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Discussions with equipment manufacturers, specifically ChargePoint (NYSE:CHPT), FreeWire, and Tritium (NASDAQ:DCFC), indicate that concerns about a slowdown in demand are generally exaggerated. ChargePoint expresses confidence in reducing its EBITDA drag by two-thirds ($49M to $16M) in the fourth quarter, primarily due to the diversity of its products, customers, and geographical reach. Tritium’s impressive growth aligns closely with its recent capacity expansions, indicating that demand is driving supply. FreeWire’s battery-integrated products are increasingly seen as a viable industry standard, with the potential to qualify for tax credits as standalone storage projects, in addition to offering lower make-ready costs.
BofA analysts wrote in a note, “While investors have generally turned cautious on the EV Charging theme, every indicator suggests in the early innings of a secular growth cycle. Despite broader signs of slowdown in the economy in whole, EV sales continue to impress with another record quarter in 1Q and forecasts for well over 1mm EV’s sold in the US for the first time this year. With this in mind, demand risks look overblown as the volume of EV’s on the road and associated demand for charging infrastructure is simply poised to continue accelerating.”
Following the conference, Bank of America reiterated a Buy rating on CHPT and Underperform on EVgo Inc (NASDAQ:EVGO), with preferences based on the visibility of achieving cash inflection. The analysts emphasized that CHPT anticipates no requirement for external capital to reach cash inflection. On the other hand, EVgo indicated that grants will have a growing impact in 2023 and beyond, but the unclear outlook for cash inflection has Bank of America exercising caution.
