Electric vehicles: charging shares are starting to buzz
Both charging point operators and equipment manufacturers promise rich returns to investors
Rapid acceleration describes far more than just the driving experience. As electric vehicles (EVs) grab an increasing share of new car sales, opportunities for investors continue to race into view. Providers of charging infrastructure, as well as automakers, are moving at a rapid pace.
Governments in the US and Europe are going all in on electric vehicles to reduce carbon emissions. The infrastructure to power the vehicles is key to a transition that could turn half of all European new car sales electric by the end of the decade. Two distinct routes for investors have emerged: charging point operators and equipment manufacturers. Both promise rich returns as revenues in this rapidly growing sector gather speed.
International oil companies have staked a claim on charging networks. Their large estates of petrol stations provide a lead that is being bolstered with acquisitions. Shell is buying on-street charging network Ubitricity, having acquired NewMotion in 2017. It has a target of 500,000 chargers by 2025.
Fast charging can take only 20 minutes and is ideal for top-ups away from home or work. It requires expensive equipment. Holland’s Fastned is building its own fast-charging network and expects 170 stations to be operational this year. Its shares have risen fivefold over the past year and now trade at 74 times this year’s expected revenues.
Valuations for equipment manufacturers have also soared. Norway’s Zaptec has risen more than threefold since listing last October. The stock now trades at 10 times expected revenues. Shares in Chargepoint of the US remain elevated at 37 times expected revenues. EVbox, owned by French utility Engie, is soon expected to join the US market via a reverse takeover at a 7 times revenue multiple.
Swedish-Swiss industrial conglomerate ABB recently announced the internal separation of its EV mobility division. It might be worth $3bn if a mooted initial public offering goes ahead and values it at 10 times this year’s sales. Divisions in Siemens and Schneider Electric present a similar proposition for value-maximising managers.