Electric vehicle charging stocks gets mixed messages from investors

Consumers are pressing the gas on electric vehicle (EV) adoption, but EV charging stations are putting the brakes on its growth.

Despite EV stocks having a massive run on the back of Tesla, Rivian and Lucid, EV charging stocks aren’t having as much luck…

What’s slowing down EV adoption?

40% of new car sales are expected to be electric by 2030 but the lack of charging stations and the speed of charging are the biggest barriers to its adoption — with a full charge taking up to 45 minutes.

If EVs are really taking over the world, we’re going to need a lot more charging stations. Yesterday, Biden signed the $1T infrastructure bill:

• Committing $7.5B into EV charging stations — more than the total amount committed by the US government in recent years.
• Biden pledged to build 500K charging stations in the next decade — still short of the 2M chargers needed — estimated by The Battle Group.

The EV charging market is projected to rise 42% annually until 2030 — reaching $155.5B — but will this translate into investor returns?

Companies leading the charge…

To capture that growth, companies are racing to place their charging stations at the best locations while negotiating exclusive rights. According to BloombergNEF, in the US:

• ChargePoint (NYSE:CHPT) has 40K chargers (42% market share).
• Tesla (NASDAQ:TSLA) has 18.4K chargers (18%).
• 33% comes from others including EVgo (NASDAQ:EVGO) and Blink Charging (NASDAQ:BLNK).

But when it comes to fast-charging stations in the US, Tesla has 55% market share. These companies are also tackling the market with different business models:

• The subscription method: ChargePoint sells chargers to homeowners and businesses and charges software subscription fees.
• The gas station model: EVgo pays for the cost of installation and charges consumers for electricity.

It’s too early to tell which model will come on top but ChargePoint’s CEO expects charging companies to make money like gas stations — from convenience and food products.

Investors: Don’t let your batteries run short

The market has a bearish tone on EV charging companies — with short interest — the portion of investors betting against a company — on EV charging stocks looking high: Blink Charging at 36% and EVgo at 15%.

More red flags: In the past week, charging companies received downgrades form Credit Suisse and Bank of America on concerns that stock prices already factored in Biden’s infrastructure spending.

And even in the charging station market — the king of EVs, Tesla — is looking like a top contender for the charging station market.