Vehicle chargers follow Wall Street buzz to plug into Spacs

Big plans to build more battery-powered cars have led the companies that charge them to Wall Street in a fusion of two buzzy trends: the electric vehicle and the special purpose acquisition company.

Groups such as ChargePoint Holdings, EVgo Services and Volta Industries are entering US stock markets by merging with Spacs, blank-cheque companies that raise money to acquire private businesses and take them public.

The charging companies aim to provide the public power cords for a new generation of EVs demanded by governments and promised by General Motors, Volvo and other carmakers.

But they are losing money and their path to profitability remains unsettled. Some companies sell electricity, some sell equipment and software and one sells advertising that flashes from charging stations where the energy is free.

“It’s difficult to earn a return just providing the charging service,” said Nick Nigro, founder of Atlas Public Policy, a consultancy.

California-based ChargePoint last week reported $146.5m in revenue and a loss from operations of $121m for the fiscal year that ended in January. The company merged with a listed Spac last month and now has a market capitalisation of $7.2bn.

ChargePoint projects turbocharged growth in the years ahead. A presentation preceding the Spac merger modelled revenue of $2.1bn in 2026, yielding adjusted earnings before interest, tax, depreciation and amortisation of $340m. Companies that go public via Spacs are allowed to show projections that they cannot make in traditional public offerings.

Pasquale Romano, chief executive, emphasised the company was not in the business of selling electricity.

Rather, the company sells hardware and subscription software to businesses and property owners that want a charging station on their premises. “I’m not a charging company, per se,” Romano said.

Its closest rival is EVBox, a subsidiary of Engie of France, which also sells equipment and subscriber software and has a strong position in Europe. The company intends to list in New York in the second quarter through a Spac, with a $1bn enterprise value and a forecast to break even in 2023 on revenue of €372m ($445m), more than five times 2020 levels.

The companies’ financial projections rest on rapid growth in the electric car market. Globally, sales will rise fivefold to 8.5m passenger EVs in 2025, forecast BloombergNEF, a clean-energy research group.

“The next four years, we will see a change in the electric vehicle market that we have not seen in the last 20 years,” said Arshad Mansoor, chief executive of the Electric Power Research Institute.

Most EV drivers recharge at home. Yet public charging stations are still critical to winning over new drivers anxious about running short of power as well as people who live in housing without a place to charge, Nigro said.

In the US, President Joe Biden aims to get 500,000 public charging cords installed by 2030, up from almost 100,000, as part of a push to decarbonise the energy system. 

EVgo is set to go public through a merger with a Spac led by David Crane, former chief executive of power producer NRG Energy. The Los Angeles-based company has more than 1,400 public “fast chargers” in the US that can replenish a car battery in minutes.

EVgo’s main source of revenue is selling electricity, whose inflation-adjusted price has declined for decades in the US. The company reported adjusted losses of $29m on $14m in revenue in 2020 but projected that revenue would reach almost $1.3bn and adjusted ebitda would surpass $500m in 2027.

Cathy Zoi, chief executive, said EVgo was more than a commodity supplier, operating chargers that were reliable and located at shopping centres and supermarkets.

“It’s more than just being a pass-through of electricity: it’s actually a sophisticated network of fast chargers across the country that we keep running at 98 per cent uptime,” she said.

EVgo is going up against companies such as Electrify America, a subsidiary of Volkswagen whose $2bn, 10-year investment plan was funded by a legal settlement over the German carmaker’s diesel emissions scandal. The company expects to have about 3,500 fast chargers installed or under development by the end of this year. 

The electric-vehicle leader Tesla, meanwhile, has its own exclusive network of “Superchargers” that plug into the cars it makes.

Volta, a charging company with a deal to go public via Spac, forecast revenue rising from $25m in 2020 to more than $800m in 2025, breaking even on an ebitda basis in 2022.

The San Francisco-based company allows drivers to charge for free and sells advertising at its stations. Chris Wendel, Volta’s co-founder and president, compared charging an EV to periodically topping up a mobile phone battery rather than taking a trip to fill up a car with petrol.

“We are not at all in the business of reselling kilowatt-hours,” Wendel said. “We’re in the business of delivering consumers to new locations where fuelling happens in the background of their regular day.”

Investors have not made up their minds over his pitch. Shares of the Spac set to merge with Volta shot up by a third when their deal was announced in early February. But on Tuesday, Tortoise Acquisition Corp II was trading below its price before the news.

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