Main photo: BMW getting juice at a Pod Point charger at King Henry's Wharves in Wapping, London. Photo by Limmersummit, via Wikimedia Commons, licensed under Creative Commons.
This energic furry mammal isn’t really very fussy about the fuel he needs in order to have the energy to cover his territory, I’m rather partial to fish, but am not adverse to catching the odd bird or insect. In fact, researchers at the University of Sheffield have been picking through spraint to determine exactly what my cousins in the Steel City eat…and its certainly not limited to pies.
Other species sometimes need to change their diets to adapt to a changing environment, and stay mobile – if there’s not enough fish heads to go around, or if catching those fish causes pollution and climate change, then it might be time to switch it up. And that’s the subject of today’s post, more specifically electric cars and the fuel that powers them.
River Otter is concerned that the switch from internal combustion engine to battery-powered vehicles might not be as sustainable as sometimes suggested. The manufacture of electric vehicles requires lithium and cobalt, plus other rare earth elements that simply weren’t needed for traditional petrol or diesel vehicles. Coface, the French credit insurance company, published an interesting report on the subject in July this year. However, this post isn’t about questioning the rational behind EVs, they’re quite clearly here to stay and moreover will be a big part of reducing dependency on fossil fuels and improving the air quality of our towns and cities.
So I’m going to take a look at the EV charging segment, since I predict this is an area that will experience significant growth in the years to come. The electric vehicle revolution is here to stay, and I’m not just talking about Elon Musk’s Cybertruck, yet the charging infrastructure to support it is still nascent. The petrol station forecourts are set to be replaced by rapid charging stations, with the addition of home charging installations, and access to the grid at workplaces and the supermarket.
My jumping off point here is a look at the UK charging market and one of the best sources of information about this appears to be Zap Map. It provides an interactive map of charging locations across the country, which is obviously essential for Model 3 owners running low on juice.
Zap Map, 50% owned by Good Energy plc listed on AIM market, says the UK currently has more than 46,000 connectors installed at over 17,000 locations. Here are the top networks, according to Zap Map, who claim to have mapped 95% of public charge points:
|Charge Your Car||2.5|
Ubitricity, which is part of Shell, has the largest network in the UK, plus operations in France & Germany. It has a partnership with Siemens which installs and maintains the infrastructure. It uses converted lampposts, bollards and provides a wall box. It specialises in on-street and community charging points, working with local authorities, and making kilowatts available to drivers on a pay-as-you-go basis. Shell itself has just over 100 chargers installed at petrol stations, and aims to increase this to over 5,000 by 2025.
|Type 2 (SimpleSocket Lamp)||5.8kW|
|Type 2 (SimpleSocket Wallbox)||3.7kW, 11kW|
|Type 2 (SimpleSocket Bollard)||3.7kW, 11kW|
|CHAdeMO, CCS, Type 2 (Shell Recharge Network)||Rapid (50kW), ultra rapid (150kW)|
- 41p per kWh for Shell Recharge at Shell forecourts
Pod Point was acquired by French electricity utility firm EDF and Legal & General in a deal last year. The company has just been taken public with an IPO, which we’ll return to a little later on. It is offering equipment for home charging, supplying chargers to businesses (either lease or outright purchase) and operates its own public charging network with locations at the likes of Tesco and Lidl supermarkets.
|Type 1, Type 2 (Solo 3 Universal and Tethered)||3.6kW, 7kW, 22kW|
|Type 1, Type 2, CHAdeMO, CCS on public network||3.6kW-22kW, plus some 43kW-50kW|
- Solo 3 home charger priced at £799 (3.6kW), £899 (7kW), £1,549 (22kW)
- Free charging at some locations on public network, at other locations prices vary, some indicate 15p, 20p, 26p per kWH, some have an hourly charge rate, e.g. £1.60
- Pod Point offers pay-as-you-go service
BP Pulse has a public network, but also manufactures its own charger since acquiring ChargeMaster for £130m over three years ago, selling chargers designed for homes and businesses. They have worked with 50 local authorities, according to their website, and are targeting the installation of 700 ultra rapid public charging points by 2025. The public network is available to customers with a monthly subscription or through pay-as-you-go. BP Pulse designs and manufactures its equipment at a factory in Luton.
