actions requiring their specific consent, right of first offer, right of first refusal, and drag-along rights. They should also be mindful of the rights of other shareholders as competing rights might be a concern later on. These investor and shareholder rights might be drafted into a shareholder agreement or the target company’s constitution. 

Conditions Precedent

The M&A agreement would likely include conditions precedent (“CP”), which are conditions that must be satisfied before the deal closes. If CPs are not met, the deal may not proceed, or the parties may have the right to terminate the agreement. 

If the due diligence reveals issues that need resolution, those issues can be written into the agreement as CPs that must be met before the deal can close. These CPs could include obtaining regulatory approvals, resolving litigation, or restructuring debt. 

CPs could also include obtaining the necessary consents from shareholders and directors, as well as third party consents from key customers, suppliers, or lenders whose contracts might contain “change of control” clauses. In the context of the EV industry, these third parties could include battery suppliers, charging network operators, or major fleet customers.

CPs could also take the form of a “material adverse change” (“MAC”) clause. Such a condition states that there has been no MAC in the target company’s business, financial condition, or operations between the signing of the agreement and the closing. This is an important CP, given the volatility and rapid technological shifts in the EV market and the capital-intensive nature of business in the EV sector.

Conditions Subsequent

As it is often impractical or impossible to resolve all integration-related issues before closing, the agreement could include conditions subsequent (“CS”) to provide a framework for post-closing tasks. In the context of EV M&A, CSs could relate to the target company’s performance post-acquisition, the attainment of certain regulatory approvals, or the compliance with regulatory requirements. For instance, post-acquisition, the target business might have to obtain specific safety certification or environmental permits for the new or expanded manufacturing facilities, battery recycling plants, or charging infrastructure that couldn’t be secured pre-closing.

Competition Law 

Transactions in which larger players acquire innovative startups may be scrutinized under competition laws that are concerned with preventing monopolistic practices and safeguarding a competitive market environment. Large M&A deals may need to submit detailed filings to regulatory authorities demonstrating that the deal will not substantially lessen competition. The authorities may assess factors like market share, potential for market foreclosure, and innovation incentives. In Singapore, merger parties may notify the Competition & Consumer Commission of their merger or anticipated merger if they have concerns as to whether the merger or anticipated merger has led to or may lead to a substantial lessening of competition.

Investment environment  

Parties looking to expand into new markets through an acquisition of a target, joint venture, or other M&A venture should consider whether the investment environment is conducive for their commercial plans post-acquisition. The rapid evolution of the EV industry gives rise to new legal challenges, such as data privacy concerns, cybersecurity risks, and the increasingly stringent regulation of charging networks. In response to these developments, policymakers and lawmakers are continually adapting legal frameworks to address new innovations and developments responsibly. Procurers of EVs and related components and services may also be scrutinising environmental impacts (e.g., CO2 emissions and energy consumption), use of green electricity, and eco-innovations.

The trajectory of evolving regulations is an important commercial consideration in plans to expand into new jurisdictions. For instance, a local government’s commitment to growing the local EV sector should be positively signalled by the simplification of licensing regimes for EV-related activities and the availability of subsidies, tax credits, and grants to promote the adoption of EVs and the development of related infrastructure. Conversely, a more challenging market environment could be characterised by increasingly stringent regulations on the EV sector and a lack of government investment in EV charging infrastructure. 

Conclusion 

The EV industry represents one of the most dynamic and rapidly evolving sectors in the global economy. The unprecedented growth and transformative innovation in the EV industry present both significant opportunities and complex challenges for companies pursuing M&A strategies. From acquiring cutting-edge technologies and securing vital supply chains to expanding into new geographic markets, a successful M&A venture could serve as a powerful accelerator for growth and competitive positioning.

However, the complexities of EV-related M&A demand meticulous attention to legal considerations. Thorough due diligence, spanning intellectual property, regulatory compliance, employment matters, ESG factors, and customer contracts, is paramount. Furthermore, securing key investor rights, including salient CPs and CSs in the agreement documents, and assessing the evolving regulatory environment are crucial for long-term risk mitigation and value creation.  

Ultimately, strategic M&A, underpinned by robust legal foresight, will continue to drive the evolution of the EV industry, fostering innovation and consolidating market leadership. Companies that proactively address these legal intricacies will be best positioned to capitalize on the immense opportunities within this electrifying sector.

This article is produced by our Singapore office, Bird & Bird ATMD LLP. It does not constitute legal advice and is intended to provide general information only. Information in this article is accurate as of 22 July 2025.