Car Charging Group Inc. (OTCPK:CCGI) is one of the leaders in the electric "gas station" business, operating nationwide in a sector that's expected to garner in excess of $13 billion annually over the next few years.
All that's needed is the cars
It's no secret that the electric auto industry has been struggling with its launch, with sales underwhelming the world over. It's also no secret that this will likely be a long-term project that will require a good dose of public education, and perhaps more government backing in the way of subsidies and perhaps even a sustained media campaign.
That said, there were 38,000 sales of plug-in cars during the 2012 model year, and that's a 228% increase over numbers posted last model year, 2011. Hybrid models that offer drivers the option of using electricity or more conventional fuels, posted a 55% increase this year.
Part of the problem is perception. Because while the industry poster child Chevy Volt, a product of General Motors (GM), sold roughly 20,000 units this calendar year, that number still outpaces a very impressive list of long established, fuel-operated vehicles, including the following:
Chevrolet Sells More Volts Than …
- Mazda: Miata, CX-7, Tribute, RX-8, 2, and 5
- Mercedes: S-Class, CL-Class, CLS-Class, SLK, SLS AMG, R-Class, G-Class, B-Class, and SL-Class
- Land Rover: LR2, LR4, and Range Rover
- Audi: A3, A5, A6, A7, A8, Q7, R8, and TT
- Lexus: GS, GX460, LX570, CT200h, HS250h, LFA, SC430, and LS
- BMW: Z4, X6, 1-Series, 6-Series, and 7-Series
- Nissan: 370Z, Quest, Cube, GT-R, Xterra, Titan, and Armada
- Porsche: Boxster, Panamera, Cayman, Cayenne, and 911
- Chevrolet: Caprice, HHR, Cobalt, and Corvette
So all is not lost.
Chevrolet's Volt may not yet be a Honda (HMC) Accord and Nissan's (OTCPK:NSANY) Leaf - the second hottest EV on the market - may not be a Ford (F) F Series vehicle, but all the same it's safe to say the draw for these vehicles will only strengthen in the face of increased gasoline costs and generally tougher economic times ahead.
Not Your Kid's Toy Car
Another potential reason offered for the difficulty behind the less than expected sales is the roughly $40,000 sticker price that some consumers feels a tad rich, given what most think they should be paying for all things electric.
But we feel there's something more salient at play here.
Consider this: the 2013 Chevy Volt will have a range of 380 miles before it has to head back to the charger. And according to most estimates, a full charge using a 120 volt outlet could take anywhere between ten and eleven hours. This has led to widespread worry among potential buyers.
Because most folks with a long commute will need to recharge every two to three days, but for salespeople who heap on the mileage, or for those who simply like to go out for extended cruises, there's another condition that comes into play. It's playfully referred to by industry analysts as "range anxiety," and according to the urban dictionary, refers to the fear that 1) you won't have enough juice to get your EV to its final destination, or to make it home, or to a recharging station, or 2) fear of driving altogether because your car may run out of juice en route.
That's where Car Charging comes in.
The company has been focusing on what its management team calls the 'land grab', the process of identifying and acquiring prime locations to install its car charging technology - its electric "gas stations", if you will, all across the country.
And just where are the best locations for charge stations? Where else?
With often hours to wait while the recharging process plays out, parking lots in malls, hospitals, airports and train stations, hotels, stadiums and sports and convention centers provide the perfect forum for those in need of a charging.
It's good for both car owners and lot operators, the latter of whom are rolling out the red carpet for those prepared to install EV charge stations on their turf. Mall owners, of course, know that while EV drivers charge, they have a captive customer strolling around in their domain for the next few hours. Hotel operators, too, see the writing on the wall. There will soon be a lot more of these cars on the road, and travelers driving them will need to look for a convenient place to both charge up and stay the night.
To that end, Car Charging has teamed up with a tremendous range and number of businesses across the country, signing deals with lot operators as fast as possible, in a bid to outpace the competition and establish themselves as the primary Charge Station operators on the continent.
The current list of its real estate partners includes a number of mega-lot transnational operators, like ACE Parking, LAZ Parking, Icon Parking, USA Parking and Central Parking System. And though they're signing on new partners at the local level with regularity, Car Charging has also managed in its very brief history to sign deals with big-cap brick and mortar companies like Walgreens (WAG), as well.
Car Charging Steps it Up
In its latest and most dramatic move to date, Car Charging has initiated an acquisition of competitor 350Green. The deal would position Car Charging as the biggest player in the EV charge station game in America, with over 1000 locations nationwide. But more than that, the 350Green acquisition gives Car Charging inroads into the Midwest market, including Chicago, and the very lucrative west coast market, where sales for EVs top the country. What's more, the move adds to CCGI's roster lucrative contracts with every major mall in the country.
Car Charging and 350Green both offer faster charge times than a typical 120 volt outlet offers, with new technology bringing wait times down to a half hour or less.
Of course these companies are not the only competitors in the EV charging arena. Ecotality (ECTY) and, more recently, NRG (NYSE:NRG) have been very active expanding their infrastructure base, and both have secured considerable government funding to assist in their efforts. General Electric (GE) is also building out its own network as is Better Place, a company dedicated to a "battery switching" model of business, rather than the more widely accepted recharging centers.
Car Charging's apparent advantage against the competition is that it has no production facilities or products to sell. All the others do. CCGI is technology neutral, and can therefore focus on its "land grab" strategy exclusively to grow its business.
Whether it eventually becomes the industry leader via this strategy, or is eventually bought out by a larger utility company like NRG, CCGI's stock certainly possesses more sizzle than an NRG or GE, whose massive market capitalizations would engender a much smaller comparative move than Car Charging as the market for EVs begins to flourish.
On the down side however, Car Charging requires staying power until revenue begins to flow in and that may take a while and that means cash.
Its revenues from service fees related to car charging stations during the first half of 2012 was $6,015 . Additionally, during the same period, Car Charging sold 75 EV Charging Stations for $290,962 at a gross profit of $60,830. Its operating losses for the first half of 2012, however, were increased by $813,788.
6 Months Ended
34 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Cash from operating activates
Cash from Investing Activities
Cash from Financing Activities
Car Charging with its superb business model will need to raise capital in the near term in order to survive. Considering the way its stock has been looking as of late, it is possible that we may be looking at an uplist to NASDAQ which would mean institutional money. This is all speculation of course and a prudent investor should limit his/her possible losses by keeping to a minimal position.
And how does the President feel?
President Obama has pledged support for increased EV usage in a policy paper entitled One Million Electric Vehicles by 2015. And now that the election has passed, we can likely expect federal programs to continue the push toward that policy goal.
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. I have no business relationship with any company whose stock is mentioned in this article.