We Need Chargers!
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The electric vehicle boom has provided many positives to the world. Cities experienced less street pollution. Cars are able to be powered by green energy. The auto industry has been able to see an uptick in car buying. And one of the biggest benefits of the EV boom is that more opportunities have been created for entrepreneurs.
One of those opportunities is providing chargers for electric vehicles. Whether you're making and installing chargers for people's homes or managing charging stations at various public places, infrastructure has played a more important role in innovation. Electric vehicles, like internal-combustion engine (ICE) vehicles, have a limited range. At least for ICE vehicles, they have many gas stations to go to. Meanwhile, electric vehicles have limited options.
Drive down a city or in the countryside. How many charging stations do you see? How many gas stations do you see? You'd probably see more gas stations than charging stations unless you go on certain routes.
Overall, with electric vehicle sales growing exponentially, there comes a higher need for more charging stations. Interestingly, the amount of charging stations around the world hasn't kept up with the growing demand for them.
In reality, it's lagging behind.
Here's a story about a gas station in America that converted into a charging station.
The Story
A gas station in Maryland by the name of RS Automotive has been around since 1985. Since 1997, the owner, Depeswar Doley, was unhappy with how oil companies structure their contracts. One of his biggest pet peeves was how the contracts would limit the number of suppliers they can work with. Also, there were clauses that extended the tenure of the contracts when sales volume hasn't been met and other clauses that limited maintenance support.
One day, Doley decided to have a chat with someone from the Electric Vehicle Institute and learned about the lucrative opportunity of providing charging stations for electric vehicles. Doley learned that taxi drivers in his state really, who drive electric vehicles, needed a charging station to go to. In his town, many of the electric vehicle owners have formed long lines to charge their vehicles at a small charging station in their town park. Most of the people using the chargers were the taxi drivers. After talking about the opportunity with his daughter, his daughter convinced him to go forward with the plan.
Going into the opportunity, Doley never expected to get rich overnight, and he didn't. Because the electric vehicle population is small, there was demand but it wouldn't reach levels where business was insane for him. In his state, 20,700 electric vehicles were registered at the time of the article. While the population was small, many of the electric vehicle owners complained of having very little places to charge their vehicles. At least Doley came in at a good time.
To fund this venture, the Electric Vehicle Institute and the Maryland Energy Administration gave Doley a grant of $786,000 to help fund his venture. This made the venture a lot easier for Doley to commit to. From there, RS Automotive has become the first gas station in America to fully convert into a charging station for electric vehicles.
Competitors
While gas stations are slow to provide electric vehicle owners with a place to charge their vehicles, other companies are capitalizing on the opportunity that's being presented to them. The electric vehicle maker, Tesla Motors, has been working hard to accelerate the amount of supercharging stations around the world. While it is free for some of Tesla's earliest customers, it isn't for the rest of Tesla's customers. Other automakers have decided to invest in providers of charging stations. Volkswagen invested in Electrify America to boost the deployment of charging networks. Venture capitalists have been capitalizing on this problem too. ChargePoint and EVgo are two VC-backed electric vehicle charging station providers. In the Nasdaq, Blink Charging (NASDAQ: BLNK) has also been capitalizing on the growing need for charging stations.
The Big Picture
Photo by Craig Adderley on Pexels
At the end of the day, as the electric vehicle population grows, the infrastructure that supports the electric vehicle boom needs to continue to grow. We can't keep producing and selling electric vehicles if there continues to be a lack of charging stations. While the industry is young, it has a promise of becoming mainstream. That promise can be fulfilled if more investment goes towards electric vehicle charging stations.
Some might wonder if gas stations will convert to cater to this growing population. From my view, because municipalities are limited in resources and many other companies are providing electric vehicle charging stations, I highly doubt that municipalities will be generous to gas station owners like how the State of Maryland was to RS Automotive. I hope that won't be the case but many of the electric vehicle charging station players have better access to capital and have been executing the deployment of charging stations at a faster and smoother pace.
Could this lead to the end of gas stations? Some might say yes and others might say no. If every car on this Earth was electric, there would be a huge demand for charging stations. There is a possibility that players like Tesla and EVgo will be able to provide a lot of charging stations to meet the demand and there is a possibility that despite their best efforts, people need to convert gas stations into charging stations to meet the demand.
My thoughts on Blink Charging Co.
Regarding my thoughts on Blink Charging Co., while I haven't dug deep enough on the company, seeing that they don't have a PE ratio indicates that the company hasn't made a profit. It would be concerning to see a company grow fast and not be able to make a profit. I do hope that they won't experience diseconomies of scale but if they do, then I would stay away from them. There is a chance for the company to dilute its shareholders to raise more capital especially since charging stations are a huge investment. Looking at its free cash flow statement, the company seems to continue burning cash.
If you want a good analysis of Blink Charging Co., check out this analysis by Simply Wall St.
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