The age of EVs has no place to 'trust your car to the man who wears the star'.
For ChargePoint Holdings Inc. , and indeed for all the companies involved in electric car charging, a key question remains unanswered. What will an electric “gas” station look like? Will you still be able to “trust your carto the man who wears the star?”
We know how gasoline engines fill up. It takes just a few minutes. You can find stations everywhere. The imagination of station owners likeWawaandBuc-ee’sis bent to extending that time, pulling-in after a fill-up and going into the store.
Electric cars take a half hour to fully charge, even with something like ChargePoint’s 480-volt “DC Fast.” With a 240-volt charger, the kind of power your clothes dryer might use, it still takes overnight. All you’re doing with household current is a top-up.
Thus,“range anxiety,” the fear that your electric can’t go onto the open road. It may be the biggest hurdle to a mass market in electrics.
The optimal answer for the electric car market is a station like Buc-ee’s, or a high-end truck stop likePilot Flying J, a chain partly owned byBerkshire Hathaway(NYSE:BRK.A). You need a place where you’ll spend a half-hour. Such a store would also need to alert drivers when their cars are ready, so the plugs can get optimal use.
Fill ‘Er Up
EvenTesla(NASDAQ:TSLA) hasn’t quite figured it out. Most Tesla plugs are “Destination Chargers,” those 240-volt units suitable for a top-up, often placed near hotels. “Supercharger” stations are usually placed at shopping malls. It’s still sub-optimal.
I’ve been harping on this inmy writing about ChargePoint. Until an electric charger becomes like a gas pump, you’re not going to get mass adoption.
ChargePoint is boosting“charging as a service”at hotel chains. It’s branding its network around car brands likeMercedes-Benz.
But ChargePoint doesn’t run electric charging stations. It sells hardware and offers software from a cloud-based platform. Its July 20 acquisition ofhas.to.be, a European charging software company, demonstrates this. Most ChargePoint sales are to commercial fleetsand new car owners.A fleet owner can recharge overnight, or between shifts. So can a homeowner. But they’re not going far from their charger. They’re tethered.
Analysts Still Pounding Table
ChargePoint had just $40 million in revenueduring the quarter ending in April.Operating cash flow for the period was anegative $2.1 billion. Small wonder that since the start of 2021 the stock is down 35%. Yet it still has a market cap of $8.35 billion.
Analysts continuepounding the tablefor ChargePoint stock. It’s too soon to write off, they say. Revenues should grow at nearly 50% per year for the foreseeable future. You’re in onthe ground floor. All five analysts following CHPT as tracked byTipRanksstill rate it a buy. Their price target is55% abovewhere it traded July 20.
As our Josh Enomotonotes, the argument for charging continues to be based on the plans of car companies to go electric. The chicken-and-egg problem of range anxiety could keep any of this from happening.
The Bottom Line
Standard Oil made gasoline the dominant fuel for cars in the early 1900s by subsidizing it. Gasoline was practically worthlessin 1911. Oil companies made their money on other fractions, like kerosene and paraffin. By creating networks of“filling stations,”oil companies eliminated range anxiety.
That’s what the electric car industry needs now. It needs a filling station business model that works with today’s hardware. The charging company that creates one will build a huge business for itself, and for other charging companies. Selling such a model to an existing gas station chain, like Buc-ee’s, would also do the trick.
Our Louis Navellier still likes ChargePoint becauseit’s the biggest company in its field.But until it can find its way to the tip of the spear, and solve the business problem created by range anxiety, it’s still a speculation.
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