EVGo, Blink Charging, ChargePoint stocks have plunged: buy the dip?

The electric vehicle (EV) industry is going through a major slowdown as interest rates remain at an elevated level. The most recent Tesla earnings showed that the company’s business was not growing as fast even after the recent price cuts.

General Motors is slowing its EV manufacturing while Ford has already canceled a $12 billion investment in EVs. The company also paused work on its $3.5 billion Michigan battery plant while Ford Lightning sales have been in a freefall.

Most EV companies like Canoo (GOEV), Mullen Automotive (MULN), Faraday Future (FFIE) and Nikola Motors have all plunged. All these firms have spent billions of dollars in the past few years.

EV charging station companies are also not doing well. As shown below, EVGo (EVGO), Blink Charging (BLNK), and ChargePoint (CHPT) stocks have plunged by more than 50% this year. They are all hovering near their lowest levels on record.

EV Charging companies are also facing major headwinds as interest rates rise and demand for EVs slows. Also, the companies are now contending with changing charging systems after big companies like GM and Ford inked a deal to use Tesla’s charging infrastructure.

These companies have all been cash incinerators in the past decade. ChargePoint has had over $1.2 billion in total net losses in the past six years. Blink Charging has shed over $195 million in the past 4 years while EVGo has lost more than $125 million in this period.

ChargePoint vs EVGo vs Blink Charging

These losses are to be expected for young companies that are investing heavily on infrastructure. The same is true with their stock dilution, which has been enormous. EVGO had 23 million outstanding shares in 2021 and now has 102 million.

Similarly, ChargePoint had 22 million shares in 2021 and now has over 359 million while Blink had 35 million stocks and now has 63 million. An increase in outstanding shares leads to more dilution for existing shareholders.

The challenge for the three companies is that they still need more capital to fund their expansion in the US. As such, ChargePoint stock price crashed in October after it disclosed new capital raise.

These companies’ cash and short-term investments are not enough. Blink Charging has about $74 million in cash while EVGo has $257 million. 

The other challenge for the companies is that they will need to spend substantial sums of money in maintenance costs. A quick look at their charging infrastructure shows that a good number of stations are often broken.

Therefore, I believe that it is quite risky to buy the EVGo, ChargePoint, and Blink Charging stocks. I suspect that these firms will have more headwinds in the coming months if interest rates remain at an elevated level.

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