The transition to battery-electric vehicles (BEVs) received a significant boost in November with the passing of the $1 trillion-plus U.S. infrastructure bill. The package earmarks $7.5 billion for the creation of a nationwide network of 500,000 public vehicle-charging points by 2030. This will help to quell the “range anxiety” that has limited the appeal of BEVs among new car buyers—with inadequate, slow charging widely believed to be the largest deterrent to adoption.
The federal commitment may act as a green light for investment in the charging business, which has been held back by lackluster BEV sales. Now, with this chicken-and-egg standoff coming to an end, we may see a flurry of M&A activity as the EV charging business finally takes off.
"It is estimated that the U.S. has just four percent of the charging stations it will need by 2040 to meet anticipated EV demands,"
creating substantial business opportunities in this space. It will take investments of between $22 billion and $35 billion to build charging infrastructure across U.S. metropolitan areas.1
The BEV charging market consists of three major segments: public charging stations, used by drivers while traveling or if they don’t have a charging facility at home; in-depot captive charging stations for fleets; and home-charging ports, used while a car is parked at a residence. All three markets are poised for rapid growth, in line with a predicted increase in BEV sales. Automotive executives expect BEVs to comprise half the auto market in the U.S., China, Japan, and Western Europe by 2030.2
Given the rapid evolution of BEV technology, interested companies should accelerate their plans to enter the market for charging—while also carefully strategizing and weighing their options. Many may join forces to earn a return on investment: several players are already forming corporate alliances to share resources and lower risk.
Some automakers are considering direct investments in charging infrastructure: for example, Electrify America, owned by VW Group, is looking to spend $2 billion on BEV charging projects. Oil companies have gas stations that could be used for charging, while utilities companies see an opportunity to grow revenue in this market, too. PG&E has plans to install 7,500 chargers at apartment buildings and workplaces across California, for instance.
There are many startups entering the market with different products, from infrastructure to charging hardware. ChargePoint, a leader in so-called Level 2 installations, which cost less than $1,000 per unit and are used as home-charging ports, has received funding from energy giant Chevron. Other relevant startups include EVgo, Blink, and EVBox.
In the first half of 2021, approximately 13 EV-related special-purpose acquisition companies (SPACs) were completed, raising $7.5 billion for BEV makers and companies involved in charging. There were several more SPAC deals in the second half of the year, including Tritium and Volta.3 In October, Wallbox merged with SPAC Kensington Capital Acquisition, raising around $330 million, including a $100 million fully committed PIPE, anchored by Janus Henderson Investors, Luxor Capital, Cathey Innovation, and Kensington Capital Partners.4 In addition, several companies have been acquired by oil firms or funded by them, such as BP’s recent acquisition of EV fleet-charging provider AMPLY Power.
Many more M&A deals are likely to follow as EVs move into higher gears. It promises to be a rich market for investors as government infrastructure spending ramps up in the years ahead.
- Source: KPMG internal report: EV landscape preliminary research
- Source: KPMG, 22nd Global Automotive Executive Survey 2021, “Industry leaders foresee dramatic changes”
- Source: Colin McKerracher, “Hyperdrive Daily: The EV SPAC boom could have been even bigger,” Blooomberg.com, July 6, 2021
- Source: “Smart charging and energy solutions provider Wallbox to list on NYSE through merger with Kensington Capital Acquisition Corp. II,” Kensington Capital Acquisition Corp. II media release, June 09, 2021