CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

EV charging sector M&A activity set to boom this year

By Monte Stewart


Updated

Tritium charging station
Tritium is part of an EV charging sector M&A boom

Electric vehicle (EV) charging sector mergers and acquisition (M&A) activity is set to boom this year as the fragmented industry experiences rapid growth in Europe and the US.

“M&A activity in the (charging) sector will be seeing a strong growth (in 2022), and the number of deals may double versus 2021 (when approximately 20 were completed),” Michel Annink, a director with London, UK-based tech mergers and acquisitions advisory firm Hampleton Partners, told capital.com.

Interest in EV charging assets hit home on Tuesday as Swedish private equity firm EQT AB agreed to acquire UK-based Instatvolt, which operates 700 charging points, for an undisclosed amount. Stockholm, Sweden-based EQT’s infrastructure arm will own Instavolt, according to a press release.

Annink authored a new Hampleton report that points to more future auto tech company M&A deals and increased industry consolidation as large-scale EV charging investment grows.

Because the charging market is young and fragmented, M&A activity is expected on “many fronts,” including manufacturer and service provider consolidations.

Consolidation wave

The EV charging sector is already undergoing “a consolidation wave” with energy companies, in particular, trying to expand their value share and geographic coverage, says global management advisory firm Arthur D. Little (ADL) in a report on its website.

“Many substantial companies with deep pockets have entered and are moving aggressively,” says the ADL report. “Consolidation is ongoing and expected to intensify. Some EV charging business models employ classical scale games, and many will fail.”

ADL predicts that revenues from EV charging of passenger cars alone will surge to about £7bn ($9.5bn) in the UK and £43 billion across Europe in 2030. That will represent a sevenfold increase from 2021, based on a compound annual growth rate of approximately 25%.

The report’s authors, ADL partners Alexander Krug and Richard Parkin, contend that the sector is moving towards an integrated charging-as-a-service business model. That format is making a strong claim to be “future-proof” because it meets the requirements of corporate EV fleet customers, which currently represent the most attractive business segment, and relieves their need for high initial investment costs.

Demand exploding

Annink, who is based in Hampleton’s Stockholm, Sweden office, said EV charging solutions demand is “exploding” after the charging sector was “non-existent” a decade ago.

It is important to realise that charging stations and accessories account for less than half of the revenues generated in the EV charging market, he added.

Infrastructure firms, charging equipment manufacturers, public charging station installers and maintenance companies, charging station operators, site owners, and charging software providers that offer payment and location search apps are among those that stand to gain.

Areas like asset ownership, operations, platform services, payment services, and electricity will represent the majority of future revenues – 56% of the €36bn (US$40.78bn) in Europe by 2030, he told Capital.com while citing ADL figures.

Mostly public companies

Annink believes that most EV charging-related M&As will involve public companies. Over the past 18-24 months, a growing number of EV charging-sector players have gone public through IPOs and mergers with special purpose acquisition companies (SPACs), he noted.

Also known as blank cheque firms, SPACs are publicly listed shells that exist solely to target other entities and take them public through a merger, acquisition, or other transaction vehicle.

Recent new public EV charging-related companies include ChargePoint, Blink, EVgo, Wallbox, Pod Point, CTEK, GARO, ZapTek, Alfen, and FastNed.

Charging companies slated to go public in the future include EVBox and Charge Amps. Meanwhile, multiple traditional players, including utility companies, incumbent electrical original equipment manufacturers, and oil companies – virtually all of which are publicly listed – are entering the sector, driving further M&A activity.

Germany leads way in Europe

Since the EV charging sector is complex and still maturing, no company is dominating, said Annink. When it comes to countries, China is well ahead of the pack.

Germany is expected to lead charging-station growth in Europe this year, said Annink, citing LeasePlan’s 2021 EV readiness index report. According to the US Department of Transportation, the US charging market is only one-third the size of its Chinese counterpart.

The US still lags Europe in both EV adoption and EV charging market size. As a result, most EV charging-related M&A activity is expected to occur in Europe this year.

“Having said this, the ($1trn) infrastructure bill that was recently passed in the US will likely accelerate activity in that region,” Annink told Capital.com.

