Right now, the reality for electric vehicles is pretty grim. People are buying EVs, but the growth in sales is cooling. That’s having a ripple effect, from rising EV inventory at dealers to automakers rethinking their EV investments and production plans. Even EV charging companies are taking a hit.
EV charging companies that were once the apple of investors’ eyes have seen their valuations drop and investors turn away as The Wall Street Journal reports. Several factors, including more automakers pivoting to use Tesla’s NACS (North American Charging Standard), have seen shares of companies like EVGo and ChargePoint tumble. From the story:
The charging providers don’t expect to turn profitable for about a year and face the prospect of EV market leader Tesla opening much of its popular charging network to other drivers starting in 2024. The blistering pace of U.S. sales growth for EVs has moderated. Some charging executives say they are running into challenges that include customer unease about the direction of the economy, higher costs and delayed deliveries of EVs to fleet customers.
ChargePoint Holdings have tumbled 74% this year, and the company missed initial revenue projections for the third quarter. Blink Charging shares have dropped 67%, while EVgo is down 21%, and both project annual losses.
Simply put, EV charging isn’t a profitable business because of use rates. EV sales have been high, but apparently, there still aren’t enough of them on the road for these charging companies to make a profit. And it’s turned impatient investors off.
EVgo executives recently told analysts they project profitability “in the next couple of years.” ChargePoint and Blink say their adjusted earnings before interest, taxes, depreciation and amortization will turn positive by late next year.
Then there are other problems, like charging station reliability — which isn’t good — and a hesitancy among owners of places where fast charges are needed, like shopping centers and restaurants. Fast chargers are expensive to install and many of these owners have economic worries as ChargePoint’s new CEO Rick Wilmer pointed out. “I think we’re seeing this viewed as a discretionary purchase and the CFOs of the world are being cautious with discretionary purchasing.”
Long term, some industry analysts think the industry will “consolidate toward companies with big balance sheets.” Whatever happens, though, it might be some time before the EV charging industry gets a handle on things.