Previous Submission

Charging Towards Change: The Future of Transportation

Next Submission

ChargePoint is helping catalyze the adoption of electric vehicles by creating world’s largest network of electric vehicle (EV) charging stations and transforming the future of transportation.

ChargePoint operates the world’s largest network of electric vehicle (EV) charging stations, using its platform to connect EV drivers with EV charging station owners.

The EV market is growing rapidly and according to most projections it will continue this trajectory. However, EVs still face significant barriers to growth. One of the most perplexing is the chicken-and-egg problem of EV charging infrastructure; to buy an EV consumers must be confident that they will be able to charge their EV when and where they need to, but to invest in EV charging infrastructure the investors must be confident that there is substantial demand. Luckily, ChargePoint has created a platform, with both hardware and the software components, that powers a comprehensive network of charging stations to help resolve this tension.

The ChargePoint platform has two primary players, charging station owners and drivers.

ChargePoint sells charging station hardware to a wide variety of business types (retailers, workplaces, hospitals, cities, etc) instilling that “EV charging [is] good for any business.” ChargePoint creates value for owners by installing EV charging stations to help companies attract customers, tenants, or employees, increase property value and duration of tenancy, and establish brand around green leadership. ChargePoint creates additional value with the software and network, helping owners manage energy use, encourage efficient use of charging stations, control pricing, and understand energy patterns and greenhouse gas reductions. ChargePoint captures value from the owners in three ways (1) selling the charging station hardware, (2) the cloud-based software services, and (3) other services such as maintenance and repair, and 24/7 system support. Currently most of the revenue is from hardware sales, but ChargePoint estimates that the recurring revenue from the software and services will outpace hardware sales, especially as the hardware is commoditized. In fact, ChargePoint software and services are open to any charging infrastructure, though to date most customers have selected to use ChargePoint’s proprietary hardware.

ChargePoint offers its drivers the largest network of EV charging stations in the world, allowing drivers to charge on-the-go.  Drivers can use a mobile app to locate the nearest charging station, determine if it is available for use, and sign up for a wait list, if necessary, get notified when the car is fully charged, pay for charging, and many other user-friendly features. Owners set the charging rates (though ChargePoint provides rate setting consulting services). ChargePoint facilitates the transfer payment from drivers to owners. ChargePoint does not collect any revenue from the drivers.

Currently ChargePoint holds approximately 70% market share in the EV charging infrastructure in the United States.  They achieved this position in four ways. First, their unique business model of selling the hardware to businesses (rather than owning it themselves) reduces risks to attract investors. Second, ChargePoint was founded in 2007 in the nascence of the EV industry, achieving a strong first mover advantage. Third, the ChargePoint product, including both the hardware and the software, is superior to its competition. And fourth, the drivers provide a strong network effect. Strong driver demand for ChargePoint charging infrastructure, thanks to the high-quality customer experience, has increased the rate of charging station installation by owners, attracting more drivers and creating a virtuous cycle. However, if competitors can match ChargePoint’s product quality and increase market share, driver multihoming may become an issue, as drivers may charge at the closest available charging station. ChargePoint should experiments with methods to increase the stickiness of their network. However, these strong network effects are primarily local, and certainly do not extend across the Atlantic. ChargePoint has recently expanded to Europe where they have 0% market share and no brand recognition. They are struggling to get traction in a competitive market.

In addition, ChargePoint should consider how it is going to modify its product offerings to adapt to the needs of EV fleets, which have different charging needs. For example, fleets are more price sensitive, and have more complex logistics. ChargePoint has the opportunity to harness the strong network effects of fleets, which will be stronger than individual drivers.  An entire national fleet is most likely to use the same platform to streamline operations and logistics, and to collect and analyze data in a unified system. Fleets are the future of transportation, and ChargePoint must continue to evolve create a product that meets unique fleet needs.

7 thoughts on “Charging Towards Change: The Future of Transportation

  1. I find the issue of multi-homing interesting here. Assuming that all EV’s have the same input for charging in the future, I find it difficult to imagine a scenario where this does not become a commoditized offering in the long run. Of course, ChargePoint might be able to sustain a large value capture for a long time given the nascency of the industry.

    I am intrigued that ChargePoint is generating sales through a variety of different business types and proving the economics of this hardware in different locations. I don’t know much about the industry but I thought that these chargers were mostly being implemented at gas stations.

