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The impact of the slowdown in EV demand continues to extend beyond electric vehicle manufacturers.
Network stocks are among the group with double-digit declines over the past 12 months.
Shares of network operator Blink (BLNK) have fallen about 64% over the past year, while charging hardware and software maker ChargePoint (CHPT) has fallen 81% over the same period. Shares of network owner and operator EVgo (EVGO) have fallen 55% over the past year.
Both are trading below their consensus target prices.
“Like the EV industry as a whole, we see this industry coming under pressure from a stock price perspective, especially in the second half of 2023… EV charging is [a] Morningstar equity analyst Brett Castelli told Yahoo Finance that he has hold ratings on both of the charging stocks he covers, ChargePoint and EV Go.
Charging network companies face a highly competitive environment. EV giant Tesla (TSLA) continues to be a dominant player in the fast charger industry. Last year, legacy automakers Ford (F) and General Motors (GM) agreed to use the company’s electric vehicle charging network, putting pressure on Blink, ChargePoint and EVGo stock prices.
Adding to investors’ concerns is that the smaller companies in this market have yet to fully turn a profit.
“The big picture for these stocks… is that their business model is still in the early stages. So the key focus for investors is to actually prove the business model and achieve profitability,” Castelli said. he said.
EVgo expects to reach profitability on an adjusted EBITDA basis in 2025, while ChargePoint expects to reach that benchmark in the fourth quarter of this year. Blink Charing expects to be profitable by the end of 2024 on an adjusted basis.
“If you build it, they will come.”
The year-over-year decline in these stocks reflects the electric vehicle industry’s aggressive efforts to address range anxiety and scarcity of charging stations, which are among the challenges facing faster and broader adoption of EVs. It’s happening while we’re working on it.
Government funding, including an estimated $5 billion from the National Electric Vehicle Infrastructure Program (NEVI) and incentives from the Inflation Control Act, will meet the Biden administration’s goal of making at least 50% of vehicle sales electric by 2030 The aim is to expand the country’s charging infrastructure. .
“Tesla’s Supercharger network is the biggest game in the city when it comes to fast charging. However, there will be some catch-up in the next few years, and the majority of future fast-charging buildouts will be federally funded.” said Castelli.
“There’s a gold rush going on right now to get these federal funds because it can cover a significant portion of the cost of charging stations. We’re talking about 10%. “We’re talking about half the cost of a charging station,” he added.
The number of EV charging stations in the U.S. increased nearly 24% last year, according to research from iSeeCars. The study looked at the most charger-friendly states based on the proportion of residents per charger.
The friendliest states were topped by Vermont, California, and Massachusetts, while the least friendly were Mississippi, Louisiana, and Alaska. The state with the greatest improvement in ease of charging was Connecticut, and the least improved was Alaska.
“The idea is this: Build it and they will come,” Ramanan Krishnamoorthi, vice president for energy and innovation at the University of Houston, told Yahoo Finance.
“As infrastructure improves, some of the biggest challenges facing EV drivers, such as range anxiety and access to charging, will begin to be alleviated,” he said.
Improved utilization
One positive sign for long-term charging is an increase in usage rates, which indicates how often drivers charge their vehicles at stations.
Earlier this week, the DC fast charger owner and operator reported that its customer accounts were up 60% year-over-year, with sales almost tripling, with most of the revenue coming from charging revenue. EVgo stock soared more than 10% as a result.
“Our revenue is growing faster than EV growth.” EV go Chief Executive Officer Badal Khan said this at an earnings conference on Wednesday.
Rideshare drivers are becoming a larger part of the fast charger customer base. Uber aims to use electric vehicles for 100% of its rides in the U.S. by 2030. Meanwhile, New York City Mayor Eric Adams recently outlined an initiative that would require all ride-sharing vehicles to be electric by the end of 2030.
“Rideshare drivers charge, on average, five times more than our average retail customer,” Khan said on an earnings call.
One industry tracker is pointing to signs that profitability targets for networks not operated by Tesla may be nearing. A study by Stable Auto, a software startup that tracks non-Tesla charging networks, shows that direct current fast charger (DCFC) utilization is on the rise.
“Historically, it has been very true that Tesla is the dominant player. More chargers, higher availability, more vehicles,” Stable Auto CEO Rohan Puri told his Yahoo Finance.
“What we’re seeing now is that we’re seeing significantly higher utilization in non-Tesla locations as well,” he added.
Although the study did not include Tesla Superchargers, “Usage data shows that DCFCs, once considered a poor investment due to low utilization, are now used in many U.S. “It has become clear that the state is making profits.”
According to the study, charging stations in 19 states in the South, Southeast, and Northeast currently have utilization rates above 15%, a threshold that indicates profitability potential. A few years ago, that rate averaged 4% to 5%, Puri said.
“The story we’re seeing with the slowdown in EV adoption appears to be different than what we’re seeing in occupancy rates. EV adoption may be slowing, but it’s still growing well and occupancy rates are It is rising,” Puri said.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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