- EV charging has a newfound boost from government incentives and industry spending.
- Charging companies are turning to M&A to juice funding further.
- EV-charging consolidation is the latest to hit the auto industry.
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Electric-vehicle-charging outfits have been racing to conquer territory by snapping up smaller players, and industry experts anticipate this year’s buying frenzy to continue.
The charging space has picked up momentum as automakers are pouring billions into EV development. Legislation like the infrastructure and climate bills, along with state programs, are pushing to accelerate EV adoption and building out charging stations is a huge part of that.
Because of these struggles, not every company will make it — some smaller companies are betting that larger ones will gobble them up and take on their assets through mergers and acquisitions. Global M&A activity in the charging space this year hit at least $900 million across 25 deals as of this week, according to PitchBook. That includes at least $200 million across seven deals in the US.
“For the smaller companies, it’s hard to scale up on their own. They really need larger partners,” Steve Hilfinger, a partner and senior business counselor with the law firm Foley & Lardner, said. “This is going to take a lot of capital.”
The auto industry’s latest M&A frenzy
Given the long lead time on vehicle development, automakers have relied on consolidation to integrate expensive technology into their portfolios. The M&A frenzy taking place in the charging and electric-vehicle world is just the latest example.
Car companies and electric-vehicle startups have been striking deals for the past several years as the industry barrels toward an emission-free future. For any M&A activity, it’s about finding a company with the tech that best fits your business’ needs, said David Camerucci, a manager in global location investment, credits, and incentives at the consultancy EY.
That’s true of a primordial charging space, too.
“If there isn’t a single one, how do we select the best of a group of providers that can give us the coverage, align to our goals, and also — with the increase in interest — help us stay on track from a timing perspective,” he said.
Red-hot and getting hotter
With support from governments around the world and major car companies transitioning their offerings to all-electric vehicles, a robust charging infrastructure is key to the industry’s future.
“The automakers obviously want to make sure that at the end of the day, there’s an EV ecosystem that will support their EV-production plans,” Hilfinger said.
Companies are racing to tap into that. This year, Blink Charging bought the infrastructure outfit SemaConnect; Schneider Electric bought EV Connect; ABB acquired a controlling interest in InCharge Energy; and the supply juggernaut BorgWarner acquired Rhombus Energy Solutions. Meanwhile, Beam Global, Charge Enterprises, and others have emphasized M&A as their long-term strategy for success.
Experts say that even a cooling economy won’t slow down increasing EV demand.
“If you can rely on the government-infrastructure funding, if you can rely on some of these other sources to help with that capital burden, it makes the overall cost lower,” Hilfinger said. “It will continue to be an active space, even with maybe a little bit of a pullback in the economy.”