CarCharging: Investing in Electric Vehicle Charging
We’ve written about many over-the-counter (OTC) companies in the past, mainly to warn our readers of the dangers involved in investing in OTC stocks. The track record of OTC stocks we’ve written about speaks for itself. As disruptive technology investors, we’re better off staying well clear of all OTC companies involved in “the next big thing”. Recently we can across an OTC company called Car Charging Group (OTCMKTS:CCGI) or CarCharging which is looking at building out a network of charging stations for electric vehicles. Let’s take a closer look.
Car Charging Group
On November 20, 2009, a Nevada company called New Image Concepts, Inc. changed its name to Car Charging Group and began trading on the OTC market under the ticker CCGI. In 2013, CarCharging (CCGI) acquired 4 companies; Car Charging, Inc., Beam Charging LLC (“Beam”), EV Pass LLC, and Blink Network LLC. CCGI now claims to be the largest owner, operator, and provider of electric vehicle (EV) charging services today. The stock is down -38% over the past year giving the Company a minuscule market cap of just $24.5 million. The majority of charging stations that CCGI operates were acquired from Blink per the below statement taken from the last CCGI 10-Q that was filed (Q3-2014):
We have generated revenues of $414,157 from service fees related to installed EV charging stations for the three months ended September 30, 2014 as compared to $40,863 in service fees for the three months ended September 30, 2013, an increase of $373,294 which is primarily as a result of the charging heads acquired from Blink and $72,897 associated with the Company’s participation in a program sponsored by Nissan North America to provide free electric charging to purchasers of Nissan Leafs in certain markets in the United States commencing in July 2014.
It’s good to see an established relationship with Nissan, but it’s hard to see how these current revenues streams can sustain the Company. Having acquired 4 of their competitors, CCGI now has 5,017 charging units on their network. The most notable acquisition was that of Blink, a Company that was provided $230 million in funding to develop an electric vehicle charging network. Half of those funds came from the U.S. government and Blink claims to have initially installed 15,000 Blink commercial and residential charging stations in addition to offering residential charging solutions. Here’s the current “About Us” section on the Blink website:
Blink was acquired by CCGI in October of 2013 and now the total number of charging units from all of CCGI’s acquisitions is listed as 5,017. No mention is made of what happened to all the initial units that Blink said they produced but one could speculate that they may have not been profitable to operate and were retired. Based on the service fee revenues CCGI received last quarter, that works out to revenue from each unit of $82.55 per unit per quarter or $27.51 per month. You could probably make more with a network of vending machines right now, but CCGI is no doubt looking to a future where electric vehicle charging units are as common as gas stations are today.
On paper, the idea sounds like a good one and CCGI was able to raise $6 million in funding from institutional investors late last year along with another $830,000 just last week. In order to make this venture economically viable, the revenue numbers will have to increase. According to EvoObsession, 30% of all electric vehicle sales in the U.S. in 2014 were the Nissan Leaf. If CCGI is going to offer an all-you-can-eat package to Nissan, it better be for more than $73,000 a quarter. And what about Tesla? Their network of free charging stations across the U.S. means that Tesla drivers are not likely to pay for a charging solution unless it’s convenient at the time.
CCGI recently announced the appointment of Schneider Electric’s Former Head of North America Electric Vehicle Solutions, Mike Calise, as their new Chief Executive Officer. Let’s hope Mr. Calise makes it a priority for CarCharging to issue their long overdue quarterly and year-end reports so we can see if those revenue numbers have improved at all and also evaluate their cash burn relative to their recently raised capital. We can then get an idea of how well CCGI is positioned to execute on a very ambitious but potentially lucrative business model.
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