Blink Charging Co. (NASDAQ:BLNK) Barclays 2022 CEO Energy-Power Conference August 30, 2022 12:40 PM ET
Company Participants
Michael Farkas – Chairman, CEO
Conference Call Participants
Unidentified Analyst
All right. I think we’ll get started here. Thank you to everyone for coming to our conference today. Next up, we have Blink Charging, which offers EV charging network charging equipment and charging services. Here to talk about the company is Michael D. Farkas, Chairman and CEO.
Michael Farkas
Hello, everybody. Thank you for coming. I’m going to talk about Blink Charging. And we are now this month starting our 14th year in the business, and EV charging business you would consider us a dinosaur.
Here’s our Safe Harbor statement. This is some of the information about Blink. We design, manufacture, own and operate EV charging infrastructure. We were founded in 2009. We have about 51,000 charging stations that we’ve deployed. We’ve got about 420,000. members, EV charging members. We have about 540 employees. We’re fully vertically — fully vertically integrated. We’re one of the only fully vertically integrated EV charging infrastructure companies.
What does that mean? It means we design the charging stations, we produce the hardware we manufacture, the network that’s charging stations operate on. We own that as well. And we own a substantial amount of the charging stations that have been deployed. We have different methodologies in deploying the charging stations. We sell hardware to our customers. In addition, we own and operate charging stations.
One of the things that really separates us from our competitors is our real-world experience in deploying charging infrastructure. I put our team against anyone. If you look at some of our teammates, Ritsaart Montfrans, was the founder of NewMotion. He’s one of our board members. His right hand man, NewMotion, which was acquired by Shell, it’s now part of Shell recharge. Miko, who ran business with Ritsaart is our Managing Director in Europe and has been expanding our business there, both organically and through acquisitions.
We have Michael Rama, who’s our CFO, who’s very, very skilled in acquisitions, integrating those acquisitions and running a business. Brendan Jones, our Chief Operating Officer, worked at Nissan and was the person in-charge of rolling out the Nissan LEAF, the first production electric vehicle. From there he went to EVgo and help build their DC charger portfolio. From there, he was selected by Volkswagen to be their first employee to run Electrify America, he was their Chief Operating Officer. From there he joined Blink. Brendan and I know each other through the history of our business, and we know each other for over a decade or so. And I was able to finally bring him on board a couple of years ago.
In addition, we have Harjinder, most people don’t know but Harjinder was actually one of the founders of ChargePoint, one of our main competitors.
We completed our transformative acquisition of SemaConnect. And if you look at Blink’s history as we’ve grown through acquisitions. Right now, we consist of about 12 different companies that we’ve acquired or acquired their assets. And we believe in growing through acquisitions as well as through organic development — organic growth.
Blink and Sema were two of the larger EV charging companies in the United States. And Sema has been very focused in the U.S. market and they’ve done an amazing job. And we’re very happy of integrating them into our business now. They’ve added over 12,800 chargers to our portfolio, over 150,000 registered members, and we’re constantly growing with their business. They have amazing marquee locations, over 1800 of them. And we’re now developing our business model of owning and operating to the Sema portfolio.
We’ve also grown through acquisitions in the European market. We recently acquired EB and Blue Corner and that has given us a presence in the UK, Ireland, Netherlands, Brussels, Lichtenstein, France, Germany. And we’re going to — we buy companies that have a good foundation and then we expand on them. And it’s very important for us to really introduce a different model which is a Blink-owned and operate model into these acquisitions that we acquire. Some of them do have some own and operate business, but most of them are really in the shell of hardware and networking services.
Our new product launches. As you could see we have the most robust product offering out of any of our competitors. We have a back-end portal that manages all of our charging stations that we own and operate ourselves and are constantly upgrading. Our MQ 200 is a product line now for the fleet market, there is a massive amount of fleet interest.
Most of the operators globally are looking at expanding their business into the EV market from the perspective of maintenance costs, fuel operating an electric vehicle fleet is much more efficient for these operators. So we’re seeing just tremendous, tremendous interest. And this is a product that was specifically designed for the fleet market, and all the different nuances that they need.
In addition, you see our Vision IQ. It’s a charging station that’s going to have both a AC and a DC option. And this allows us to receive additional revenues at locations, that now we’re really just focused on EV charging. So there are many on street locations, commercial locations, retail locations, that having advertisement model is something that really could ramp up revenues in a very big way for us.
We have our Series 8 charger that we received in the Sema acquisition. This is the only charging station today that complies with California’s new rules is having a credit card swipe. Unfortunately, California, believe it or not, is going backwards. And instead of having a tap credit card feature, they’ve mandated that their charging stations have a swipe feature. Again, this is the only charging station today that complies with that mandate. And we believe it’s going to be a very, very big winner for us.
The HQ 200 is our workhorse. It is our commercial charging station. And we’ve been doing amazing business with it. And we’re going to continuously do some. Our HQ 200 is our new home product. And we have both a connected and non-connected version. And we’re seeing again, a lot of interest in the home market.
Most people don’t realize how much in need of charging stations really are. Today, there are a couple of million viable charging stations the entire marketplace. By 2040, we’re looking to need about between 400 million and 450 million chargers, the growth is astronomical. And in addition, we have our mobile application that allows you to operate those charging stations wherever you are and initiate charging sessions, get directions and operators’ charges.