Notable EV Charging Company M&A Deals in 2021Notable EV Charging Company M&A Deals in 2021 - image: Hampleton Partners

Biden provides investment bounce

In early February, US president Joe Biden announced that his government will provide $7.5bn for a nationwide network of 500,000 EV chargers – the largest US investment of its kind.

ETH/USD

3,418.73 Price
-0.650% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

US100

19,848.10 Price
-2.780% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 1.8

XRP/USD

0.63 Price
+6.270% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

Gold

2,459.69 Price
-0.360% 1D Chg, %
Long position overnight fee -0.0196%
Short position overnight fee 0.0114%
Overnight fee time 21:00 (UTC)
Spread 0.30

Plans call for all 50 states, Washington, DC, and Puerto Rico to submit proposals to set up EV chargers along highways by the beginning of August to receive an initial outlay of $615m.

But Annink suggested that public subsidies will have minimal impact on charging-related M&A activity

“EV Charging station demand is mostly driven by rapidly increasing sales of EVs,” he said.  “While subsidies are proven to accelerate the adoption of EVs, they are only one of the elements driving EV sales and EV charging market growth and are also just a temporary stimulus.”

Other influencers include cost, environmental impact, and vehicle performance.

“The M&A deal demand in early-stage markets like the US may, however, benefit from public subsidies,” said Annink.

He said EV maker Tesla may trigger EV charging station M&A activity by opening its charging network to non-Tesla vehicles. Tesla has opened its Dutch charging network to other EVs and is running pilot programs in Norway, France, Germany and Belgium.

Overall investment growth

“These are memorable times, but it’s just the beginning,” said Mike Carlisle, president of global EV charging equipment manufacturer Tritium (DCFC), which went public in January through a merger with a SPAC, in an interview with Capital.com.

Founded in 2001, Tritium (DCFC) manufactures charger hardware and software for direct current (DC) fast chargers.

“The biggest challenge is: How do we go and put those (chargers) in the ground quick enough to meet what will be an onslaught of charging demand?” he said.

Carlisle said the charging station development will ease drivers’ fears that they will be stranded without vehicle power.

And, the federal funding will “unleash tremendous EV adoption,” easing the burden of EV owners who do not have charging capabilities at home and help meet emission-reduction goals over the long term, he added.

At the same White House event at which Biden announced charging station funding, Tritium CEO Jane Hunter said the company will open a new charger manufacturing plant in Lebanon, Tennessee, in the third quarter of 2022. The plant will produce 30,000 units per year at peak capacity.

“What Tennessee will do is allow us to meet the Americas demand straight from the Americas,” said Carlisle, noting Tritium currently makes chargers in Brisbane, Australia, and then ships them to its Torrance, California, location for modification and distribution.

Wise network under development

Kevin Williams, CEO of Las Vegas-based Wise Power Systems, which is developing a nationwide EV charging network in the US, said charging infrastructure development will be much more robust in the US this year due to the federal infrastructure funding.

“Those dollars are starting to hit the streets now, and we see that impacting our customers,” said Williams.

Wise Power is a renewable energy services provider. The company offers solar photovoltaic (PV) systems, scalable energy storage, and EV charging stations branded as Wise EV Charging.

Wise is developing 25 EV charging facilities in south Florida, centred around Boca Raton area, that will deploy Tritium chargers installed at petrol stations and other venues. The Florida network is slated to begin operations in the third quarter of this year. From there, Wise is looking to expand into Texas and California and across the US.

Property owners acquire chargers under third-party financing arranged by Wise. The company plans to develop $600m worth of stations by 2024.

The global EV industry – including automakers and charging companies – is aiming for 100% EV adoption over the next two or three decades. Carlisle, who drives a Tesla, suggested that charging station companies will not be happy with their progress until that ultimate goal is reached.

“You can see how important it is (environmentally), and you can see the (business growth) prospects there,” he said.

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided in this article is for information purposes only and should not be understood as investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents and has not been prepared in accordance with the legal requirements designed to promote investment research independence. While the information in this communication, or on which this communication is based, has been obtained from sources that Capital.com believes to be reliable and accurate, it has not undergone independent verification. No representation or warranty, whether expressed or implied, is made as to the accuracy or completeness of any information obtained from third parties. If you rely on the information on this page, then you do so entirely at your own risk.

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading