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LONDON/DETROIT (Reuters) – Electric vehicle charging companies in Europe and the U.S. have started fighting over the best spots for fast public chargers, and industry watchers predict fresh rounds of consolidation as more big investors enter the fray.
Many current EV charger companies are backed by long-term investors, and more are expected to launch. Looming bans in various countries on cars powered by fossil fuels have made the sector more attractive to infrastructure investors like M&G’s Infracapital and Sweden’s EQT (ST:EQTAB).
“If you look at our customers, it’s like a land grabbing game now,” Tomi Ristimaki, CEO of Finnish EV charger manufacturer Kempower said. “Who gets the best locations now can guarantee electricity sales in the coming years.”
A Reuters analysis showed there are more than 900 EV charging companies globally. The sector has attracted over $12 billion in venture capital funding since 2012, according to PitchBook.
As big investors fund more consolidation, “the fast-charging landscape will look pretty different from the landscape that exists today,” said Michael Hughes, chief revenue and commercial officer for ChargePoint (NYSE:CHPT), one of the largest suppliers of EV charging equipment and software.
Corporations from Volkswagen (ETR:VOWG_p) to BP (NYSE:BP) and E.ON have invested heavily in the industry, which has seen 85 acquisitions since 2017.
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There are more than 30 fast-charger operators in the UK alone. Two new ones launched last month: Australia’s Jolt, backed by BlackRock (NYSE:BLK)’s infrastructure fund, and Zapgo, which has received 25 million pounds ($31.4 million) in funding from Canadian pension fund OPTrust.
In the U.S. market, Tesla (NASDAQ:TSLA) is the biggest player, but more convenience stores and fuel stations will soon join the fray and the number of U.S. fast-charging networks will more than double to 54 in 2030 from 25 in 2022, said Loren McDonald, CEO of San Francisco-based research firm EVAdoption.
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It can take four years for a properly placed EV charging station to become profitable once utilization hits around 15%. Charger companies complain red tape in Europe is slowing expansion. Still, the sector is viewed as a good bet by long-term infrastructure investors like Infracapital, which owns Norway’s Recharge and has invested in Britain’s Gridserve.
“With the right locations, long-term investments in (charging companies) absolutely make sense,” said Christophe Bordes, managing director at Infracapital.
ChargePoint’s Hughes believes larger players will start looking beyond existing sites for new real estate, purpose-built for mega-facilities with 20 or 30 fast-charge dispensers, surrounded by retailers and amenities.
“There’s a race for space,” he said, “but it will take longer than anybody expects to find, build and enable these new sites for the next generation of fast charging.”
Competition for the best sites is becoming fierce and site hosts can switch between operators before settling on a winner.
“We like to say there’s no such thing as a dead deal when you’re talking to a site host,” Blink Charging (NASDAQ:BLNK) CEO Brendan Jones said.
“LOGOS WILL BE DIFFERENT”
Firms are also competing for exclusive contracts with hosts.
For instance, UK’s InstaVolt – owned by EQT – has deals with companies like McDonald’s (NYSE:MCD) to build charging stations at their locations.
“If you can win that partnership, it’s yours until you blow it,” InstaVolt CEO Adrian Keen said.
With EQT’s “deeper pockets,” InstaVolt plans 10,000 chargers in the UK by 2030, has active chargers in Iceland, and has launched operations in Spain and Portugal, Keen said. Consolidation could start in the next year or so, he added.
“That might open up opportunities in the markets we’re in, but also open the door to a new market for us,” Keen said.
Utility EnBW’s charging unit has 3,500 EV charge points in Germany, about 20% of that market. It is investing 200 million euros ($215 million) annually to hit 30,000 charging points by 2030, leaning on local staff to fend off competition for sites.
The unit has also formed charging network partnerships in Austria, the Czech Republic and northern Italy, vice president of sales Lars Walch said.
While consolidation is coming, there will still be room for multiple operators, Walch said.
Norway, a leading EV market, has suffered from short-term “over-deployment” this year as companies raced to build out charging stations, Recharge CEO Hakon Vist said. The market added 2,000 new charge points to hit a total of 7,200, but EV sales were down 2.7% through October this year.
Recharge has around 20% market share in Norway, just behind Tesla.
“Some companies will find they’re too small to meet customers’ requirements and leave or sell,” Vist said.
Others are launching companies knowing they could acquire others or be acquired themselves.
New UK entrant, OPTrust-backed Zapgo plans to target under-served parts of England’s Southwest, offering landlords a slice of charging revenue to get good locations. It plans 4,000 chargers by 2030, said CEO Steve Leighton, who predicted consolidation “will all come down to money” later this decade.
“The funders who’ve got the deepest pockets will be running that consolidation,” Leighton said, adding OPTrust “is big, but one of the larger infrastructure funds might come along and want to pick Zapgo up at some point.”
The U.S. market will shift as convenience store chains like Circle K and Pilot Company, and retail giants like Walmart (NYSE:WMT) invest massively in charging stations, EVAdoption’s McDonald said.
“Like all industries started by a bunch of small startups, over time the big guys jump in and … they consolidate,” McDonald said. “At the end of this decade, the logos are going to be very different.”
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