The originator of charging piles in the United States "lost power"

The first company in the United States to make charging piles has fallen. Recently, Tritium, the originator of charging piles in the United States, submitted a bankruptcy plan to regulators, and then its stock price plummeted by 66% in one day. Tritium is the originator of the charging pile industry, even two years before Tesla, and was valued at $2 billion. As the most basic infrastructure for the popularization of electric vehicles, Tritium has not waited for the explosion of new energy vehicles in North America. Now, it seems that it is difficult for Tesla to return to the peak of market value three years ago, and the charging pile industry has not yet come out of the profit curse.

Bankruptcy filing

Tritium was founded in 2001, two years before Tesla. As a leading company in the charging pile track in the United States, Tritium has received "top stream" VC/PE investment with a valuation of $2 billion, and will be listed on the US stock market through a SPAC in 2022.

After going public, Tritium continued to expand, building a new production line in Tennessee, USA, and focusing on the development of charging stations. According to reports, Tritium has built "Veefil-RT, the world's smallest 50kW DC fast charging pile", and has successively released 75kW, 150kW, 350kW and other DC charging pile products, so as to achieve "plug and charge".

Initially, Tritium was aimed at enterprise customers, including BP, Shell, and IONITY, among others. Among them, IONITY is a network of high-power charging stations jointly established by BMW, Mercedes-Benz, Ford and Volkswagen. According to the official website, the company has sold more than 13,000 charging piles to more than 40 countries around the world. Until last year, Tritium claimed to be the number one producer of charging stations outside of China.

But unexpectedly, in just one year, what I was waiting for was the news of bankruptcy. In 2024, Tritium's stock price plummeted by more than 90% and its market value shrank dramatically, now at just under $4 million. In addition, Tritium was experiencing serious financial difficulties, with a debt-to-asset ratio of 152% and a tight cash flow. The company tried unsuccessfully to seek government bailouts and eventually had to close the factory and lay off workers.

An industry insider told Beijing Business Daily that Tritium's commercialization journey in the United States has not been smooth, "either looking for customers, or on the way to find customers". Originally, Tesla was supposed to be Tritium's main customer, but with Musk at the helm, building charging infrastructure at a lower cost and opening up the charging network to all EV brands has put a lot of pressure on traditional charger manufacturers. In addition, Tritium's business model relied heavily on hardware sales and did not focus as much on operational services as other competitors, resulting in a poor user experience with Tritium chargers.

It is worth mentioning that Tritium tried to enter the Chinese market in 2017. At that time, the company approached a Chinese company that was willing to cooperate and installed a charging pile in Jiangsu. Company executives are also bullish on China, where EV sales growth is stronger than in Europe and the United States. However, the story of Tritium and China did not end there, and there has been no follow-up since.

Construction is slow

Tritium chose to expand because it was betting on the larger U.S. market and because it was optimistic about federal subsidies for U.S. manufacturing. In November 2021, U.S. President Joe Biden signed the $1.2 trillion Bipartisan Infrastructure Act, which calls for significant investment in U.S. infrastructure. Among them, the construction of electric vehicle charging networks is a priority, and Biden has also pledged to build at least 500,000 public electric vehicle charging stations in the United States by 2030.

But now, more than two years later, according to the Washington Post, only seven new charging stations have been built and put into use in four states after Congress appropriated $7.5 billion for the event. The article is concerned that with the Biden administration's recent introduction of new vehicle exhaust emission regulations, more electric vehicles and hybrids are bound to hit the road in the future, and the slow construction of public charging stations may slow down the transition to electric vehicles in the United States.

Atlas Public Policy, an electric vehicle policy analysis agency, estimated that the funding should theoretically be enough to build at least 20,000 charging stations or 5,000 charging stations. But a spokesman for the Federal Highway Administration said that in the past two years or so, only Hawaii, New York, Ohio and Pennsylvania have built seven public charging stations for electric cars, with a total of 38 charging stations.

According to the report, construction has been slow to roll out across the board, in part because the Biden administration has required new charging stations to be of a higher standard than previous generations of facilities. The guidance requires that each subsidized charger must have 97% uptime reliability, 150kW of power, and that the location of the charging station should not exceed one mile (1.6 km) from the interstate, all of which pose challenges to the state government.

Akshay Singh, Strategy& Automotive Partner at PwC, stressed that the U.S. needs to speed up the installation of fast chargers and install more charging stations. He noted that while the number of EV fast chargers in the U.S. is increasing, "the pace is nowhere near where it should be."

In addition, although the U.S. is the world's third-largest market for new energy vehicle growth, its electric vehicle penetration rate is still at a low level compared to China and Europe. According to data, the penetration rate of electric vehicles in the United States in 2021 was only 4.34%, compared to 15.5% in China and 21% in Europe.

It's hard to stand alone

Compared with 20 years ago, the rules of the game have changed, and charging piles are no longer just a competition from one or two companies. Charging pile operators in third parties generally face profitability problems.

Tritium's earnings report shows that despite the year-on-year increase in revenue, the net loss has also continued to widen. From 2020 to 2023, Tritium's total revenue will be $46.96 million, $56.15 million, $85.82 million, and $185 million, respectively. However, its net losses were US$34.44 million, US$63.09 million, US$129 million, and US$121 million respectively. That is, the company was never profitable.

Yan Jinghui, a member of the expert committee of the China Automobile Dealers Association, believes that charging pile companies are under huge cost pressure while expanding their market share. In addition, with the intensification of market competition, in order to attract and retain users, charging pile companies have to invest more money in technology research and development and improve service quality, which also exacerbates the financial burden of enterprises.

On the one hand, the construction and operation costs of charging piles are high, and the revenue is difficult to cover the costs, resulting in long-term losses for enterprises; on the other hand, the constraints of the charging network and power grid built by car companies also pose a double pressure on third-party charging pile operators.

At the same time, the growth momentum of the electric vehicle market in the United States has slowed significantly. On October 26, 2021, Tesla's market value once soared to $1.03 trillion, surpassing the sum of 11 traditional car giants such as Toyota, Volkswagen, and General Motors, and becoming a new member of the trillion-dollar club after Apple, Amazon, Google, and Microsoft.

In the past three years, Tesla's stock price has experienced many ups and downs, but it seems that it has been difficult to recover recently. Gary Black, managing partner of The Future Fund, a well-known investment advisory firm in the United States, pointed out that Wall Street analysts may lower Tesla's full-year sales and earnings per share expectations for 2024 due to Tesla's first-quarter car production and delivery data falling short of expectations.

Analysts at Wells Fargo believe that Tesla is a "growth company without growth" and is overvalued, and expects zero sales growth this year and sales will start to decline in 2025. Tesla did not previously give this year's delivery target in its 2023 financial report, only saying that sales growth will slow down, and some analysts predict that Tesla's sales this year may reach 2.2 million units, a year-on-year increase of about 20%, which is lower than the 50% growth rate set by Tesla.