Meet our Mobility Thesis – MiddleGround Capital
October 26, 2023

Meet our Mobility Thesis


One of our distinct differentiators is our deep knowledge of operations and focused investment approach. We’ve taken that one step further by working with third-party experts to identify specific industries that offer the highest opportunity for investment – Mobility (the new automotive) being one of them alongside Industry 4.0, Infrastructure, and Industrial Revolution.

The mobility space is in the eye of a storm of disruptive trends. Though historically, automotive was an extremely mature industry, the advent of electric vehicles (EVs) and autonomous/connected technologies is driving drastic change; the automotive industry, previously defined by speed, engine quality, and/or affordability, is turning into the mobility industry, which is increasingly defined by electrification, high complexity electronics, and consumer comfort.

This shift requires a complete overhaul of segments of the supply chain and a huge injection of capital, which presents an opportunity to help well-positioned lower-middle market companies fund new technology development and program launches.



If you know anything about our history, you know that automotive is in our DNA.

Two of MiddleGround’s three Founding Partners began their careers at Toyota, just down the road from our Lexington, Kentucky headquarters. John Stewart started by installing bumpers on Toyota Camrys and ended up leading operations for their European division by the end of his 18-year career. Scot Duncan spent 13 years at Toyota where he held leadership positions in engineering, maintenance, and production. In addition to our Founder’s expertise, a huge percentage of our company has worked in automotive manufacturing (200 years of collective automotive experience… but who’s counting?).

In addition to the operating expertise across our Founders and Operations Team, we also have on our team career investors with automotive expertise. Justin Steil, Partner, and New York City office leader, sits at the helm of our Mobility thesis. He’s at least the third generation in his family to have worked in the automotive industry, and his first job was even at a Tool and Die shop. His lifelong passion for automotive (proven by the racecar wallpaper of his childhood bedroom) paired with his 20 years of experience in private equity make him the perfect lead for this thesis.

The automotive industry is as difficult a place that exists for earning healthy profits, customers and vendors are demanding, and supply chains are complex. To turn a profit, operations must be extremely lean. Having a team with direct experience in this space means we already have the skills to jump into this industry seamlessly.

Although the formal mobility thesis hasn’t been around since MiddleGround’s inception, we’ve been investing in automotive from the beginning:

  • Shiloh – acquired Nov 2020: Manufacturer of lightweight automotive parts that we merged with Dura, a designer and manufacturer of highly engineered automotive systems including electric vehicle battery trays. We’ve created value through organic revenue growth, operational enhancements, and footprint rationalization. The merger represents an opportunity to drive significant equity value through the creation of a leading, global automotive supplier of lightweight and structural components.
  • Plasman – acquired Oct 2021: Market leader in automotive plastic exteriors. We’ve created value through new customer acquisition, raw material sourcing, labor reductions, increased working capital efficiencies, production capacity, and capex projects.
  • New Eagle – acquired Nov 2021: Creates automotive software in-house that helps OEMs design and manufacture ECUs (electric control units). New Eagle’s challenge historically fell in keeping up with customer demand; since acquiring the business, we have invested in engineering resources, acquisitions, and growth of facilities to better position the business to take fuller advantage of a vast white space.



As a part of our Mobility thesis development, our team identified key trends that represent the most attractive areas to invest in. Our investments in mobility must touch on one or more of these themes in addition to meeting our standard investment criteria:


  • Electrification of the powertrain
    Electrification involves all the technology that goes into shifting from a gas- powered engine to an electric vehicle (EV). EV sales were <5% in 2018 but are projected to grow to 33% of sales by 2031. Rapid growth is driven by both changing consumer tastes as well as government mandates; the prime example is the advanced fuel efficiency standard in California requiring that all new cars get 54.5 miles to the gallon by 2025. In addition to government pressure, consumer demand for EVs is increasing alongside climate change concerns. A keystone consideration when switching to an EV is battery range. And for good reason, nobody wants to be stranded miles from a charger with a dead car battery! Some battery range improvements are addressable within the battery itself, but much of it relies on lightweighting, our next trend…
  • Lightweighting
    The lightweight trend involves replacing components historically produced using steel and heavier materials with lighter-weight materials leveraging advancing plastic and composite materials along with aluminum. By 2031, advanced materials, such as plastics, are expected to comprise ~68% of vehicle weight. The growth of lightweight trends is tied to electrification and increasing demand for fuel efficiency, as battery range is heavily dependent on the weight of a vehicle (as it is with fossil fuel efficiency, it takes more gas to fuel a Hummer than a SmartCar).
  • Connected vehicle technology
    A connected vehicle is one that communicates to the world around it. These features enable vehicles to communicate with cell phones via Bluetooth, but also to infrastructure (stop lights, for example) or other vehicles through wireless communication technology. Nearly all new vehicles are expected to be sold with basic connectivity by 2026; Vehicle-to-Everything technologies could reach ~88% penetration by 2031. This presents an opportunity to integrate connectivity solutions within the vehicle, but also an opportunity to invest in connected infrastructure.
  • Autonomous vehicle technology
    While you may think of the Jetson family’s flying, talking, self-driving vehicle when you think of autonomous vehicles, that’s not necessarily true. Autonomy is a range of technologies that enable a car to operate with partial or no input from drivers. That includes blind spot assist and parallel parking features all the way up to fully self-driving vehicles. By 2031, analysts forecast that ~90% of new cars in the U.S. are expected to be sold with at least lower-level autonomy.



The industry is clearly one ripe with opportunities for investment; however, COVID-induced supply chain trends have also put stress on manufacturers.

While people were stuck at home, buying habits shifted heavily toward consumer electronics… and where buying trends shift, supply follows. Enter, the semiconductor or “chip” shortage of 2021-2022. Semiconductors are a major component of consumer electronics and modern cars; with limited supply post-COVID, auto manufacturers’ production was constrained. Reduced production volumes have put profits and liquidity under pressure, which means lower deal flow.

However, we are coming out of the COVID shutdown and supply chain shortages. Production has been rebounding and is projected to improve over the next 36 months, promising continued opportunities for investment in the automotive space.