|Type 2 (Pulse7)||7kW|
|CHAdeMO, CCS, Type 2 (Pulse50)||50kW|
|CHAdeMO, CCS (Pulse150)||150kW|
- £7.85 per month for subscription to Pulse public network
- Between 16p – 42p per kWh depending on type of charger and membership status
- £10 per hour overstay fee for over 90 minutes on certain chargers
- 7kW home charger costs £1049.00
ChargePlace Scotland is a public network developed by the government, although the charge points are not owned by the Scottish administration, it handles the customer service and makes referrals for fault information. It aims to accelerate the deployment of EV infrastructure and 90% of the chargers on the network are available for free, using a variety of different chargers. The Aberdeen City local authorities outline instructions for chargers provided by Siemens and APT. Swarco, an Austria-based company working on mobility and traffic, was also announced as the new back office operator for ChargePlace Scotland from July this year.
|Variety of connectors including: CHAdeMO, CCS, Type 2||3-7kW, 22kW, 50kW, 150kW|
Source London is owned by Total, another oil and gas multinational, and was bought from Bollore Group in September 2020. Source claims to be London’s only 100% charging network powered by green energy and has more than 1,500 charging points in the British capital. It works with 23 London boroughs.
|Type 2||7.4kW, 22kW|
- Full subscription for £4 per month and Flexi membership for £10 one-off fee
- From 3.6p – 11.9p per kWh with Full and Flexi options depending on charger type
- Central London surcharge added for certain areas
- Pay-as-you-go plan from 7p – 14.3p per kWh depending on charger type
- 10 or 20 minute minimum depending on charger type
Char.gy is focused on street charging, offering a lamppost and bollard charger, working with local councils and parking facilities. The company received a £6.4m investment from Zouk Capital and has charging points installed in the South-East and Midlands of the UK. It aims to sell the chargers to local authorities and offers subscriptions to drivers.
- Casual subscription for £38.99 per month with 200kWh included (19.5p/kWh plus 15p/kWh for excess usage
- Unlimited subscription for £68 per month
- Pay-as-you-go at 33p per kWh
There are a number of other companies vying for a slice of the EV charging market.
The Electric Highway from Ecotricity, has a 80% share of the charging market at UK motorway service stations, according to a government report. Gridserve bought the Electric Highway from Ecotricity in June, and Gridserve itself is backed by loans from Hitachi Capital, which in turn is a subsidiary of Mitsubishi HC Capital Inc, and The Rise Fund (The Rise Fund II Gladiator). Gridserve is focused on sustainable energy and operates the Braintree Electric Forecourt in Essex, touted as the world’s first electric forecourt, with 36 charge points. Gridserve is using charging kit from ABB.
Mer, owned by Statkraft, operates in the UK, Norway, Sweden and Germany. It also bought a controlling stake in Swedish charging company Bee Charging Solutions. Mer says it is the second most popular charging network in Norway. Bonds for Statkraft, the Norwegian state energy company, are listed on the Oslo stock exchange.
InstaVolt owns and operates a rapid charging network and received investment from private equity firm Zouk Capital. It uses technology from ChargePoint, a US company listed on the New York Stock Exchange.
Pod Point IPO
When I started looking into EV charging a few months ago, I was on the lookout for a pure player I could invest in. With some serendipity, an email landed in my inbox alerting me to Pod Point’s planned floatation and led to my eventual purchase of shares this last week. The company was only admitted to stock exchange on 9 November and the IPO was placed at £2.25 per share, so I was able to get in at close to this with a cost of £2.35.
