Charging companies are still working out how to position themselves in the market as they struggle to achieve profitability.
“It's very hard to make money in the business of providing plugs,” said Andy Palmer, the former Aston Martin CEO now leading PodPoint.
PodPoint – which is majority owned by France’s EDF Energy – recently made the decision to move away from fast chargers in public locations to concentrate on home and workplace charging.
It's now targeting positive free cashflow (one measure of financial health) by 2027 as it works out how to successfully exist in a market that sits at the often chaotic intersection of lumpy EV demand, sporadic government support, planning red tape, restricted grid access and volatile energy pricing.
“We see the need to specialise,” Palmer said. “If you're going to do it well, you can't be all things to all men.”
The charging industry encompasses a range of business models: making the physical chargers, installing them, operating them and unifying networks under one brand to sell subscriptions or sign up corporate customers.
Companies can combine any number of these business models, but most highly prized by investors are more integrated charging businesses like Chargepoint and Tesla, according to the consultancy Bain.
Pure hardware providers are less popular, because the markets believe that increased competition will turn them into lower-margin commodity businesses.
Those investors are getting impatient. “The costs are burdened by private investors mostly, and when you talk about private investors, you talk about returns,” said Vittorio Carelli, transportation infrastructure credit analyst at Fitch Ratings. “We don’t have a view on anyone right now who is in a cashflow-positive situation.”
The pitch to investors has largely been based on the Amazon model: invest now to reap returns in the long term. Behind that bullishness is the certainty that the vehicle market will move to electric propulsion in the UK and across Europe.
Analysts at the bank Jefferies, for example, predict that legislation will help push EV sales across Europe to 9.3 million by 2030.
Although car makers such as Toyota and Stellantis are pushing multi-pathway approaches to achieving zero carbon emissions by 2035, only battery power has so far really proven that it can achieve that goal.
But with even a medium-term goal of profitability looking shaky, investors are becoming spooked. “There’s no money if the infrastructure doesn't provide sufficient return,” said Carelli.
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