Three stocks that will profit from electric-vehicle growth
Professional investor Konrad Sippel of Solactive, index provider for the Electric Vehicle Charging Infrastructure ETF, picks three firms solving the electric-vehicle charging challenge.
The 2021 Glasgow climate summit saw 24 countries pledge an end-date to new sales of internal-combustion engined cars. The purchase of electric vehicles is now also being heavily subsidised in many other countries. It’s estimated that 60% of cars sold globally will be electric by 2040, which translates to around 600 million electric vehicles (EV) on roads across the world.
This will make today’s network of petrol stations obsolete and require an entirely new network to support the increasing number of electric vehicles. While carmakers have seen substantial interest from investors, the industry building the infrastructure required to power these vehicles has been largely overlooked. Electric vehicles require charging in three different scenarios: at home, at work and for long-distance travel along the major motorway networks.
Research suggests that the recommended ratio of electric vehicles to public fast-charging points is ten. The United States’ strategic goal of getting 26 million electric vehicles on the road by 2030 should require around 2.6 million public charging outlets. Currently there are only 113,000, so it is no surprise that the US government has pledged $2.5bn towards the expansion of the public charging network. In Europe it is estimated that around three million public charge points will be needed by 2030, compared with only 250,000 today.
This clear demand coupled with heavy government investment and subsidies has created the opportunity for new business models within some of the companies in this sector that are already listed and investable. The three stocks below are all in Solactive’s Electric Vehicle Charging Infrastructure index, which is used by the Electric Vehicle Charging Infrastructure ETF.
The world’s largest network
ChargePoint (NYSE: CHPT) has the largest network of electric-vehicle charging stations in the world. It has a unique business model that provides construction services and optimises the charging workflow via an integrated network, but does not actually own the stations themselves. Its network optimises interoperability between stations, power management, and pricing strategy for the benefit of users and providers alike.
Putting power back in the grid
Wallbox (NYSE: WBX) is an EV charging equipment manufacturer in Europe. Besides providing wall-mounted chargers for homes, it also offers direct current charging that can be used for public fast-charging stations. The company has developed a unique bi-directional charging technology, which allows the EV to discharge power to the owner’s home or back to the grid. This also enables the EV to act as a large battery storage unit for emergency use, power storage for excess solar energy, or if paired with a smart meter to optimise energy costs for households.
A flexible emergency solution
CTEK (Stockholm: CTEK), originally a producer of battery chargers, has also entered the EV charging sector. Apart from manufacturing EV charging stations, accessories and components, the company produces portable EV chargers, benefiting from its expertise in energy storage and portable charging. Its portable EV charger product has a charging power up to 11kw. This compact charger not only provides emergency support for electric vehicles, but also affords flexibility for users who want to use the charger in less urban settings.
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