Analysis

EV charging sector a strong target for SPACs?

, S&P Global market intelligence

A flurry of upcoming SPAC mergers involving companies targeting the rapidly growing market for electric vehicle charging is set to accelerate a wave of acquisitions sweeping through the sector. Following the listings of ChargePoint Holdings Inc. in February and EVgo Services LLC, at least three more EV charging companies are planning to go public by merging with SPACs, over the coming months. Despite still making heavy losses, they hope to tap into the same investor enthusiasm for the switch to EVs that has buoyed carmakers like Tesla Inc.

The four latest companies to go public via SPACs, which also include Volta Industries Inc., EVBox BV and Wallbox Chargers SL, expect to raise roughly $2 billion between them. With their newfound financial firepower, they could start to snap up smaller peers in the increasingly competitive charging space.

The market for EV charging has already undergone heavy consolidation, with major utilities and oil companies buying dozens of infrastructure installers and software startups in recent years. Other startups in the sector are now under growing pressure to carve out a dominant market position or risk becoming targets themselves, according to Sherief Rahim, a director at M&A firm Improved Corporate Finance.

Activity in the charging space is ramping up as government incentives and an explosion in electric models from carmakers drive up sales of EVs. The number of public and semi-public charging stations in Europe is expected to grow tenfold to 2 million between 2020 and 2030, according to researchers at IHS Markit. Arthur D. Little, a consultancy, forecasts revenues from charging passenger cars will reach close to €50 billion across the continent by then.

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