I was already aware of Pod Point, and had started to collate research and analysis of the EV charging market. I was slightly surprised that EDF, the majority owner of Pod Point wanted to list the company so soon after purchasing it. But the state-backed electricity company is often subject to the whims of the French government, regulation and the ensuing politics of the various state-backed utilities which operate overseas. So I’m going to assume here that Pod Point’s floatation is rather an opportunity for EDF to raise more capital, rather than a volte-face and loss in confidence in the company. This is clear from EDF’s retention of 55% of the share capital following admission. The major shareholders include:
|Shareholder||% of shares following admission|
|Legal & General||14.6|
|BMO Asset Management Limited||3.37|
Reassuring to have some big institutional support. It is equally reassuring that Erik Fairbairn, the founder of Pod Point, is staying on as CEO following the IPO. Additional expertise appears to being brought to the board, with new chair Gareth Davis and five additional non-executive directors. EDF already holds two seats on the board. The new additions to Pod Point’s board hold experience at various listed public companies, notably Andy Palmer, who has worked at Nissan on the development of the Nissan Leaf EV, and Norma Dove-Edwin, who works at National Grid. The others all appear to hold considerable executive level experience, and the board is 40% female.
Following the listing, the prospectus says that additional shares will be picked up by EDF, to the tune of £15m, by Erik Fairbairn, for approximately £4m, and by the directors, for a total of £1.3m. All of this is expected at the offer price, contributing an additional £20.3m in equity for investment.
The offer itself raised £87.7m in net proceeds, which with the additional purchases gives us a total of £108m. This is earmarked for use as follows:
- £67m in rapid charging assets and multi-tenancy dwelling installations
- £20m in product and software development
- Repayment of £20m in revolving credit facility provided by EDF and Legal & General
- £1m paid to previous shareholders as deferred consideration
From the pro forma statement of assets, adjusting for the impact of the new shares, current liabilities total £23m after the IPO, which is little changed following the listing, and non-current liabilities drop to £11m. Net financial indebtedness stands at £21m, as of 30 September 2021.
Revenues have ramped up over the last few years, and EBITDA for the six months to June 2021 show a small profit:
|2018||2019||2020||6 months 2021|
Some takeaways from this income information – revenues almost doubled from 2019 to 2020, showing a proportional increase in the operating loss. However, from the first six months of 2021, if we presume the same forward earnings on an annual basis, the the operating loss is proportionally dropping. I would expect that this is due to an increase in sales and associated economies of scale. The company’s gross margin is increasing from 11.8% in 2018, 16.2% in 2019, 24.6% in 2020 and 26.9% in the first six months of 2021.
If we look at the gross margin per unit, the breakdown is as follows:
|£||2018||2019||2020||6 months 2021|
|Home gross margin/unit||102||109||181||204|
|Commercial gross margin/unit||209||277||331||379|
Total revenue for home charging units in the 6 months of 2021 was £16.5m and for commercial units £8.5m, with the two markets representing £25m of revenues from a total of £26.4m. Home charging units therefore account for more than 62% of the company’s revenues. The company initially used a majority of Pod Point employees to install charging units, with 84% of installations carried out itself, however, in recent years this has dropped considerably, with third party installers now accounting for 87% of all installations. The EV charging firm says this was needed to scale quickly. I presume this significantly reduced the staffing cost on the company’s accounts, but you also sacrifice some potential margin you can add to the cost of installation technicians.
Pod Point has shipped and installed more than 102,000 charges points, as of June 2021, and has a public network of some 5,200 sockets available. This compares to BP Pulse who has installed about 50,000 charge points and has a network of some 8,000 publicly available, according to a report in The Times in July. The Pod Point prospectus notes BP Pulse as the company’s largest competitor, and if we refer back to our table outlining market share, Ubitricity doesn’t compete on home installations. Curiously, The Times articles touches on difficulties with BP Pulse and customers unable to get timely installations or required repairs. This too, it appears is a bottleneck Pod Point is experiencing. A quick look through tweets reveals that Pod Point customers are too subject to lengthly waits for installations and problems with repairs:
Pod Point currently uses a single manufacturer for its chargers, iPRO, located in the UK, which provides the company’s branded AC charging units. iPRO itself was bought out in June 2021 by Note Ab, a Swedish contract electronics manufacturing provider. iPRO had turnover of £11.9m for the year ending August 2020, according to a filing at Companies House. Note bought iPRO for an initial consideration of £7m, and the Stockholm-based company is involved in other areas of the EV charging market, supplying components and services for other charger manufacturers. This may be a company to revisit at a later date for further analysis.
