⚡️ Electric Avenue Vol. 2: Electric Boogaloo

Happy Monday. This is the 2nd Edition of Electric Avenue. And just like the sequel to a great movie, we can only hope & pray that we don`t bomb at the box office and become a meme.

BTW, if someone forwarded this to you, subscribe now to get the next edition directly to your inbox.

Here`s what we have for you today:

1 Pic + 2 Thoughts + 3 Links 

But first, let’s take a look at the EV & Charging stocks movement over the past week:

Most Stocks are down this week, sometimes in the double digits. Except NIO and that could be explained by a slew of good news recently.

The first 200 NIO ET7 sedans are en-route for deliveries in Europe. Also, NIO just opened it`s 2nd battery swap & charging site in Norway, marking another big milestone for the EU expansions of the company. 

Additionally, the U.S. and China just reached a deal that would allow more oversight from U.S. regulators over Chinese companies. Prior to this, the threat of being de-listed from U.S. stock exchanges has loomed over Chinese tech companies such as NIO, Alibaba and Tencent. They were all trading up on Friday.

1 Pic

California finalized new rules this week that ban the sale of conventional gas cars by 2035. Here are the highlights and why it matters beyond just CA:

• Starting in 2026, at least 35% of vehicles sold for a given car manufacturer have to be all-electric, increasing every year up to 100% by 2035.

• In total, the California Air Resourced Board (CARB) expects that the regulation will cut auto emissions by 50% from 2026-2040 when compared to the baseline case.

• There are at least 15 U.S. states that tend to adopt California`s guidelines, representing a total of a around 40% of the U.S. car market.

2 Thoughts

I. Where does the US currently stand on EV market share?

In terms of the 250 million existing cars on American roads, an estimated 1% are currently electric.

In terms of EV Market share amongst new vehicles sold, the US just crossed 5% . According to BloombergNEF, the 5% number marks a critical EV tipping point where technological preferences rapidly flip.

Compare that number to 11% of New Car Sales in Europe, 14% in Germany and a whooping 83% in Norway and we can conclude that Europe is currently still in the lead. 

If the US followed the EV adoption curve of Norway, a total of 25% of American new car sales could be Electric by 2025. This would be just a year prior to the 35% mandate in California taking effect. 

II. The State of Public Charging

When we reported on the Lucid Air 1000mile record last week, we pointed out that 3 out of 3 fast charging stations used for the trip had issues. What wasn`t on our radar at the time was a brewing storm of media attention on the topic, that culminated in several tweets (1, 2) and a Youtube video indicting Electrify America and EvGo for the reliability of their networks. 

This echoes the frustrations a lot of EV drivers experience in their daily interactions with public charging infrastructure that is NOT the Tesla Supercharger network. Just recently, a group of researchers at the University of California, Berkeley published a paper on 3rd party charging network reliability:

• The dataset was based on 657 chargers at 181 stations in the San Francisco Bay Area.

• According to researchers, only 72.5% of the 657 were operational, meaning over a quarter of chargers were not functional.

• Additionally, a random evaluation of 10% of the chargers, approximately 8 days after the first evaluation, demonstrated no overall change in functionality - meaning the operators were unable to fix the issues within a one week timeframe.

• While we are missing similar objective data on the Tesla Supercharger network, anecdotally Tesla drivers seem way happier with their network. During its last shareholder meeting Tesla boasted a 99.96% "uptime" KPI - when analyzing the average number of sites that had at least 50% of charger available throughout the year. This KPI is certainly a bit generous and we`d be interested to see Electrify America or EVGo provide their uptime measured by the same definition.

• Tesla has also started to open their network to non-Tesla vehicles in Europe and is expected to do the same in North America soon. It will be interesting to see how the challenge of providing services to and interoperability with EVs from more than just one brand affect the Supercharger user experience.

3 Links

• NIO`s VPP: Reports from China came in this week about NIO using the batteries in it`s power swap stations to reduce grid load during peak times. A total of 108 swap stations with ~600-700kWh of storage capacity each have participated in load reduction events. China`s summer heat has been stressing the national grid this year. To further help relieve strain on the grid, NIO is also incentivizing users with home charging to execute "reverse swaps". NIO users can receive bonus points if they charge their vehicle battery at home during off-peak times and then swap their full battery for an empty one during peak times in the afternoon.

• Chargers made in America: Australian charger manufacturer Tritium celebrated the opening of its Tennessee factory this week. This marks a 1st step in important onshoring of DCFC manufacturing to reduce lead times in the US. Major players selling chargers in the US market currently all manufacture abroad (ABB - Italy, BTC - Phillipines, Delta - Taiwan, Signet - Korea). Bringing manufacturing to the US will allow these companies to be "Buy America" compliant which could increase eligibility for government funding.

• Chargepoint broken down: The Business Breakdowns podcast recently did an episode on Chargepoint, analyzing their market position in the US and Europe. Highlight include:

  • Chargepoint has an estimated 40% market share in North America and does ~$200M/yr in revenue.

  • They are doing about 25-30% gross margins since they are mainly a hardware business at the moment - hardware provides about 80% of the annual revenue.

  • At the same time, 90% of their revenue still comes from North America - showing the potential they could still realize in Europe, e.g. with their recent acquisition of has.to.be.

Sneak Peek for next week..

After talking about VW`s V2G efforts last week, we`re gonna take a deep dive into the V2G capabilities of a North American OEM next week: Ford.

As the Ford F150 Lightning EV has been delivered to initial customers over the past weeks, more information about it`s Intelligent Backup Power feature has come to light. We`ll reflect on what we`ve learned next week - stay tuned!

Meme of the Week

DISCLAIMER: None of this is financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions.