The Expanding Electric Vehicle Charging Infrastructure

Shell’s ambitious initiative to establish 500,000 electric charging stations within a four-year timeframe signifies a substantial surge in the EV charging sector. This growth has attracted significant investment and spurred several companies to pursue public offerings to secure the necessary funding for meeting escalating demand.

Recent Market Activity & SPACs

Since the start of the year, three companies have merged with special purpose acquisition vehicles (SPACs), paving their way toward becoming publicly listed entities. Furthermore, another firm has secured tens of millions in funding from prominent private equity investors, bolstering its path to commercial success.

The trend of SPAC mergers began in September when ChargePoint, an electric vehicle charging network, reached an agreement to merge with Switchback Energy Acquisition Corporation. This merger established a market valuation of $2.4 billion for the company, with its public debut occurring on February 16th on the New York Stock Exchange.

In January, EVgo, a company specializing in the ownership and operation of electric vehicle charging infrastructure, entered into an agreement to merge with Climate Change Crisis Real Impact I Acquisition. The resulting valuation was $2.6 billion, representing a considerable achievement for LS Power, EVgo’s privately held owner.

LS Power and EVgo’s management, currently holding 100% ownership, will transfer all equity into the transaction. Upon completion in the second quarter, they will collectively maintain a 74% stake in the newly formed company.

Volta Industries followed suit this month, agreeing to merge with Tortoise Acquisition II. This union would assign a $1.4 billion valuation to the charging company, named in honor of battery inventor Alessandro Volta. The announcement led to a 31.9% increase in the SPAC’s share price, reaching $17.01, and currently trades around $15 per share.

Private Equity Investment

Private equity firms are also actively participating in this expansion. Riverstone Holdings, a leading energy investment firm, has invested in FreeWire, which subsequently raised $50 million in a new funding round earlier this year.

A Shift in Investment Focus

“Investors are recognizing the changing landscape and reallocating capital accordingly,” stated Arcady Sosinov, chief executive of FreeWire, in a recent interview. “There’s a movement away from traditional investments in oil and gas and utilities, prompting a search for alternative opportunities.”

Sosinov continued, “This represents the most significant growth opportunity of the next decade.”

FreeWire currently collaborates with BP, but its charging technology is adaptable for deployment in diverse locations such as fast food restaurants, post offices, and grocery stores – places where individuals spend between 20 minutes and an hour.

With the Biden administration’s commitment to increasing EV adoption within federal fleets, post offices present a particularly promising avenue for charging networks, according to Sosinov.

Long-Term Growth Potential

“The attractiveness of electrifying mobility lies in the certainty of its occurrence, not the uncertainty of its implementation,” explained Robert Tichio, a partner at Riverstone responsible for the firm’s ESG initiatives. “Current penetration rates are remarkably low when compared to countries like Norway or those in Northern Europe, which have already surpassed double-digit percentages.”

A recent Super Bowl advertisement by GM, featuring Will Farrell, highlighted Norway’s advanced position in electric vehicle adoption.

“The capital requirements for the electrification of transportation are projected to reach approximately three-quarters of a trillion dollars annually,” Tichio noted. “We’ve reached a pivotal moment where collective political, social, and economic consensus has solidified, something that wasn’t achievable just 18 months ago.”

Shell’s Strategic Moves

Shell already possesses existing electric vehicle charging infrastructure deployed in select markets. In 2019, the company acquired Greenlots, a Los Angeles-based EV charging developer.

Furthermore, Shell expanded its presence in the electric vehicle charging sector earlier this year with the acquisition of Ubitricity in the U.K.

“As customer needs evolve, we will increasingly provide a diverse range of alternative energy sources, supported by digital technologies, to offer choice and flexibility,” stated Mark Gainsborough, executive vice president, New Energies for Shell. “This investment in meeting the low-carbon energy needs of US drivers is part of our broader efforts to create a better future, and a step towards making EV charging more accessible and appealing to utilities, businesses, and communities.”