The DC chargers used by Pod Point are sourced from third party suppliers, including ABB, Tritium and Delta. But as we’ve seen it is the home chargers which make up the lion’s share of revenues. This does entail some risk if iPRO encounters difficulties or if faulty charging units become a major issue. Pod Point acknowledges this in the prospectus, noting that they have thus far not experienced any significant problems in their relationship with iPRO. To mitigate this reliance on one single supplier, Pod Point says it is exploring potential supplies from other manufacturers to diversify its product range, whilst maintaining the relationship with iPRO. The supply agreement with iPRO includes a 12 month warranty under which they are responsible for the cost of repair or replacements.
The hardware is one part of the equation, the software and the Pod Point app is another crucial part of the service. The app is used to monitor charge activity and an account is needed for the public charging network. The Android app has over 100,000 installs with a rating of 3.2 out of 5. It seems to get mixed reviews, but it is perhaps a good sign that Pod Point appears to be quite reactive to comments from users. Reviews on the Apple App Store are even less complementary, with 2.2 stars out of 5, some describing the app as “terrible” and “glitchy”. Again, there appears to be responses from the software developer. But overall, with a product that is predicated on the use of new battery technology for vehicles, it shows poor performance that the app can’t keep up. There was also a worrying article by consumer watchdog Which earlier this month, signalling a potential data breach, putting customers data at risk. Pod Point said this has been resolved, but it raises an important question about the quality and security of apps associated to charging equipment. They need to have basic levels of functionality and not fall prey to hackers, otherwise this risks undermining confidence in the product as a whole. As such, it is suitable and appropriate that some £20m of the IPO funds is earmarked for software development. The company has more than 300 full time employees, including in-house software and hardware developers.
Pod Point has installed 396 charge points at Tesco sites, for which it retains ownership and makes revenue from the hardware. It is rolling-out chargers for Lidl, selling the chargers to the supermarket and making fees as an asset operator, invoicing £1.3m in the six months ending June 2021.
It has other commercial customers including Apcoa parking, as well as installations at destinations including Chester Zoo, Warner Brothers Studio Tour and Bristol Airport. And has referral agreements with car manufacturers including Audi, Jaguar Land Rover, Nissan, Peugeot, Volkswagen and Hyundai.
Installing charge points for new property developments could be a lucrative area of the business and Pod Point is selling home charging units to Barratt Homes and Bellway Homes, who target EV charging points in 50% of new homes by 2023. Bellway sold over 10,000 homes in the 2021 financial year.
As we’ve seen from a general look at the charging market, there are a number of companies operating public networks, home chargers and business installations. For home charging, Pod Point considers its main competitors to be:
Ohme is considered a small company under UK accountancy regulations since it probably generates turnover of less than £10.2m. It has an existing charge, according to Companies House, for financing from MarketFinance.
Wallbox is listed on the New York Stock Exchange and announced third quarter results with revenue of $55m for the first nine months of 2021 and full year guidance of $79mm, so far selling 66,000 units globally in 2021. The Dutch incorporated company with headquarters in Barcelona came to public markets in October through a combination with a SPAC.
Andersen is operated by Muller EV, which has received investment from Mobeus, a company running UK Venture Capital Trusts. Andersen caters for the high end, premium end of the home charging market, differentiating itself by the quality of build and different aesthetic options, including wood and colours including Ruby and Stanton Green.
