The fast chargers are expected to be available at grocery stores, retail outlets, entertainment centers and other high-traffic locations. Drivers can conveniently charge their vehicles at an EVgo station while running their errands.
Courtesy of GM
The famous line from the classic baseball film Field of Dreams is: If you built it they will come. In the case of the electric vehicle industry, the line should go: They are coming so you better build it.
Auto makers new and old are planning to launch dozens of fully electric vehicles in the coming years, capitalizing on the incredible success of Tesla (ticker: TSLA). That will mean more demand for public EV charging infrastructure from drivers looking to top up while away from home.
For EV adoption to continue to grow at a rapid pace, charging infrastructure will also need to keep up with vehicle sales. Seeing more plugs around town could convince on-the-fence buyers to switch from internal combustion to battery power with fewer sacrifices.
EVgo is one company that can help solve the chicken-egg dilemma. The California-based startup is merging with a special purpose acquisition company, or SPAC, called Climate Change Crisis Real Impact I Acquisition (CLII), or CRIS. Announced on Friday, the transaction will take EVgo public, giving investors a chance to come along for the ride. It will also provide EVgo with about $575 million in fresh capital to help accelerate the building out of its nationwide fast charging network. The company says it currently has more than 800 chargers in 34 states and 220,000 customers.
The difference between slow and fast charging stations—which can also be call level 2 and level 3 charging—boils down to how much electricity the charger can safely pump into the EV’s batteries. That rate depends on the hardware in the car, but it also depends on the EV charging infrastructure.
Non-EV driving stock market investors may have heard of EVgo before Friday. General Motors (GM) partnered with the company this past summer, announcing plans to add more than 2,700 fast charging stations over the next five years. GM wants to sell many more EVs in the coming years, and having the infrastructure in place for new battery powered cars will help, the thinking goes.
EVgo’s chargers work for cars from any manufacturer, and are located in grocery store parking lots, outside office buildings, and on city streets. The company is targeting both daily commuters and commercial operators. EVgo has partnerships with Uber Technologies (UBER) and Lyft (LYFT) for their ride-share drivers to charge their EVs.
“The EV market is expected to grow by 100 times between now and 2040,” EVgo CEO Cathy Zoi told Barron’s. “So the needs for charging those vehicles, and especially fast charging, are going to grow phenomenally …More different kinds of people will buy EVs who don’t have at-home charging, more commercial fleets will have EVs, and the cars themselves are getting bigger and heavier, so they need more juice.”
There are other EV charging companies including Blink Charging (BLNK) and Beam Global (BEEM). Blink’s market capitalization is about $1.9 billion. Beam is smaller with a market value of roughly $450 million.
Both are smaller than EVgo for now. Zoi didn’t address any competitor directly, but expressed confidence in her company’s technology and service capabilities, which include call centers to manage customers’ problems, software for controlling charging stations, as well as advanced hardware designed to minimize the time required to charge an EV.
The CRIS-EVgo deal values the combined stock at about $2.6 billion. Proceeds include the $230 million in the climate change-focused SPAC’s trust, plus a $400 million private investment in public equity, or PIPE. The PIPE backers include a roster of major institutional investors: funds managed by Pimco, BlackRock, Wellington Management, Neuberger Berman, and Van Eck. They are all coming in at $10 a share, versus CRIS stock’s $13.34 close on Thursday.
CRIS, which went public on Sept. 30, and several other renewable energy, climate change, and electric vehicle-related premerger SPACs have been trading well above their trust values in recent months. QuantumScape (QS), Hyliion (HYLN), and Nikola (NKLA) all saw their stock prices multiply after their SPAC mergers in 2020, and investors have wanted in early on the next hot deal.
Existing EVgo shareholders—which include management and energy-focused investment firm LS Power—will own about 74% of the merged entity. Pending shareholder approval, CRIS stock will convert to stock in EVgo and change its ticker to “EVGO.”
( Canoo, an EV maker that merged with another SPAC, now has a stock symbol “GOEV.”)
“It’s almost a certainty to me that this addressable market gets realized,” says David Crane, CRIS’ CEO who served as CEO of NRG Energy (NRG) from 2003 to 2015. “It’s not like this sector needs some huge breakthrough that may or may not happen.”
Auto makers have committed hundreds of billions of dollars to their EV programs, and governments are committed to transitioning the industry away from carbon-emitting vehicles using both carrot and stick. The Biden administration has talked about installing half a million charging stations in the U.S. And consumers like to drive EVs.
Investors have likewise become convinced EVs are the future of personal transportation. Several EV stocks Barron’s tracks are up roughly 500% on average over the past year. Tesla is now the world’s most valuable auto maker, by a wide margin. And EV makers, in aggregate, are worth roughly the same amount as all the traditional auto makers, despite delivering a fraction of the vehicles.
Write to Al Root at [email protected] and Nicholas Jasinski at [email protected]
