The ChargePoint Business Model: How The Firm Makes Money

Executive Summary:

ChargePoint is an electric vehicle charging network that offers over 100,000 charging spots across the globe.

ChargePoint makes money by selling charging hardware, through cloud service subscriptions, as well as maintenance services.

Founded in 2007, ChargePoint has risen to become one of the world’s leading charging networks. The company successfully went public in March 2021.

What Is ChargePoint?

ChargePoint is an electric vehicle (EV) charging network that offers over 100,000 charging spots across the globe.

The company places its charging stations within a variety of locations, including near hospitals, parking lots, in front of retail stores, and many more.

ChargePoint itself is the one who plans and manages the installation (which is either conducted by ChargePoint or third parties) as well as maintenance of those charging stations (depending on whether customers have opted into a maintenance plan).

From a consumer’s perspective, here’s how ChargePoint works. First, you sign up by registering an account.

You can find charging spots in proximity by checking out the map on ChargePoint’s website or by downloading its mobile app (available on Android or iOS devices).

A charge can be initiated by tapping your phone while at the station or by using a dedicated ChargePoint card.

Users then simply plug in the connector and begin charging their vehicle. After the car is charged, one simply puts it back into the holster.

ChargePoint is compatible with a variety of EVs from brands like BMW, Tesla, Toyota, Honda, Volvo, Volkswagen, and plenty more.

Compatibility is dependent on the type of charger a vehicle possesses. ChargePoint offers charging solutions for Level 1, Level 2, and DC fast chargers.

Consumers can also have charging stations installed at their homes by purchasing the ChargePoint Home Flex, which allegedly charges nine times faster than a wall outlet.

ChargePoint Company History

ChargePoint, initially incorporated as Coulomb Technologies and headquartered in San Francisco, California, was founded in 2007 by Dave Baxter, Harjinder S. Bhade, Milton T. Tormey, Praveen Mandal, and Richard Lowenthal.

All five founders came from a technical background and each possessed decades of experience in various leadership roles across organizations such as Lucent Technologies, Cisco Systems, and more.

The team itself was helmed by Richard Lowenthal who was ChargePoint’s initial CEO. Before he went on to found ChargePoint, Lowenthal was serving as the Mayor of Cupertino, where companies like Apple reside, for eight years.

ChargePoint originated from the fact that more and more automakers began actively working on new EV models, which were all slated to launch in the next few years. Moreover, the United States government was supporting startups with a sustainable focus through tax credits and grants.

During the first 1.5 years of the startup’s existence, the team was working on developing the technology and gauging interest from potential investors as well as customers.

In July 2008, Coulomb Technologies finally unveiled its product, dubbed ChargePoint Network, to the public. Not long after, the company already managed to secure various new clients with its charging stations being installed across fuel stations in California.

To capitalize on the opportunity, the team managed to raise their first round of funding, netting them $3.75 million, in January 2009. By the summer, the company had already over 30 networks in operation, both in the United States as well as Australia and the Netherlands. Its order backlog had, furthermore, swelled to over $30 million worth of installations.

The growth was rewarded with yet another round of funding in January 2010. This time, it was able to raise $14 million which was used for market expansion as well as further research and development. It also used portions of that cash to release its first-ever app for iOS.

Throughout the year, ChargePoint continued to add cash to its balance sheet. In June, it received a $15 million government grant. Another $15 million in funding, led by its previous investors, was announced in September.

That same month, the company also unveiled its first-ever residential home charging station. It also embarked on a program dubbed ChargePoint America by committing to install 4,600 new charging stations in nine regions across the United States. Lastly, a partnership with Siemens allowed it to strengthen its presence within Europe.

ChargePoint was also able to secure some serious customers as part of the program. For instance, it installed charging stations at the corporate offices of Boeing and Google, amongst others. By the summer of 2012, the company had managed to install over 6,000 charging spots.

As a result, ChargePoint was able to raise yet another round of funding in May. This time, investors poured $47.5 million into the company. The next year, Better Place and ECOtality, its biggest competitors, both went bankrupt after raising hundreds of millions in venture funding. Consequently, less competition meant more customers that it would be able to attract.