NewMotion is a part of Shell operating under a standalone brand, aside from Ubitricity. NewMotion offers a model called Home Fast, and is also offering services to car manufacturers, leasing companies and businesses.
myEnergi claims it sells the best selling British-made solar charger that can connect to your own renewable energy source. It has subsidiaries in Europe, but doesn’t yet appear to have received any outside investment, apart from financing from HSBC, as per filings on Companies House.
For workplace charging, Pod Point outlines the following competitors, which it has sourced via the government’s CMA Market Study:
Alfen is a company founded in the Netherlands and besides EV charging, it supplies transformer substations and energy storage systems. As well as chargers for businesses, it also provides home chargers and public areas. It is listed on the Euronext and had revenues for EV charging of €25.2m in the third quarter of this year. EV charging revenues were up 123% on the same quarter in 2020. Alfen currently has a market cap of about €1.8bn.
EO Charging offers both home, workplace and business charging, and in fact boasts some of the same partners as Pod Point, such as Tesco. The UK company has a distribution network spanning 30 countries and plans to become a US-listed company through a combination with a SPAC. EO says it hit $22m of revenues in 2020, according to the investor presentation, and expects $33m of revenue in 2021.
EVBox competes on all the different EV charging market segments and is a subsidiary of French utility company Engie. It had planned to go public through a combination with a US-based SPAC, although Engie will retain a 40% shareholdering, according to the investor presentation. Revenue for 2020 was €72m-€75m, rising to an expected €120m in 2021. However, there’s a potential stumbling block as the SPAC deal seems to have been delayed, SEC filings detail, with a review of certain accountancy issues.
En-route public charging is a market hotly contested by the following providers:
- BP Pulse
- Electric Highway
We’ve already mentioned some of these. Ionity is interesting given that it is a joint venture between BMW, Ford, Hyundai, Mercedes-Benz and Volkswagen, representing another way in which EVs are shaking up the automotive industry. Car manufacturers never previously had a presence at filling stations. Ionity appears to have relationships with other traditional petrol retailers such as Avia, Eni and Q8. This network is leveraging the idea of having the exact type of chargers suitable for your vehicle. Although I’m not sure if this is really that big a selling point, since as long as you match the connector and maximum charge your vehicle will accept, then there seems no need to identify a specific charging network on anything other than cost. The network has a pay-as-you-go offering and membership for €17.99 per month, with charges of €0.79 and €0.35 respectively. As well as 150kW chargers, it is also offering the newer 350kW equipment, which promises to significantly bring now charging times. Ionity is expanding across Europe, with some 400 charging stations along major European highways.
Osprey says it is building 150 high-powered charging hubs across the UK, with a total of 1,500 charging sockets. It headlines £75m of investment and claims to be one of the UK’s largest and fastest growing networks, using equipment from Finnish manufacturer Kempower. Osprey has shareholders including Cube Infrastructure, Investec, Syndicate Room and banker Maurice Hochschild.
