- Charging company floats at 225p a share and raises almost £100m
- Pod Point has half of the market for household car chargers
Electric charging point companies are racing to secure the capital needed to build out networks ahead of the UK’s 2030 ban on new petrol and diesel cars.
Their energy is well-placed. Almost a quarter of vehicles sold in the UK last month had a plug, either as battery electric cars or hybrids, and BloombergNEF predicts that we will need 600,000 new public chargers and more than 11m private chargers by 2040 to cater for the surge in demand.
Pod Point (PODP), which listed on the main market of the London Stock Exchange this week, is one such company. Founded in 2009 and bought by EDF (Fra:EDF) last year, Pod Point sells and installs domestic and commercial charging units.
The company floated almost 29 per cent of its shares at 225p a share, raising £99.7m in a deal that valued the business at £352m. Pod Point has been well-backed, with shareholders including institutions such as Legal & General, Schroders, BMO Asset Management and Santander, according to its prospectus. French power giant EDF will continue to hold more than half of its shares.
Pod Point already enjoys a 50-60 per cent share of the market for household car chargers. In recent months, however, attention has shifted away from home-charging towards public services. More than 60 per cent of households in English cities and urban areas do not have off-street parking, and companies are eyeing up the potential of residential streets, motorway service stations and shopping centres.
Earlier this week, London-based Connected Kerb announced plans for 190,000 on-street chargers by 2030 at a cost of almost £2bn. It received backing from US-based EV charging infrastructure provider Charge Enterprises in June.
The oil and gas giants are also muscling in on the action: Royal Dutch Shell (RDSB) intends to install 50,000 lamp-post-based chargers by the end of 2025 through Ubitricity, a European company it acquired in February. Meanwhile, BP, which bought Chargemaster in 2018, is rolling out new ultra-fast charging hubs in high-traffic areas.
Pod Point is operating in a competitive arena, but has grown quickly, achieving a step change in its revenue growth ahead of its listing. Turnover grew 91 per cent to £33.1m last year and in the first six months of this year it hit £26.5m. Its margins are climbing alongside big increases in unit sales: between 2019 and the first half of this year, the gross margin per home unit installed doubled to £204, while for commercial units this climbed from £277 to £379.
Pod Point chief executive Erik Fairbairn, who set up the business in 2009, said the initial public offering (IPO) would allow the company to invest in improving technology and add sales capacity.
There is certainly plenty of scope for expansion. Charging infrastructure is still hard to find in much of the UK: ZapMap data shows Greater London has 8,412 charging points, while Wales makes do with just over 1,000. Greater Manchester’s population of 2.8m is tussling over just 360 charge points, according to Transport for Greater Manchester.
Then there are the charge points that have been installed and fallen into disrepair or disuse, after the government threw money at schemes that local councils lacked the expertise to deliver. The government is still ploughing money into subsidies: a further £620m has been set aside for EV infrastructure, with a focus on on-street residential charging. However, companies are becoming increasingly tactical as drivers’ habits develop.
Contracts with retailers are an important source of growth, for example, and Pod Point boasts a potentially lucrative partnership with Tesco (TSCO), installing thousands of charge points in the supermarket’s car parks.
Kilowatts (kW) matter in this industry, though, and questions have been raised about the slow 7kW chargers that Pod Point has installed next to Tesco stores.
Ryan Fisher, an analyst for electrified transport at BloombergNEF, said that the retailer “may regret going with a slow charging strategy” as drivers may want to fully recharge their vehicles while they shop.
The German supermarket chain Rewe, for example, is installing 150kW-300kW chargers in partnership with Shell, which can still take up to an hour to fully replenish a flat battery. Morrisons and Lidl have also opted for faster options. Pod Point also offers 50kW at a cost of 28p per kilowatt hour (kWh).
Pod Point’s potential misstep by not focusing solely on rapid chargers highlights an important issue: drivers’ habits are still evolving and long-term strategies remain untested. Will the petrol station infrastructure owned by BP (BP.) and Shell give them the upper hand? Or will forecourts become largely redundant as drivers charge at home, at work, or while they shop?
Political tension is also likely to emerge as streets become cluttered with charging points and on-street parking becomes even more fraught. And that doesn’t even begin to cover concerns about hacking, which analysts fear could lead to charging blackouts and whole road networks going down.
Despite these fears, investors remain very keen on EV-connected shares: US EV company Rivian (US:RIVN) priced in New York this week with a valuation range topping out at $67bn (£49bn), and is only expected to deliver around 1,000 vehicles this year. If Pod Point can tap into even a fraction of that excitement, it could be an energy transition winner.