In order to capitalize on this unique opportunity, ChargePoint raised another round in May 2014. It raised $27 million from many of its existing investors. Investors returning often serves as a positive signal since they may like what they see and want to continue participating in the firm’s upside.

Later that year, in October, co-founder and former CEO Richard Lowenthal left ChargePoint as he entered retirement. Back in 2011, he already handed the keys to Pasquale Romano, the former decade-long CEO of broadband provider 2Wire. Lowenthal, for the next three years, served as ChargePoint’s Chief Technical Officer.

Another strategy ChargePoint employed was to partner with automakers to deploy its charging stations. In January 2015, for example, the company announced a partnership with BMW and Volkswagen.

These automakers (as well as ChargePoint) used those partnerships to turbocharge the adoption of their own fleets as they competed against Tesla’s Surpercharger network. To that extent, ChargePoint also began to invest more into DC fast chargers, which are particularly critical for ‘on-the-go’ charging.

Moreover, ChargePoint was also simply able to grow alongside the EV market, which in 2015, grew by 80 percent according to the U.S. Department of Energy. In May 2016, the company raised yet another $59 million.

Demand for its services was so high that ChargePoint even had to introduce a Waitlist feature in October, which allows drivers to virtually queue up. Portions of its funding were also used for improving its existing products, for example by releasing an ultra-fast DC charging station that can deliver up to 400 kW in January 2017.

Two months later, in March, ChargePoint raised another $82 million in funding from automaker Daimler. At that point, it had already crossed more than 30,000 installed charging stations. The round was extended by another $43 million from Siemens in June.

That same month, ChargePoint made its first acquisition by purchasing over 10,000 charging stations from General Electric. On the residential side, it also continued to innovate, for example by partnering with Vivint Solar to integrate its charging tools into Vivint’s rooftop photovoltaic solar system.

After raising another $45 million in debt in January 2018, ChargePoint also managed to score a partnership with Amazon to integrate into Alexa and allow people to charge up their cars through voice commands.

In June, ChargePoint acquired its first-ever company. It purchased Kisensum, a fleet management software provider, for an undisclosed sum. The move was particularly aimed at strengthening its position in the bus segment.

Throughout the remainder of the year, ChargePoint operated under the mantra of interoperability. The company came out and publicly announced that it planned to have a global network of 2.5 million charging stations by 2025.

In order to fulfill that goal, it closed partnerships with other charging network operators to allow customers to use their platforms interchangeably. EVBox and FLO became the first set of partners in October. A partnership with Greenlots was announced two months after.

Meanwhile, ChargePoint also continued to beef up its balance sheet. In October, it raised a massive $240 million Series H round from the likes of Chevron, Daimler, American Electric Power, and more. It capped the year off with another $10.3 million grant from the state of Colorado to install local charging stations.

In 2019, ChargePoint managed to score more partnerships with the likes of GM (January) and Chevron (May) to install DC fast charging stations for the automaker’s own vehicles. It correspondingly built on its existing relationship with FLO, EVBox, and Greenlots by announcing a similar partnership with Electrify America in August.

All of these partnerships allowed ChargePoint to cross the inaugural mark of 100,000 charging stations in September 2019. Despite ChargePoint’s stellar growth, it also faced some complications along the way.

The coronavirus pandemic put many of its ongoing installation projects to a standstill. Luckily, demand eventually rebounded. Not only did it recover but lockdowns also led to less polluted air across many cities, which further solidified the switch to an all-electric future.

To capitalize on that opportunity, ChargePoint raised another $127 million in August. A month later, news emerged that ChargePoint was planning to go public by partnering with a special-purpose acquisition company (SPAC) called Switchback Energy.

On March 1st, 2021, the IPO finally took place. ChargePoint managed to raise another $450 million in the process. ChargePoint, as a result, became the first publicly traded EV charging network.

Portions of the IPO cash were immediately put to use by acquiring two more companies. In July, ChargePoint bought operating software firm for around $295 million. A month later, it spent $88 million to buy ViriCiti, an electric fleet management company. Both acquisitions not only strengthened its position in Europe (where the companies are headquartered) but also extended ChargePoint’s product portfolio.

