Opportunity and Valuation in the Electric Vehicle Charging Market
Car Charging Group, Inc. (OTCBB: CCGI), headquartered in Miami, Florida, is one of the nation's fastest growing providers of Electric Vehicle (EV) charging services. The Company's ultimate mission is to establish a nationwide infrastructure, enabling EV and Plug-in Hybrid Electric Vehicle (PHEV) owners to charge their EVs anytime, anywhere in North America and ultimately Europe and Asia. The CCGI strategy is to be a "first in" strategic partner with businesses, municipalities, shopping malls, parking garages, multi-family residential and commercial properties, and others who are expected to have high numbers of EVs at their locations. Since launching operations in 2009, CCGI has developed contractual relationships with 29 leading partners that own more than 6.4 million parking spots. In addition to working with private enterprise, CCGI also pursues public sector opportunities. As an example, the Pennsylvania Department of Environmental Protection[i] announced 12/14/11 that that CCGI has been awarded a $1 million grant to help develop electric vehicle infrastructure by installing charging stations at 17 Turnpike service plazas.
In an attempt to understand the magnitude of the potential demand load increase, and to prepare for the impact the EV market growth may have on the electric grid, the ISO/RTC Council commissioned a study, "Assessment of Plug-in Electric Vehicle Integration with ISO/RTO Systems," in which it was estimated that 1 million to 2.5 million EV's may be on North American roads by 2015 - 2020. The following graphic illustrates the reports conclusion that the "slow" growth scenario is likely to result in 1 million EV by 2020:
Comprised of 10 North American Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs) http://www.isorto.org/atf/cf/%7B5B4E85C6-7EAC-40A0-8DC3-003829518EBD%7D/IRC_Report_Assessment_of_Plug-in_Electric_Vehicle_Integration_with_ISO-RTO_Systems_03232010.pdf
For the period from 2017 - 2030, the study finds that: "This period is considered as the beginning of the mass-market...New technologies, advanced features, and new charging capabilities likely will be available. Third-generation PEVs are likely to begin appearing on the market. Most importantly, the vehicles will likely have appeal to mainstream automotive customers and become mass market products."With an estimated 842 vehicles per 1,000 citizens in the U.S. alone and the developing world's per capita vehicle ownership ratios still exponentially below those of the U.S., the potential market opportunity for EV's and the charging of EV's is challenging to quantify but not difficult to characterize as very large.
Based on the recent capital raise by EV charging system operator Better Place, it seems clear that investors such as GE, UBS, HSBC and Morgan Stanley have concluded that the opportunity is indeed significant for the right operator. Announced November 11, 2011, Better Place recently completed a $200 million financing that valued the company at $2.25 billion on a post money / fully diluted basis. Better Place also reported that the Company has raised $750 million since its founding in 2007.
The Better Place solution is a model in which batteries are switched out rather than re-charged in the vehicle. According to its corporate description, Better Place"owns and operates a network of battery switch stations and public/personal charge spots, along with the supply of batteries that power the cars, to provide drivers with instant range extension and the convenience to drive, switch and go across an entire region." Better Place also reported that the financing proceeds would be used to expand operations into Western Europe and that other deployments are in progress in two U.S. states and several other countries.
As a private company, Better Place has no obligation to disclose detailed operational and financial data, so it is challenging to analyze its valuation relative to publicly traded companies such as Car Charging Group (OTCBB: CCGI), which as noted previously, has reported that its partner relationships provide access to 6.4 million parking spots, while CCGI's recent market capitalization was under $65 million.. There are publicly traded companies such as iGo, Inc. (NASDAQ: IGOI) and ZAGG Inc. (NASDAQ: ZAGG) whose operations have some degree of comparability to those of Car Charging Group(OTCBB: CCGI). However, like some of the electronics industry titans with some manner of presence in the sector, Car Charging Group's (OTCBB: CCGI) comparables generally have operations that also include products and markets other than EV charging systems.
Regardless of the valuation methodology, given the level at which Better Place recently was valued by a group of sophisticated investors, it seems clear that the market is concluding that there is an opportunity to thrive in the car charging sector. Companies with strong systems, management teams, relationships and competitive positions may be worth a closer look for investors interested in finding a way to take advantage of what seems to be a rapidly expanding EV charging market.
Car Charging Group, Inc (OTCBB: CCGI)
| Select Stock Trading Data | |
| Recent Stock Price: | $1.70 |
| Shares Outstanding: | 36.4 million |
| Float | 8.3 million |
| Recent Market Cap: | $62 million |
| 52 Week Range: | $0.68 - $6.24 |
| Exchange: | OTCBB |
| Ticker: | CCGI |
| URL: | http://www.carcharging.com |
| Data sourced from Yahoo! Finance; otcbb.com | |
Patrick Murphy Bio:
Patrick J. Murphy is the owner of Murphy Analytics LLC, a provider of sponsored research coverage on smallcap stocks. Mr. Murphy has nearly 20 years of capital markets experience providing institutional investment and transaction analysis across a range of asset classes including microcap equities, commercial real estate debt and equity, municipal derivatives and public finance, venture capital, fixed income, CMBS and mortgage REIT's. In addition to his work with Murphy Analytics, Mr. Murphy also serves as a consultant to a municipal derivatives advisory firm. Mr. Murphy is an alumnus of the University of Notre Dame (1991), with an undergraduate degree in Economics, and earned a Masters Degree in Finance from St. Louis University in 1997. Mr. Murphy is a CFA Charterholder and a member of the CFA Society of St. Louis.
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Comprised of 10 North American Independent System Operators (ISOs) and Regional Transmission Organizations (RTOs)
http://www.isorto.org/atf/cf/%7B5B4E85C6-7EAC-40A0-8DC3-003829518EBD%7D/IRC_Report_Assessment_of_Plug-in_Electric_Vehicle_Integration_with_ISO-RTO_Systems_03232010.pdf
http://www1.eere.energy.gov/vehiclesandfuels/facts/2010_fotw617.html
http://www.betterplace.com/the-company-pressroom-pressreleases-detail/index/id/Better%20Place%20Raises%20$200%20Million%20Series%20C%20Financing
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