The electric vehicle market has come a long way in a short period of time; however, there is still a major gap between consumer awareness and feasibility of infrastructure to support continued consumer demand. Bridging that gap is Car Charging Group Inc. (OTCPK:CCGI), a development stage company focused mainly on providing charging stations and services across the country and one of the few businesses of its kind. Range and charge time are the most notable conflicts for potential EV consumers, so CCGI is working to close that gap by providing solutions to these problems. By exploring these two issues, along with Car Charging Groups recent acquisitions and rumored asset purchases from failed EV battery maker Better Place, it is easy to see why the company has a promising future.
CCGI - Bridging the Gap Between Infrastructure Demand and Consumer Awareness
CCGI is developing an infrastructure of charging networks that will assist in the growth of consumer demand and ultimately benefit the company and its investors. Without companies like Car Charging Group, NRG Energy, (NYSE:NRG) or Ecotality (ECTY) the infrastructure for charging availability would not develop as quickly, leading to a major lag between consumer demand and actual feasibility of the EV market itself. Recent studies have shown that while there is still a gap between consumer expectations and what is actually available in the marketplace, that gap seems to be closing.
A Deloitte survey in 2012, "Unplugged: Electric Vehicle Realities Versus Consumer Expectations," highlights the importance and potential of companies like CCGI in the EV market place. While demand for electric vehicles is growing, expectations of consumers does not match current market offering, according to the survey. Major concerns of consumers in the Deloitte survey included range and charge time. While only 63% of the survey respondents were satisfied with the current average range of EVs at 480 Kilometers, 80% of the drivers surveyed drive less than 80 Kilometers per day. There was a clear difference between what consumers wanted and what they actually need. This is a gap that should close over time as awareness and education grow in the EV market.
Charging time was the second issue in the Deloitte survey with many consumers expecting a charge time of two hours or less. In reality, level one chargers require 10-20 hours charge time, level two chargers require 3-8 hours, and level 3 chargers require less than thirty minutes. CCGI is answering these needs by providing more level two stations. Further, by developing a massive network of charging stations across the nation, CCGI is addressing the problem with battery range. As the company continues to expand its network of charging stations, consumers will have access strategic charging stations, reducing the possibility of a driver becoming stranded between charging areas.
*Source: Deloitte Survey, "Unplugged"
While reducing charge times is definite need, consumers having access to charging stations is equally as important. CCGI has completed number of recent acquisitions that will add to the company's ability to expand its charging network.
Recent Acquisitions and Partnerships Helping CCGI to meet Consumer Expectations
It is clear from the Deloitte survey that there is still a gap in the EV market between consumer expectations and what the current EV market offers. CCGI is working to deliver what consumers want and need. With recent acquisitions, Car Charging Group, Inc. is now the owner of the largest independent public EV charging station network in the World according to a May 2013 Press Release. Not only is the company the largest independent charging network, but it has added a significant number of level 2 charging stations with the purchase of charging station company 350Green that better meet the expectations of consumers for charge time. Further, another recent news release announced a partnership between Nissan and Car Charging Group to expand the availability of quick charger stations that are capable of charging the Nissan Leaf in 30 minutes. CCGI will include Nissan's quick chargers in its public charging network and offer the evCharge card to consumers who purchase a Nissan LEAF at a Nissan dealership. CCGI is also developing a mobile app to provide charging station location information with turn-by-turn directions and access capability for all of it EV charging stations. As it continues its expansion in the U.S., the company may also have its sights on international growth.
Better Place Rumors - International Growth A Possibility
Car Charging Group is already developing an impressive presence across the United States, but a recent headline in Israeli news indicates the company may have plans to expand internationally. Unfortunately, there is no other source of this information at this time. While this news has limited sources and facts associated with it at the current time, if true, it could mean a future foothold in an already growing market. The report indicated that CCGI, along with Israeli company Success Parking, is bidding on undisclosed assets of recently failed Better Place, an Israeli electric car battery company. Better Place blazed a trail in the EV market, putting Israel at the pinnacle of the EV market in Europe as it attempted to expand into Denmark, the Netherlands, and even China, Hawaii, and Japan. Even though the company never sold a significant number of cars, its network and international presence is valuable. Many headwinds faced Better Place, but many of the headwinds for Better Place could actually prove to be valuable assets to a company like Car Charging Group. While the technology and concept behind Better Place is intriguing, its own design may have actually ended up being the cause of the failure.
