Is it just me, or does it seem like electric vehicles (EVs) are all the rage these days? Everywhere I turn, it’s all about EVs and reducing our dependence on fossil fuels and combustion engines . . . and the Biden administration seems to be the head of the cheer squad, recently announcing a lofty goal of half of all new cars being sold in the U.S. being zero emissions vehicles by the year 2030.
Considering how many people have cars, that seems incredibly ambitious. And they’re not wrong. Market tracker LMC Automotive is already expecting EVs to make up 34.2% of new vehicle sales in the U.S. by 2030.
Granted, only about 3 to 4% of sales in the U.S. in 2021 were EVs, but with gas prices going the way they are, it could very well happen. And the Biden administration is pushing the idea hard, even hoping to eventually secure a tax credit of anywhere from $7,500 to $12,500 for people who buy an EV.
He has stated that he wants to help ensure that America is a world leader in EV sales, which up until now, has been a title held by China. Part of his recent infrastructure bill includes funding to facilitate this goal. He has said that he wants to make sure that no matter where a person lives, charging their EV will be quick and convenient and that the nation is pushing to build a reliable, convenient, and equitable public charging network.
So far, things are pushing along nicely. In fact, things are ahead of schedule according to studies. Biden is also pushing for domestic production… this has VCs pretty excited. Funding for VC-backed electric vehicle startups was about $19 billion last year, more than double 2020s numbers, with companies like Rivian (RIVN) raising $2.65 billion in early 2021 and another $2.5 billion in the later part of the year. As governments mandate and incentivize the space, the amount of money pouring into EV companies is growing exponentially.
Say Farewell To “Gas” Stations?
Not surprisingly, the big boys of the auto industry are getting involved. For instance, Ford and GM are developing their own EVs and dumping money into startups in and around the space.
But they’re going to need more efficient charging systems. Foreign manufacturers want in too. An Australian supplier of fast chargers to ChargePoint, Tritium, is looking to build a factory in Tennessee that could produce up to 30,000 DC fast chargers per year and Siemens is looking to expand its US footprint to provide up to 1 million chargers a year by 2025.
We’ve already talked a little bit about Biden’s $1.2 trillion infrastructure bill, so you’re familiar with the funding from that package going to this space, but let’s dig a little deeper and find out if we’re about to undergo another major evolution in what it means to travel in America… are we about to lose our gas stations?
Over the past half decade, nearly every state has been working out the logistics of alternative fuel corridors, and Biden’s plans in the infrastructure law (which allocates $7.5 billion to build a network of EV chargers) will be building on those frameworks. His plan calls for EV chargers every 50 miles near highways and high-traffic corridors with funds available to states to build out electric vehicle charging stations over the next five years, with some strings attached.
The stations must be capable of charging at least four cars at 150kw at once with at least 600kw of charging capacity, must make sure that charging stations are reliable (at least one charger per station needs to be working more than 97% of the time), must be open to the public, and must be designed so they can be easily expanded and upgraded.
The program also encourages that charging sites be constructed near travel centers, convenience stores, visitor centers, or restaurants. And to get credit, states will need to install chargers that use the Combined Charging System (CCS), to ensure that different kinds of charging ports are accommodated; although, there are exceptions.Once states have completed the Interstate charging network, they can apply for grants to fill in gaps elsewhere and exceptions to the 50-mile interval requirement will be made on a case-by-case basis.
Existing Networks Will Adapt
As far as the question of losing our gas stations, existing networks will likely be allies, helping to foster adoption and usher in a new type of experience moving forward. For instance, oil giant Shell (SHEL) is already working on converting some gas stations into EV-only charging hubs with free WiFi and timber canopies overlayed with solar panels. You can find one such converted station in London, but we can reasonably expect to see more such conversions here in America, and around the world, as time goes on.
The updated “gas station,” which opened in January, features nine 175kw charge points, a supermarket, a coffee shop, and two regular old parking spaces. Shell hopes that customers will be able to shop, grab a coffee, and enjoy the free WiFi while they patiently wait for their cars to charge.
So far, they seem to be enjoying it. While they have admitted it isn’t as quick as pumping gas (it takes about 20 minutes to get from zero to 50% charge), the price is only a fraction of what it costs to pump gas and that means that people don’t mind planning their time a bit more carefully. They are also citing the ease of payment, which is seamless with an app on their phone, the tap of a contactless payment card, or the quick scan of a QR code.
Where The IPOs Are
As mentioned earlier, RIVN raked in the cash in 2021. Why does this startup matter? Because it’s backed by Amazon and Ford, and those are pretty big names. It turned out to be one of the biggest IPOs of the year, with a market valuation of $86 billion. Although, that’s only a fraction of Tesla, but that’s to be expected… the point is, there are others jumping into the space and there’s plenty of room to grow. Amazon’s 20% stake is now worth about $17 billion, and Ford’s 12% stake is valued at over $10 billion.
I like RIVN. It’s down 65% from its opening day so expectations have dropped a lot. And it’s still working to execute ambitious business plans.
Another company that never really got a shot on Wall Street is EVgo (EVGO), one of the nation’s largest EV charging firms. EVgo has made deals with big-name automakers and has forecasted 100 million battery electric vehicles on the road by 2040. The company’s CEO Cathy Zoi is all-in, saying that the electrification of transportation is no longer a matter of “if”, but a matter of “how fast.”
EVGO went public back in July and got as high as $19 before the market turned on nearly all new stocks. Here at $12, it’s interesting.