Today, over 1,000 people are employed by ChargePoint which operates offices across the world.

How Does ChargePoint Make Money?

ChargePoint makes money by selling charging hardware, through cloud service subscriptions, as well as maintenance services.

The business model of ChargePoint is predicated on accelerating the adoption of its network as fast as possible.

Not only can it monetize its network through supplementary services (more on that later) but it secures critical locations for decades to come (as customers are not going to switch out charging stations every few years).

Additionally, ChargePoint is not dependent on one single EV manufacturer or customer type (e.g., municipality or businesses). Instead, its solutions can be plugged into almost any available EV, which vastly increases the utility of its charging networks.

To that extent, the company has begun to focus on interoperability by partnering with a variety of other charging operators such as Greenlots or FLO.

These partnerships are based on the Open Charge Point Interface (OCPI), an independent, open-source protocol that allows network operators to exchange necessary information.

Without further ado, let’s take a closer look at each of ChargePoint’s revenue streams in the section below.

Hardware Sales

The bulk of the revenue that ChargePoint generates comes from selling its charging hardware to businesses, government entities, or individuals.

As previously stated, ChargePoint offers Level 1, Level 2, DC fast charging, as well as various residential charging products.

The Level 1, Level 2, and DC fast charging stations are installed across a variety of locations, such as parking lots, supermarkets, fuel stations, and more.

Unlike some of its competitors, ChargePoint does not participate in the revenue that is generated from charging up a car.

Instead, its business and government partners get to keep 100 percent of the proceeds. This incentivizes site owners to work with ChargePoint as their investments will likely amortize over time.

Alternatively, businesses can offer free charging as a perk to their employees (similarly governments can provide such services for their citizens).

Since ChargePoint does not depend on utilization, it leaves businesses and governments with all the freedom in deciding how and where they want to place a given station.

ChargePoint benefits from its charging network by offering ancillary services and software solutions, which we’ll cover in the next two sections.

Cloud Service Subscriptions

Another way with which ChargePoint makes money is to sell various cloud-based subscriptions to commercial and fleet customers.

Features include:

  • Being able to set the price a driver pays at the station
  • Advanced access controls
  • Enabling a waitlist for drivers to queue efficiently
  • Integrations with fleet fuel cards
  • Notifications when a car is done charging
  • Real-time advanced analytics to monitor performance and health of a charging station

… and many more. Just like any modern-day subscription, ChargePoint generates revenue by charging a monthly fee.

As highlighted above, ChargePoint benefits from the swelling adoption of its charging hardware. The more installations it manages to do, the greater the pool of customers that would want to subscribe to its cloud services.

In order to make the offering more attractive, ChargePoint also made some acquisitions throughout 2021 to bolster the feature set of its cloud services.

Software subscriptions possess two major advantages: they often have very high margins and are extremely sticky.

A business customer who purchased a charging station from ChargePoint is naturally incentivized to subscribe to its software product because it enhances the driver’s experience and allows them to better manage their stations.

Assure Services

Lastly, ChargePoint also generates revenue through maintenance and management services dubbed ChargePoint Assure.

These services include proactive monitoring, fast response times, parts and labor warranty, expert advice, phone support, and more.

Customers can purchase up to five years of ChargePoint Assure coverage at selected stations. Assure fees are paid on a monthly basis.

Just its cloud services, ChargePoint benefits from an ever-increasing charging network. The bigger it grows, the more warranty services it can sell to its customers.

ChargePoint Funding, Revenue & Valuation

ChargePoint, according to Crunchbase, has raised a total of $929.2 million across thirteen rounds of funding.

Notable investors include Siemens, Toyota, Daimler, Quantum Energy Partners, Linse Capital, Baillie Gifford, and many others.

When ChargePoint went public in March 2021, during which it raised another $450 million, its business was valued at $2.4 billion. Its market cap has now risen to over $6 billion.

For the fiscal year 2021, ChargePoint generated revenues of $146 million, up from the $144.5 million it recorded in 2020.

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.