Better Place Vs. CCGI…And Why CCGI Will Succeed Where Better Place Failed
Better Place sought to develop a solution to the problem of mileage range in electric cars. By separating the car from the battery, the company's plan was to allow car owners to swap out a drained battery for one that was already charged, removing the wait time and need for charging stations. Since the company could not develop relationships with enough car manufacturers and consumers were still concerned about battery range, there simply was not enough demand and growth in the beginning to keep the company in business. Better Place tried to build a market for battery switching cars. This idea of not only creating a new product, but creating an entirely new market, obviously requires tremendous upfront capital, consumer education, and early adoption by consumers. This was the major flaw in Better Place's endeavor. In contrast, CCGI simply plans to expand on an existing market of providing universal charging services. It is not only catering to an existing market of existing consumers, but it is providing a service that is necessary and is making the lives of its customers easier by providing additional charging locations. This business model simply requires contracts with parking garages, property managers, and other commercial locations. The customer base will grow as the company offers more charging stations and as more consumers purchase electric vehicles. Car Charging Group's concept of providing charging stations to a wide range of electric cars is also more universal and practical than Better Places battery switch stations.
Better Place Setbacks a Plus for an Acquirer Like CCGI
Two of Better Place's mistakes, building expensive battery switch stations and rapid expansion in Israel and Europe, could be positives for CCGI or another company acquiring Better Place assets. One major upfront cost to Better Place was building battery switch stations. Each battery switch station costs about $500,000 to build, according to a recent article, and a network large enough to serve the country would require dozens of stations. While a setback for Better Place, this would actually be a positive for a company like CCGI purchasing the assets of Better Place. The company would be able to purchase the 38 strategically located and already-built stations at a significant discount from the actual cost to build them. There are already a number of stations that have been built across the country as part of Better Place's original development. The current stations are built only for Better Place batteries but it's the locations and existing structures that could be valuable to another EV charging company. These stations could be converted by CCGI to universal charging stations to serve a number of EV makes and models at a lower cost than building new stations. This would give Car Charging Group immediate access to a market in Israel and Europe.
An attempt at expanding quickly before proving the concept in Israel caused Better Place problems that, to CCGI, could become a benefit. Better Place attempted to create the product and the infrastructure, requiring a massive amount of consumer education and awareness. Better Place may have been too early to the market, but along the way it created a following and increased awareness for EVs in Israel and parts of Europe. In addition, consumer awareness is growing through the efforts of other EV manufacturers and a number of government organizations working together. This will benefit CCGI as it expands to provide charging services to the growing base of EV owners.
Better Place vs. CCGI - Financial Operations
Without access to filed financial documents for Better Place, it is difficult to compare the true financials of Better Place to Car Charging Group. However, basic information about both companies shows that CCGI may have the right idea and approach to expansion, whereas, Better Place seems to have attempted to grow too quickly. Reports from Israel Corporation, a 31.5% owner of Better Place, disclosed the results of Better Place operations for 2011. Better Place's expenses totaled $200 million in 2011 without generating revenues. Sales and marketing expenses increased to $54 million, and R&D reached $75 million. In contrast, CCGI's approach requires less upfront capital and relatively low expenses. CCGI's total operating expenses for 2011 were roughly $4.1 million in 2011 and $5.2 million in 2012 and the company is already beginning to generate revenues from charging services as well as the sale of some charging stations. Quarterly results filed with the SEC show the company generated $10, 576 in revenues for the first quarter of 2013. While this is clearly a very small number, consider that this is an increase from $2,605 in the first quarter of 2011. According to CCGI press releases, the company has acquired three additional charging companies, EVPass, Beam Charging, and 350Green, since the first quarter of 2013. All of these acquisitions will provide additional charging contracts with property managers in various locations, likely leading to more revenues from each. Further, an acquisition of Better Place assets in Israel and other locations could immediately make Car Charging Group an international name in Car Charging.
As with any early stage company, there are additional risks not always present in more established publicly traded companies. With spotty revenues and a dependence on investors for continued growth, CCGI may have to access additional capital. A lack of access to growth capital could adversely affect operations, as has occurred with some other EV startups. However, as CCGI continues to prove its importance as a necessary component of the success of the overall EV infrastructure and market, it may not run into the same problems some of the other startups have encountered. Further, consumer awareness must continue to keep pace with growth in EV infrastructure expansion. CCGI is building the base for a massive network of charging stations, but enough consumers must ultimately switch to electric vehicles in order to provide the demand necessary for CCGI to develop strong and consistent revenues. Even with these challenges, CCGI seems to be in a good position as the largest provider of public EV charging stations in the world.
While there continue to be cracks between current infrastructures a consumer expectations, CCGI is clearly working toward enhancing consumer experiences in through its partnerships and acquisitions. As CCGI continues to create these initiatives in the U.S., further expansion into other countries like Israel where growing consumer awareness is already in effect would allow the company to grow its presence and future growth potential by offering much needed solutions to EV owners across the world. CCGI has advantages that Better Place and other manufacturers don't have, flexibility and a product that improves awareness, infrastructure, and ease of use for all EV owners. CCGI's technologically agnostic features make it a promising company versus EV manufacturers and other EV charging companies that offer only their own proprietary systems. As the market awareness and demand continues to expand, CCGI will continue to grow its foothold as a necessary component of the EV market. And if the reports in Israeli news are true, acquisitions of EV charging and infrastructure assets in other countries certainly wouldn't hurt
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.