It's never easy for companies in brand new industries to navigate early market trends and uncertainties. For pioneers of electric vehicle ((EV)) charging solutions, those challenges are multiplied by regulatory issues as well as the need to steer through a maze of government grants and to cooperate with global automakers.
That's why several EV charging companies are making sure to populate their boards of directors with people who can make a difference. Some companies are including outside directors with EV industry experience or industrial expertise. Others are looking to high-profile politically connected directors who can help a young company get an edge as the market evolves.
Coulomb Technologies, a privately held company that operates the ChargePoint Network for EVs in 14 countries, boasts the inclusion of Martin Eberhard on its board. As a co-founder of Tesla Motors (TSLA), Eberhard is well placed to help Coulomb technologies develop its charging stations to meet the needs of a new generation of EV drivers.
Eberhard was pushed out of Tesla in a big dispute, in which he filed a lawsuit against co-founder Elon Musk that was subsequently dropped in 2009. Still, he's widely credited with conceiving the Tesla Roadster, the trend-setting electric sportscar that has pushed the limits of the EV industry. He later did a stint at Volkswagen's (VLKAY.PK) EV program, giving Coulomb additional insight on how big auto manufacturers are thinking about electrifying vehicles.
While Eberhard is something of a controversial figure, some companies prefer to draw more conventional insiders to their boardrooms. For example, ECOtality Inc.(ECTY), the Nasdaq-listed company which operates the Blink network of EV charging units for residential and commercial use, added Enrique Santacana as a director in early 2011. Santacana is the North American regional manager for ABB, the Swiss-based giant manufacturer of power and automation technology. ABB has taken a stake in ECOtality and is partnering with the company to penetrate the US market for EV charging systems.
Santacana is a big catch. As a senior member of the National Electrical Manufacturers Association, Santacana can offer ECOtality unique insights on industry developments. He's also networked with government officials in the field, having served on the U.S. Department of Energy's Electricity Advisory Committee. Since ABB is one of the biggest industrial players in the EV charging game, with aspirations to help foster a global EV charging network. For investors seeking assurances that an EV charging player is hooked into bigger industry trends, Santacana's ability to give ECOtality strategic direction should provide some comfort.
Political officials can also help fledgling EV charging companies grow their business. On this front, Car Charging Group Inc. (CCGI.OB), a Miami-based upstart, pulled off a major coup by adding Bill Richardson its board as its Chairman in December 2012. Richardson, a former US Secretary of Energy who has served two terms as governor of New Mexico, has a unique combination of political experience and a passion for alternative energy.
As New Mexico's governor, he pushed an aggressive renewable energy agenda by requiring utilities to generate 20% of the state's power from renewable sources. He's also a vocal proponent of greater global coordination to accelerate the adoption of alternative energy sources. And he has impressive international influence as well, having served as the US ambassador to the United Nations.
Car Charging Group has 40 strategic property and retail partnerships, giving it access to 6.4 million parking spots across the US and has set its sights on opportunities in Mexico and Europe. Investors who are concerned about an EV charging upstart's ability to enjoy crucial government support should take note - since the development of infrastructure for EV charging requires government support until there is a critical mass of electric cars on the road, Car Charging Group is likely to benefit from a political heavyweight like Richardson on its board. Additionally, it is also worthy to note, that a person of Richardson's public stature does not simply lend his name, nor accept to be the chairman of the board, to just any company unless he sees a significant benefit for both he and the company. Perhaps his joining of the board could be viewed as a part of the company's long term strategy that has yet to be announced.
Political experience could prove important in the embryonic market for EV charging services. According to an academic study published in the Journal of Law & Economics in 2001, having a politically experienced director on board is especially important for companies that are more subject to political influences. It's no coincidence that in the 1990s, when US electric utilities faced increased retail competition, many companies in the sector brought in politically experienced directors, according to the study.
Companies that don't make an effort to include outside board members with industry or political experience do so at their own risk. Take Better Place, which has built a network of battery-changing stations for specially designed Renault cars in Israel. When Better Place launched in 2007, the company had political connections at the highest level, including support from Shimon Peres, the Israeli president, and Ehud Olmert, then prime minister. Shai Agassi, the company founder, even got Carlos Ghosn, CEO of Renault, to back the project and create specially designed cars for the pilot.
However, Better Place's board of directors remained surprisingly void of industry insiders or political rainmakers. It's true that Idan Ofer, the company's chairman and head of Israel Corp, is a well-known Israeli business heavyweight with a network of connections in industry and politics.
Yet the privately held company's founders have continued to pour money into Better Place during a turbulent year which saw the ousting of Agassi. It would be unfair to blame the company's well-documented failures in 2012 on the composition of its board. Still, it's possible that Better Place may have lacked crucial insight on EV industry trends partly because it had no senior outside directors with the right credentials.
Outside directors offer companies important insight on where they're going, and an independent view of a business model's viability in any industry. In the EV industry, where so many questions about the evolution of the market remain unresolved, having such perspective inside a boardroom may prove vital to a company's survival.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