    I think this is a worthwhile business and will do a lot of good for the world as it will continue to reduce the hesitancy of consumers to purchase fully electric vehicles!

  2. I’m really curious as to how the risk of traffic is being shared between ChargePoint and the real estate owners. The same chicken and egg risk that would have been initially ChargePoint’s, seems to have been transferred to real estate owners. Does installing charging stations though,”help companies attract customers, tenants, or employees, increase property value and duration of tenancy” ? It’s possible that real estate owners have a higher cost base and thus more willing to take a small risk in purchasing hardware, for potentially a much large upside.

    The second question I would have is on the multi-homing front. A good strategy would be to tie up with automakers and try and ensure a proprietary interface, thus preventing multi-homing options.

  3. Great Post! Local and global network effects seem to play a key role here. Local from the driver’s perspective because you care about having charging stations along your most frequent routes and not necessarily three towns away.
    Global from the perspective of the EV OEM who has to make their cars compatible with different charging systems. This will be particularly true for fleet owners.

  4. Thank you MMidd for the article! Do you think that EV charging platforms are a winner takes all strategy? If yes, do you believe that ChargePoint’s platform will win? I have my doubts!
    For EV, there are a few things that are important in EV’s charging technology, such as convenience, speed, and efficiency. And in that line, Tesla’s Supercharger network has an edge in almost all dimensions! Tesla’s current superchargers will give you in 20-30 minutes over 200 miles of charge – enough for 3 hours on the road[1]. A ChargePoint DC Fast charger, will charge vehicles “quickly” at a rate of 40 miles of range in 15-30 minutes [2]. Also, the merger of Tesla and SolarCity might suggest that maybe Tesla is in the game for providing an overall solar solution to its clients: solar rooftops, EV charging in-house and the Tesla car! And why not think of the AI for smart houses that will optimize energy consumption overall. If this were the case I am not sure of ChargePoint’s competitive advantage here.
    I believe that local network effect are really strong locally, and that current multihoming is providing opportunities for many players to emerge, but if solar decentralization and profit pool will tend to be concentrated in the charging network, then I can imagine players like Tesla will start competing more intensely.

    [1] https://electrek.co/2016/09/14/the-very-good-chevy-bolt-reviews-are-in-but-everyone-forgot-to-ask-the-most-important-question/
    [2] https://na.chargepoint.com/faqs#F30

  5. Thank you MMidd for the article! Do you think that EV charging platforms are a winner takes all strategy? If yes, do you believe that ChargePoint’s platform will win? I have my doubts!
    There are a few things that are important for EV’s charging technology, such as convenience, speed, and efficiency. And in that line, Tesla’s Supercharger network has an edge in almost all dimensions! Tesla’s current superchargers will give you in 20-30 minutes over 200 miles of charge – enough for 3 hours on the road[1]. A ChargePoint DC Fast charger, will charge vehicles “quickly” at a rate of 40 miles of range in 15-30 minutes [2]. Also, the merger of Tesla and SolarCity might suggest that maybe Tesla is in the game for providing an overall solar solution to its clients: solar rooftops, EV charging in-house and the Tesla car! And why not think of the AI for smart houses that will optimize energy consumption overall. If this was the case I am not sure of ChargePoint’s competitive advantage here.
    I believe that local network effects are really strong, and that current multihoming is providing opportunities for many players to emerge, but if solar decentralization profit pool will concentrate in the charging network, then I can imagine players like Tesla will start competing more intensely.

    [1] https://electrek.co/2016/09/14/the-very-good-chevy-bolt-reviews-are-in-but-everyone-forgot-to-ask-the-most-important-question/
    [2] https://na.chargepoint.com/faqs#F30

  6. Great post! I agree with some of the comments earlier that partnerships with automakers might make it more attractive for car owners themselves, as systems would be more integrated and drivers could perhaps earn special “perks” if they charge their cars in designated places. Another way to diversify its business lines and protect itself from commoditization is perhaps investing in building better car batteries or partner with other battery makers. This could significantly improve the time that people would have to wait to charge the cars as they could just swap out their car drained battery packs for new ones at a one-time cost, or subscription-based model.

  7. As you and some of the other posts alluded to, I think there is a risk of revenue dependency on selling hardware. At some point, the hardware will become commoditized and drive down prices. I wonder how ChargePoint thinks about the alternative: giving the hardware away or free in order to rapidly grow the network and generating revenue by sharing charging fees or long-term service contracts. Thanks for sharing.

Leave a comment