Will This Keep Elon Musk Up at Night?

Excited About the EV Industry? Read This

With Tesla Inc (NASDAQ:TSLA) stock shooting through the roof, the company’s co-founder and chief executive officer Elon Musk is likely in a good mood. Indeed, as more and more people start embracing electric cars, Tesla stands as the biggest winner.

In 2019, the company delivered about 367,500 vehicles, up 50% from the prior year. (Source: “Tesla Q4 2019 Vehicle Production & Deliveries,” Tesla Inc, January 3, 2020.)

Now, one of the main things that makes people think twice about getting an electric vehicle (EV) is the fear that the battery will run out of power before it can be recharged, otherwise known as “range anxiety.” But Tesla has been doing a good job at addressing that concern.

According to Autotrader’s ranking of electric cars that are on sale in 2020 by range, the top three models are all made by Tesla. (Source: “The Electric Vehicles With the Most Range for 2020,” Autotrader, last accessed February 21, 2020.)

But even the longest-range EV will run out of battery power after a few hundred miles. If you are just commuting and can plug in your car at work or at home, there will be no problem. If you plan to do a long road trip in an electric car, though, you’ll need to find places to charge it on the trip.

The good news is, Elon Musk has thought of that. In fact, one of the appeals of buying a Tesla is to use the company’s “Supercharger” network. The network of fast-charging stations was first introduced in 2012. Today, there are about 1,800 Tesla Supercharger locations worldwide, consisting of about 15,900 individual Supercharger stalls. (Source: “Charts,” Supercharge.info, last accessed February 24, 2020.)

At first, Tesla Supercharger was free to use for Tesla customers. Later on, as the company started selling more and more cars, it started charging money for customers to charge their cars on the network, which was not unexpected.

It has been estimated that using a Tesla Supercharger costs about $0.26 per kilowatt hour. I should point out that, for Tesla “Model S” and “Model X” cars ordered before January 15, 2017—or for vehicles that were purchased using a referral code during certain periods—Supercharging is still free. (Source: “An Update to Our Supercharging Program,” Tesla Inc, November 7, 2016.)

The thing is, though, Elon Musk is not the only person who sees the importance of having an EV charging network. In fact, there are already other companies that have built networks of EV charging stations.

For instance, Blink Charging Co (NASDAQ:BLNK) is one of the leading owners and operators of EV charging stations in the United States.

Headquartered in Miami Beach, Florida, Blink Charging started its business in 2009 and now has over 15,000 EV charging stations throughout the country. The company also has a growing presence in Europe, Asia, Israel, the Caribbean, and South America. (Source: “EV Charging Services,” Blink Charging Co, last accessed February 21, 2020.)

Blink Charging has multiple revenue streams. The company makes money by charging electric car drivers to power their cars, by selling EV charging hardware, and by providing network connectivity and payment processing services for its property partners.

With BLNK stock trading around $3.00, the company isn’t really big enough to get the attention of the mainstream financial media. However, Blink Charging Co does have a solid presence in the EV charging industry, as the company now has over 150,000 registered Blink members.

Business has been growing, too. According to the company’s most recent earnings report, Blink Charging generated $764,486 of revenue in the third quarter of 2019, representing a 39.8% increase year-over-year. (Source: “Blink Charging Announces Third Quarter 2019 Financial Results,” Blink Charging Co, November 13, 2019.)

Growth was across the board, as the company’s hardware sales for the quarter surged 210% year-over-year and its network fee revenue for the quarter increased 44% year-over-year.

Mind you, Blink is not alone; there are quite a few companies that have been building EV charging stations around the world. But because many EV charging networks are owned by private companies, Wall Street analysts don’t really talk about them.

Analyst Take

At the end of the day, I won’t doubt Tesla’s potential in the EV industry. The company has hands down the largest following among EV enthusiasts, and its production has been ramping up nicely.

My point here is that, as Tesla and other auto manufacturers put more electric cars on the road, the demand for charging stations will see a substantial increase and Tesla won’t be the only one getting a piece of the action. In the long run, big profits could be made by companies that offer expansive EV charging networks.