Soaring gas prices helped drive electric vehicle adoption in the first quarter, with EVs doubling their market share to 5.2% in the U.S.
But even as an all-electric future draws nearer, don’t expect big profits anytime soon from the companies involved. According to Michael Farkas, founder and CEO of Blink Charging (BLNK), profitability for companies in the EV space is "unrealistic" given where the industry is right now.
"People [ask]: 'Is it in its infantile state?' And I go: 'No, it's actually at its embryonic state when you look at the numbers,” Farkas said on Yahoo Finance Live (video above). “So it's not going to mean profitability tomorrow. If that's your expectation, then this is not the industry for you.”
'Rewards will be there in the future'
The global race to net zero has supercharged the EV charging infrastructure market, with some estimates expecting revenue to top $147 billion by 2030. However, investors have become increasingly skeptical about the medium-term growth prospects of companies that are far from profitability.
Blink’s stock has declined more than 35% in the last month, hitting a 52-week low on Thursday. While the sell-off has coincided with a broader pullback in high growth names, the declines have been more pronounced in the EV space. Blink rival Chargepoint (CHPT) and EVgo (EVGO), for instance, are both down more than 30% while electric truck maker Rivian (RIVN) has fallen over 25%.
“This is a growth industry. This is about land grab and growing out your footprint and investing in infrastructure,” Farkas said. “I believe the rewards will be there in the future. It's just a matter of having a long-term perspective. A lot of investors today look for the short term.”
Blink lags far behind competitors, including Tesla (TSLA) in the U.S., in the number of charging units deployed, though the company has been looking to expand rapidly through acquisitions.
Last week, it signed a $23.4 million deal to purchase Electric Blue (EB Charging) and its 1,150 chargers in the United Kingdom, marking the company’s first entry into the UK market. That was preceded by an expansion into Greece and Latin America. And last year, the company signed a nearly $24 million acquisition deal to purchase Belgium-based charging operator Blue Corner N.V. and its 7,071 charging ports across Europe.
The land grab comes as countries plow ahead to reach emissions reduction targets and slow climate change.
The Biden administration has pledged to reduce the number of new gas-powered vehicles sold in the U.S. by half by 2030. As part of that effort, the infrastructure bill signed into law last year sets aside $7.5 billion to build out a national charging network with the aim of making 500,000 chargers accessible to Americans.
“Today if you look at estimates, we have roughly a couple million charging stations deployed globally. There are a lot of them that are not viable chargers, prior technology,” Farkas said. “By all estimates, you're looking at needing between 120 to 150 million chargers by 2030. Really this is the beginning of the process in this industry.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita