Electric vehicle charging industry shows no profit
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President Joe Biden’s plan to wean American drivers off fossil fuels requires a massive investment in public charging stations to fuel the electric car revolution. So far, none of the companies deploying the equipment have figured out how to make a profit.
The dilemma comes down to demand, and there is a certain quality of chicken and egg. Most EV drivers charge their cars at home, so many public charging stations have little use. But many people who still drive gasoline cars won’t consider switching to electric until they see the charging stations widely deployed, for fear of running out of juice on the road.
Speculators are piling up in the industry, convinced the boom is nigh, while short sellers and other skeptics warn some of these companies will scramble long before figuring out how to make any money. Biden’s plan to spend $ 15 billion to help create an additional 500,000 public stations by 2030 is fueling optimism, with investors flocking to EV charging companies since his election. The risk is that the first players will be badly burned, which could worsen the industry’s financial markets for years to come.
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“It will certainly take years of investment before any return is achieved,” said Chris Nelder, who studied pricing economics for the RMI Energy Research Institute.
Nelder is convinced that electric vehicle charging will ultimately pay off. But when that tipping point arrives, it’s one of the biggest questions facing billing companies.
A decade after its existence, the industry is still looking for a winning business model. Two of the most established names, Blink Charging Co. and Beam Global, had sales of less than $ 10 million last year. That hasn’t stopped investors from sending Blink shares up more than 500% after Biden’s victory in November, and although it has come out of its peak well, the company’s market valuation is still north of $ 1.6 billion. Beam has jumped over 300%, although it has lost about half of its value this year.
Charging station by ChargePoint
America’s largest company, ChargePoint Holdings Inc., has just gone public through a Special Purpose Acquisition Company, or SPAC, and others, including EVgo Services and Volta Industries Inc., are on the cusp of to follow.
Refueling cars and trucks has always been a low-margin business, with gas stations making much of their money from selling snacks, coffee and cigarettes. Business is even more difficult when it comes to electric vehicles. Unless they live in dense cities like New York or San Francisco, drivers do the vast majority of charging at home. They rarely use public chargers, with most vehicles offering more than enough range to complete daily errands without recharging. The US Department of Energy estimates that 80% of electric vehicle charging is done at home.
Another thorny issue is the nature of the use of parking spaces to serve as charging stations. If a customer walks into a space in her apartment complex at 9 p.m. and logs in to buy a few dollars’ worth of electricity, more often than not, she’ll leave her car there until she gets to work the next day. . No one else can use this charger for the next 10 hours, regardless of when their car has finished charging.
Then there is the relatively small number of vehicles involved. Americans bought 259,000 new electric cars last year, a record according to BloombergNEF, but that still only represents 2% of total car and truck sales. And of those new electric vehicles, 79% were made by Tesla Inc., which has its own network of branded “superchargers” that cannot be used by any other electric car.
Tesla conductors are “connected in a tight loop to the Tesla network,” said Ryan Fisher, analyst at BNEF. “Where is the demand to connect to these other networks? There is no such thing.
The Biden administration is hoping it can stimulate some of that demand with the proposed spending, which is part of its infrastructure plan now before Congress. Some of the money would go to grants and incentive programs to install chargers, according to a White House fact sheet, and some would go to research to reduce the cost of the chargers themselves.
Charging companies are positioning themselves for profitability in different ways.
The year is 2039. Zero-emission electric heavy-duty trucks pass you on the highway. Charging ports are now commonplace in terminals and truck stops. Diesel-powered vehicles are a thing of the past. You sit down and ask yourself: how did we get here? Here, in 2021, the head of eMobility at Daimler Trucks North America speaks to RoadSigns. Listen to a sample above and get the full schedule by going to RoadSigns.TTNews.com.
ChargePoint sells stations and offers varying degrees of operational support, but is not paid for by the charge itself. A typical customer might be a Silicon Valley company that offers their employees free charging at work as a benefit. If a particular station is lightly used, ChargePoint is always paid.
“I wouldn’t want a driver as a customer because I think I would starve,” Pasquale Romano, CEO of ChargePoint, said in an interview. “There is not a lot of money in electricity.”
Other companies, like EVgo, own the chargers they deploy and make money every time they are used.
Blink, on the other hand, takes both approaches at the same time. The company prefers to own and operate as many stations as possible, but if an owner wants to purchase Blink’s chargers, that’s fine too. The biggest priority is locking down the right sites in high demand areas, according to CEO Michael Farkas.
“Right now it’s a land grab,” Farkas said in an interview. “For us, it’s about getting as many locations as possible, and we’ll take care of the profitability later.”
Volta Industries, which plans to go public under a PSPC deal this year, is adding publicity to the package. Its chargers come with 55-inch digital screens. A grocery store can place chargers in its parking lot and bombard customers with advertisements for specific products inside.
Beam Global offers a self-contained unit with a canopy of solar cells powering a battery and charger. It is not necessary to dig the parking lot to install a power line. “You can tell the world you drive in the sun for free,” CEO Desmond Wheatley said in an interview.
There’s a good reason Beam focuses on easy installation and self-generated power. The time and cost to install a grid-connected charging station can be significant, often involving building permits and connection to the local utility. The equipment itself can range from under $ 2,000 for a slower base charger to over $ 100,000 for the more powerful models, according to BNEF. Increased production is expected to lower hardware costs, but for now, that’s another reason some companies are struggling to make a profit.
“It’s still early days,” said Colin Rusch, a senior analyst who covers the industry for Oppenheimer & Co. “As with any start-up industry, you have to give it a little time, until it shuts down. developed.”
– With the help of Rachael Dottle.
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