Shop While You Charge Up Your Car: How Volta’s EV Strategy Differs From Beam or Blink
There’s another electric-vehicle charging company coming to market, but one that plans to be much choosier than its competitors. Rather than a gas station–like utility approach, San Francisco–based Volta Industries wants to use its charging stations as a tool for attracting shoppers and diners to locations like shopping malls, restaurants, and grocery stores. The goal is for more revenue streams and potentially higher profit margins.
Volta announced plans on Monday to merge with Tortoise Acquisition II (ticker: SNPR), a special purpose acquisition company, or SPAC, from the same team that brought Hyliion (HYLN) public last year. The deal is expected to close late in the second quarter, when the companies will combine and Tortoise II’s ticker will change to “VLTA.”
Beam Global (BEEM) and Blink Charging (BLNK) are already public, while another three charging players are also taking the SPAC route to public markets: Europe-focused EVBox plans to merge with TPG Pace Beneficial Finance (TPGY), EVgo with Climate Change Crisis Real Impact I Acquisition (CLII), and ChargePoint with Switchback Energy (SBE).
It’s a lot of highly valued companies vying for the same market, but one that’s growing at a breakneck pace. EV adoption is forecast to explode in the coming years, and more governments in more countries are at least talking about supporting EV charging infrastructure.
“This is a secular trend, and there will be several different players that will grow at market,” Volta’s co-founder and president Chris Wendel tells Barron’s. “What you’re going to see over time is differentiation.”
Volta aims to separate itself from the crowd through its location selection and multiple revenue streams. Rather than essentially being a reseller of electricity from the power company to EV owners, Volta’s business model takes advantage of the chargers’ ability to draw people to a given location.
That means partnering with retailers, shopping malls, grocery chains, and others to place Volta’s chargers in prime parking spots in front of their businesses. The company says its chargers are used for an average of 148 minutes per EV—giving drivers plenty of time to get out and shop or dine at their location. Volta splits the cost of building the charger with the commercial client and collects a recurring fee.
Depending on the location, Volta may offer 15 minutes of free charging to attract EV drivers, then charge by the kWh. The power of each individual charger depends on the location and the demands of Volta’s partner.
“We try to match the charging on a location to the expected dwell time and behavior on that property,” says Wendell. “The longer you spend on a property, the less of a fast charge you need. If you have to go move your car, or else get charged idle fees just 15 minutes into your shopping, that’s the opposite of what [the retailer] wants.”
Essentially, Volta promises increased customer traffic to the locations where its chargers are installed. Those chargers are sleek-looking devices with two billboard-size screens for displaying advertising. It’s a similar look and sponsorship model to New York’s Citi Bike stations.
Volta expects that by 2025, 37% of its revenue will come from advertising and sponsorships, plus another 7% from selling the data its network generates.
“Some of the early charging models we saw had no way to pay back the capex required to build the infrastructure,” Wendel says. “Our aim was to build a business that’s centered around our clients’ commercial impact by starting from demand. So put stations where we know they will be used, as opposed to a build-it-and-hope-they-will-come strategy.”
That means a much smaller network of chargers than what Volta’s competitors are targeting, but with wider profit margins and a faster payback time per charger. From about 1,500 stations at the end of 2020, Volta plans to have just over 26,000 installed by the end of 2025. That compares with hundreds of thousands planned from ChargePoint, EVBox, Blink, and EVgo.
By 2025, Volta expects newly installed chargers to pay for themselves in under two years, from about three and a half years today. The company expects to just about break even on an Ebitda—earnings before interest, taxes, depreciation, and amortization—basis in 2022, and turn a profit in 2023. Its 2025 forecasts are for $252 million in Ebitda on $826 million in revenue, with sales about doubling each year from 2020’s $25 million.
The SPAC merger values Volta at about $2 billion, including roughly $600 million of proceeds after expenses. That includes the $345 million in Tortoise II’s trust and a $300 million private investment in public equity, or PIPE, from institutional investors including BlackRock, Fidelity, and Neuberger Berman, coming in at $10 a share. Tortoise II stock recently traded around $16.25 after a surge on Monday and slight pullback on Tuesday. At current prices, Volta stock is valued at about $3.4 billion based on the 203 million shares outstanding after the deal closes.
That compares with EVgo’s pro forma market capitalization of about $5.3 billion based on 263 million shares outstanding when its merger is completed. EVgo projects about $600 million in sales and about $200 million in Ebitda in 2025, which is actually a little lower than Volta’s projections. But EVgo also has relationships with General Motors (GM) and Tesla (TSLA).
ChargePoint sells charging hardware and software, and its stock is currently valued at almost $13 billion based on the 305 million shares outstanding after the merger with Switchback Energy closes. ChargePoint projects about $1.4 billion in 2025 sales and a little less than $200 million in Ebitda.
Beam and Blink are already public. Beam offers solar powered charging equipment and has a market value of about $500 million. Blink owns and operates EV charging equipment and has a market cap is roughly $2.1 billion. Four analyst cover Beam stock and project about $100 million in sales by 2025. Two analysts cover Blink shares and project about $150 million in sales by 2025.
Based on those comparisons, Volta looks relatively attractive. But all the companies have slightly different business models, and it will take time to figure out how many companies will win in the EV charging wars.
Tortoise stock, which will become Volta, was down more than 5% in late trading Tuesday after Monday’s 34% jump. The S&P 500 and Dow Jones Industrial Average, for comparison, were both just about flat Tuesday.
Write to Nicholas Jasinski at [email protected] or Al Root at [email protected]
