Tesla’s Charging Network Advantage Persists

A little over a year ago, I wrote an article about a summer road trip to LA in an electric vehicle and the significant charging hassles I experienced during that trip.

I did a very similar trip last weekend when I drove to the University of California, Los Angeles to drop off my daughter for her freshman year of college. We took the same EV but the experience felt completely different. A lot has changed over the last year.

Consumer enthusiasm for EV vehicles has cooled significantly over the last year with more consumers opting for hybrid or plug-in hybrid vehicles. While the pace of growth has declined, the second quarter of 2024 still saw 330,463 EV sales, representing 11.3% growth compared to the second quarter of 2023 and an 8% share of total new cars sold in the U.S.

Tesla (TSLA) has not lost its charging network advantage because the adapters that are needed to let a car like the Ford Mach-E charge at the Tesla supercharger network are in short supply. I have been waiting for mine for many months. However our charging experience this time was relatively painless compared to last year.

The three factors that contributed to this improved experience were:

• booking an Airbnb for our stay that had the option to charge an EV
• specifically picking Electrify America charging locations that had at least six fast chargers
• the free charging that Electrify America was offering through various car manufacturers like Ford and Hyundai appears to have come to an end

Thankfully the location we stopped at in Kettleman City, midway between San Francisco and Los Angeles, had all chargers functioning and we didn’t have to wait. Another location at a mall in Valencia also had nearly a dozen functioning chargers and our wait for a quick 10 minute top-off charge was minimal.

Electrify America and its peers like EVgo (EVGO) and ChargePoint (CHPT) are missing a big opportunity by not building convenience stores around their charging stations. They would have captive customers with anywhere from 30 minutes to an hour to kill. Convenience stores are a big driver of profitability for gas stations. This is one of the reasons Berkshire Hathaway acquired Pilot Travel Centers, also known as Pilot Flying J.

The two public EV charging companies I discussed in my article last year have seen their stock price head in completely different directions. While ChargePoint has seen its stock collapse 71% over the last year, EVgo fared better with a gain of 17%. The stock of EVGO has more than doubled from where it was trading in mid-June. Electrify America is yet to go public.

Looking at EVgo’s income and cash flow statements I can see why the CEO Badar Khan decided to purchase 125,000 shares at an average price of $2.01 on the open market. Revenue continues to grow and free cash flow, while still negative, appears to be heading in the right direction.

We are still very far from an all electric economy. Oil & gas will continue to have a role to play to fulfill our energy needs for several years or even decades but it would be worthwhile to pay attention to the emerging players in this nascent industry.

Disclaimer: I have no positions in any of the companies discussed in this article. Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.