Electric vehicle (EV) charging is big part of Biden infrastructure plans … how EV charging works … companies that are best positioned to win the EV charging race
This week President Biden unveiled a $2 trillion infrastructure bill that focuses on some traditional items, like roads and bridges, but also includes $174 billion to support the transition to electric vehicles (EVs).
EVs have already been a market favorite over the last year, and this development would just add to a snowballing amount of investment.
For example, the bill would include a plan for 500,000 EV charging stations across the United States by 2030. The plan also calls for sales rebates and tax incentives for the purchase of American-made EVs.
This would be a major tailwind for what is already one of the biggest megatrends in business.
And if the government is serious about providing incentives to switch to EVs, charging stations are a good place to start.
After all, what good is a car without a gas station?
Not much good at all.
And that’s how our resident hypergrowth investing expert Luke Lango started a recent update to his readers. Luke is the editor of Innovation Investor, a service dedicated to what Luke calls “the best investment strategy in the market.”
Just think about some of the most influential and impactful innovations over the past thirty years… innovations in e-commerce, digital advertising, mobile phones, etc.
Now think about all the market circumstances that had the opportunity to slow down or altogether derail these innovations – all the way from the dot-com bubble through the global coronavirus pandemic and a divisive U.S. Presidential Election.
None of them stopped or even materially slowed the pace of innovation.
Why? Because the future is an unstoppable force that waits for no one.
EVs are a huge part of innovation investing right now. If you doubt how bullish this trend is on Wall Street, just take a look at the last 15 months’ performance of the Global X Autonomous and Electric Vehicles ETF (DRIV). This ETF holds car makers like Tesla and Toyota, but it also holds chipmakers like Intel and Nvidia.
(BTW, I made this chart 15 months to demonstrate the trend even beyond the March 2020 lows.)
So the announcement of the stimulus and its dedicated funding for the EV infrastructure was particularly exciting.
Here is how Luke summarized it:
An EV runs on electric charge. If the battery dies and there’s nowhere to charge it, then the EV is stuck where you left it. Meaning: Without EV charging stations, we don’t have usable electric vehicles.
From this perspective, the EV megatrend bull case everyone is gushing about – you know, the one where everyone buys a Tesla or some other EV over the next decade – won’t come to be unless an equally large growth spurt materializes in EV charging infrastructure.
***That doesn’t mean it’s time to dump cash in every EV charging stock
Although Luke is a big believer in investing in innovation, he has never advised going in without thorough research and a plan.
There are lots of EV charging companies out there today. Not all of them will make it. Indeed, only a handful of them will make it big. So, it’s not time to buy EV charging stocks – rather, it’s time to buy the best EV charging stocks.
And to know which ones are “the best,” we need to first understand EV charging technology.
Luke explains one of the important things to remember is that the electric grid is built using alternating current (AC), but batteries can only store power as direct current (DC). That’s why the cord to your laptop has a box in the middle – that’s the AC/DC converter.
EV charging works in much the same way.
***How EV charging works
There are two classifications of AC chargers – L1 and L2.
L1 chargers are the most basic chargers out there. They’re really slow, but really cheap. They’ll give you about 3 to 5 miles of EV range per hour of charging. Given that they’re low-cost, low performance in nature, L1 chargers are common as residential solutions, but are rarely used beyond the home.
L2 chargers are a big step-up from L1 chargers. They’re much faster, but also much more expensive. They’ll give you maybe 30 miles of EV range per hour of charging. These L2 chargers constitute most chargers on the road today.
Now, there are also DC fast chargers. These chargers are fundamentally distinct from AC chargers. They have built-in AC/DC converts, which convert AC power from the grid into DC power within the actual charger itself. What this enables, then, is for the charger to pump DC power directly into an EV battery, completely bypassing the AC/DC converter in the car and therefore resulting in a far more powerful charge.
These chargers are exceptionally fast… and incredibly expensive. As a result, they can give you over 100 miles of EV range per hour of charging, but there aren’t many of them on the roads today – only a few thousand across the whole U.S.
Considering this context, it’s important to understand that the future of the EV charging landscape will be a mix of mostly L2 chargers throughout urban areas and some DC fast chargers on interstate highways.
That’s because L2 chargers are good enough. The reality is that the enormous shift from gas stations to charging ports will be accompanied by an equally enormous paradigm shift in where we “fill up” our vehicles.
Because EV chargers are tiny and can be built anywhere there’s an electric connection, the days of dedicated gas stations are over. You won’t see EV charging stations replace gas stations. You’ll see gas stations become extinct, and EV charging ports pop-up everywhere, from your gym parking lot to your local grocery store parking lot to your local mall parking lot.
***Stocks to take advantage of this environment
As Luke explains, if you want to pick a winner in the EV charging infrastructure game, you’ll want to buy stock in companies that are either great at L2 or DC charging or innovative enough to figure out a way to beat the competition when it comes to charging prices.
Luke has identified two clear winners in the EV charging world, and they stand to gain the most from Biden’s EV charging station plans.
One company is the unrivaled leader in L2 charging… the other has figured out a way to do free charging.
Luke recommends both these stocks in his Innovation Investor service, as well as baskets of stocks from innovators in green energy, digital entertainment, space and everything e-commerce.
You can find out more about Luke’s approach to investing, and his Innovation Investor service, by clicking here.
Enjoy your weekend.
Editor in Chief, InvestorPlace