Tortoise Acquisition (SNPR) is targeting EV charging company Volta Charging. You’re most likely well aware of them through the plethora of recent SPAC mergers.
They all do only one thing, charge your car. I mean that’s all they can do right? Well today’s deep dive is on Volta Charging, in short these guys have found, in my opinion, a superior business model that provides three strong streams of revenue.
Almost all EV charging station companies have one thing in common — either a company hosting the chargers has to pay for them or EV drivers who use them have to pay for them. Volta does things differently. It uses the Google method, or the cable TV method — the station is free to use, while advertisers pay to get their product or story in front of you. Volta says on its website that customers on average spend $54 per visit (at locations where the charging points were installed) and they stay there for around 92 minutes.
Whilst being free to use for the EV owner, there is no cost for the business owner to install a Volta Charger either. This is a key point as it drives an incentive for businesses to choose Volta over competitors like Chargepoint, where they would have to purchase it at their own capital expense. The free charging that Volta provides can attract previously unwilling customers towards a business without the business having to be at expense, which occurs in other free charging offerings.
This alongside the unit economics that are second in revenue to only EVGo provide a competitive advantage that will help them take market share for retail charging. One thing to note is that the payback period per unit averages to 3.6 years.
Volta are the first to provide free DC fast charging (L3) in North America  for up to 30 minutes. If this wasn’t good enough, then after those 30 minutes are up the price per kwH is $0.26 which is even cheaper than Electrify America on it’s membership plan ($0.31 with, $0.43 without). This is followed by free L2 charging for up to 3 hours (depending on the location). Volta’s $0.26 per kWh L3 Charging is cheaper than Blink’s L2 Charging which costs $0.39 – $0.79, in fact the level 3 charging per kWh is cheaper than that of Tesla, EVbox, EVGo and Electrify America.
- Volta has the highest utilization of any EV charging network in the United States.
- Volta charging stations already deliver IRR’s in the mid 40%. As they grow significantly and the network scales, economics should improve even more as EV charging demand increases.
- Volta currently has over 450 sites, 1,500 stations and 3,000 screens installed – and a further 470 sites, 1,100 stations and 2,200 screens contracted and in construction. In addition to this footprint, Volta has developed a pipeline of over 5,000 sites, 10,000 stations and 20,000 screens.
- Volta does not manufacture their own chargers.
Drivers get free charging, and businesses get more business.
The reason why Volta undercuts its competition is through it’s ad based revenue. The company operates a network of free charging stations through brand sponsorship that wants to reach highly coveted audiences and local brick and mortar businesses to attract new customers; benefiting brands, consumers, and real-estate locations by providing valuable advertising space to businesses and free charging to drivers.
They are strategically placed in front of essential businesses such as grocery stores, pharmacies, banks and hospitals. Volta’s EV network supports a larger consumer trend towards vehicle electrification by placing fueling stations in parking lots directly where consumers already spend their time and money.
Volta has already signed agreements with retail corporations such as Albertsons, Giant Food, Regency Centers, Wegmans, Amazon, Walgreens, Stop&Shop, Saks Fifth Avenue, and Topgol. Advertisers have included Netflix, Facebook, Smartwater, Chase, Starbucks, Hulu, Nestlé, Polestar, Porsche, and Unilever. Some of these agreements are locked in with 10 year contracts.
These agreements also encourage the upkeep and maintenance of Volta Chargers in order to keep the integrity of the brand image for not only Volta but the advertiser they’re representing. This cannot be said for other free charging solutions whose landlords see no incentive in maintaining something they themselves do not gain profit from. Ad-supported growth is a demonstrated and PROVEN business model.
Data, behavior and networking
The final stream of revenue is through behavioral data that’s collected relative to the location, this can include length of stay, model of car, stores nearby, frequency of visits, etc. This data can then be sold off to companies who require the customer data whilst also helping to improve Volta’s own predictive algorithm which allows them to estimate the current and future demand for certain locations.
A bear case to consider
The first and most obvious one is the fact that their charging network isn’t as big as it’s competitors, most notably Chargepoint who has benefited greatly from the first mover advantage. This results in the relatively low revenue of $25m in 2020.
Secondly, the market for EV chargers is saturated, not just the public ones but the countless private companies that are available such as EV connect, Flo, Recargo etc. This could result in the EV effect where not all companies will survive. When considering the broader market there is the very real possibility of a sell off in the EV sector, SNPR will most definitely be impacted by such an event, with its current price of writing hovering at around $15.04 this proposes a 33% loss worst case scenario.
Due to the fact that Volta does not manufacture their own chargers, it could also lead to the potential case of poorer quality control. After some digging through Plugshare and Reddit I haven’t found this to be the case so far, with generally positive reviews throughout but it’s still a possibility that should be considered.
Another related idea is that free chargers won’t be treated as well as ones paid for, this could lead to neglect/misuse of the product.
Final note, there is a lack of a defined moat. This obviously can be said for any EV charger but it still applies here, more so with the fact that the screen based advertising that Volta offers hasn’t been patented yet. The application is still pending. This could lead to potential clones of this model by competitors.