I realise I’ve meandered somewhat in this post, exploring the UK public charging network landscape, looking more specifically at Pod Point and taking a glance at some of the competitors referenced in the prospectus. Before wrapping this up with some final thoughts about Pod Point I want to go through some of the major participants the prospectus outlines, we’ve already mentioned almost all of them, except for ChargePoint and Zaptec. I’m reproducing some of the elements from the prospectus and supplementing it with other information I’ve sourced in the following table:
|Pod Point||BP Pulse||EVBox||ChargePoint||Wallbox||Zaptec||Alfen|
|Market||UK, Norway||UK, Germany, China||Europe||Europe, North America||Europe, North America, China||Nordics||Europe|
|Installed base||114,000||58,000||250,000||115,000+||100,000 (66,000 in 2021)||37,000||100,000|
|Business Model||Install, own and operate||Install, own and operate||Install, own and operate||Install||Manufacturer||Manufacturer||Manufacturer|
|Route to market||Whole ecosystem||Whole ecosystem||Home, work, destination, fleet||Whole ecosystem||Whole ecosystem||Home||Home, work, destination|
|Revenue||£26.5m (6 months 2021)||£16.4m (Pod Point estimate)||c.$73.5m (SPAC presentation)||c.$230m (Q2 full year guidance)||$79m (2021 guidance)||£11.2m for Q3, £25.4m year to date||€25.2m for Q3.|
Globally, Pod Point has some serious competitors with ChargePoint leading the charge, Wallbox coming in a close second, with Zaptec and Alfen both ramping up significant revenues. Zaptec is operating in a region which has seen significant EV takeup and countries such as Norway are much further along in adoption compared to other countries. Alfen is worth a look, since it doesn’t just focus on EV charging, but is working on hardware encompassing the whole idea of the smart grid. I don’t really trust the revenue figures for BP Pulse, and on a recent conference call BP executives sounded bullish on their prospects. I’m a little unsure about the revenue figures for EVBox, since there’s been some question over them in terms of the SPAC deal. I’ve missed off Tritium here, who are also expected to do a SPAC deal, and Delta, which is a Taiwan-based multinational with interests across a number of industries.
Of the listed entities, market capitalisations are as follows (sourced through the FT):
- ChargePoint: $8.65bn
- Wallbox: $2.67bn
- Zaptec: $542m
- Alfen $2.15bn
At IPO price Pod Point has a market cap of approximately $472m, leading us to a rough estimation of the price to sales:
|Market cap ($)||472m||8.65bn||2.67bn||542m|
|Full year revenue estimate ($)||71m (H1 x 2)||230m||79m||60m (Q3 x 4)|
We’ve made some very big assumptions about stretching Pod Point and Zaptec’s revenues over the full year. Nevertheless, we can quickly see the big difference in valuations for the US-listed companies and those on European stock exchanges. Pod Point has the most modest valuation, but it is also the new kid on the block, having just come to market.
I’d already decided to buy Pod Point stock before writing this post, after skimming the prospectus. I think it has a solid chances of maintaining its position and becoming a significant player in the UK charging market. It spans different areas of the market, and despite being up against some deep-pocketed competitors, such as BP, it is also has the backing of EDF. There are challenges to being unable to leverage an existing property portfolio of petrol forecourts for en-route charging, and facing a network of car manufacturers such as Ionity, who can lock their customers into the network. But existing relationships with car dealers – who help push their chargers when it is most important to customers, when they’re in the market for a home charging solution – could be a key to the company’s success.
The EV charging ecosystem turns the traditional fuelling infrastructure on its head, and although I’ve not touched at all on the estimated demand for chargers (since I mostly believe a considerable increase in demand is a foregone conclusion), creating charging infrastructure for businesses, local authorities and destinations, is also a vital segment for Pod Point. We’ve seen that the company is working on establishing those relationships, but it appears the juicest part of the business comes from home installations. Here, Pod Point is really acting as a reseller, and therefore can quickly add value, utilising the skills and experience it has amassed over more than a decade. But not manufacturing the chargers themself means it is reliant on suppliers, who have the potential to add risk when installations don’t happen in a timely fashion or repairs aren’t carried out.
It is telling that the EV charging market is going through a phase of consolidation over the past year to two, with start-ups being bought out by big established corporations, public offerings and SPAC deals. The involvement of oil multinationals, energy companies and car manufacturers is noticeable, but not not really surprising. Electricity is a complementary good for car manufacturers, so for the EV revolution, it makes sense for manufacturers to want to try and control an extra piece of the pie. Similarly for energy companies attempting to get a chunk of the downstream supply, while for oil multinationals, this is clearly about trying to cave out a future, as fossils fuels are consigned to the past.
Exploring Pod Point’s initial offering has given me the opportunity to investigate other companies in the EV charging market, and I think there are a few other contenders who could be worth looking at for future investment. It feels like time is of the essence to try and pick some potential winners as this market expands and some players get bigger, and others run out of battery.
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