The historic commitment to EV infrastructure, we are seeing the most unbelievable subsidies globally for the EV charging market. Never has there been in history, a business that’s growing as fast as it is getting the kind of subsidies that is from governments worldwide. In the U.S. alone, we’re talking about $7.5 billion, $5 billion being given out by the states. And additional $2.5 billion dollars being given out by the Feds. This is just for the U.S. There are programs certainly globally.
We’re talking tremendous amounts of money. The way these programs typically work is we pay for the installation, the deployment, and then the government reimburses us. Typically it’s about 80% of the cost of the program. So it’s literally buying dollars for $0.20. And again, never in history, have we seen such subsidies. And it’s continuing.
This is how you compare us to our competitors. As you can see, we are the only fully vertically integrated EV charging infrastructure company, pretty much everywhere. There may be one other company in China called Star that says vertically integrated as we are. You can see we check all the boxes, from designing the hardware to manufacturing the hardware to having the network ourselves owning and operating the charging infrastructure and providing all these other services.
Clearly, we are by far the most robust and being able to offer services and functionality to our customer base and multiple deployment methodologies that allows different property owners to deploy charging stations as they currently deployed capital.
Question-and-Answer Session
Q – Unidentified Analyst
So I’m going to actually open it up to the audience to see if anyone has any questions. If not, I have a list of questions to go through. So — but maybe while we wait for people to gain some courage, maybe I could start. There are a lot of EV operator models. And I’m curious to know why you think the owner operator model is worth pursuing because it is very capital intensive. And If we need to build out the big network, that’s a lot of capital, you need to spend for the foreseeable future,
Michael Farkas
Correct. It’s very simple. The first charging station that we bought and was actually purchased by Coulomb. I mean, we’ve purchased from coulomb technologies, which has no charge point. Our first charging station cost was 6,200 and change. It had 1.8 kilowatts of output. And today, we’re producing charging stations for less than $600 a port with 19.2 kilowatts of output. So clearly, there’s massive commoditization on the hardware.
On the network side, the first unit we purchased, it costs us $2,499 per month for connectivity fees. Today, we’re being offered, if we buy from certain manufacturers free networking fees for a few years, commoditization, on the networking side. The only component of this service that’s not going to be commoditized is the actual providing the fuel. We’re seeing actual growth in that side of the business and additional margins. So we at Blink are focusing on the long-term element of this business, which is the sale of the fuel. Otherwise, we don’t see true opportunities for profitability.
Let’s compare us to one of our competitors ChargePoint, they sell hardware, that’s all they do, they own and operate. And they’re the largest in the space, but yet they’re selling more, but their losses are increasing as well because of the fact of the commoditization. When you look at our business, and you see on the owner operate model, it takes very, very little utilization. So this to be a very, very profitable investment. So owning and operating is the long-term, we believe that long-term most viable component of the transaction of fueling your EV.
Unidentified Analyst
So you mentioned low utilization, but the success of EV charge for charging is going to depend on the rollout and increased adoption of EVs. So can you just kind of walk us through what is the breakeven period for an owner-operated install, kind of maybe what you’re seeing today versus what you might see five 10 years from now.
Michael Farkas
Okay. When you look at a Level 2 deployment, you need very little utilization for it to become a profitable deployment. If you’re looking at a 10% straight line utilization, and we have two different methodologies of deploying hardware that we own and operate. And one model, we pay for everything. And we call that our turnkey solution. In that model, it’s a seven-year contract with two seven-year extensions, those are exclusive. We have a hybrid model where we provide the equipment and manage the solution, and the property owner pays for the installation. That’s a five-year contract with two five-year extensions.
For the most part, those are automatic extensions. So you’re looking at 15 year contracts, and 21 year contracts. There’s stickiness there. So when you sell hardware, we sell hardware charge when sells hardware, there’s no stickiness. Tomorrow, we could be thrown out tomorrow, they could be thrown out replace with somebody else.
But when we’re an owner and operator, it’s not about equipment, it’s about a service. And we have exclusive rights at these locations, whether again, it’s 15 years or 21 years to provide EV charging services. It’s not about a Level 2 charging station, it’s not about a DC fast charging station, whatever equipment that we feel is appropriate for that location it’s our right to deploy and as many of units in those locations.
And it applies to any vehicle whatsoever that needs fueling, whether it’s an e-bike, an e-motorcycle, and EV itself, or even these eVTOL vehicles that are going to be flying into the rooftops of buildings and parking lots. So when we have an address, we have a location. It incorporates all of that. So it’s very, very different model. Yes, it’s a little bit more capital intensive. But when you have the government subsidizing as much as they are today, it’s not as capital intensive as you think. But that’s what we believe is the focus.
When you look at a payback on a own and operate model and are held to it model on own and operate turnkey. It’s typically about — if you have a 10% straight line utilization rate, again, which is not heavy, we have units that are doing more than that today. We also have a lot of units that are doing less than that today. But on a turnkey solution, you’re looking at less than two-year payback. You have 19 years left on that contract. On our hybrid model, it’s less than a year payback, again, utilizing that straight 10% utilization rate.
And again, what we’re seeing today, which is very interesting is we’re seeing utilization rates, almost on par with the percentage of fleet sales of total vehicles. So today, we just achieved 5% or last month we achieved 5% of total vehicle sales being EVs. And we’re seeing on the network roughly around that same number of utilization, get to 10% it’s a whole different ballgame. The whole way different way of financing these units a whole different way of operating the units.
Unidentified Analyst
And how do we think about how you charge for charging?
Michael Farkas
Qe today charge based upon certain factors, but obviously takes into consideration the cost of our electricity, the cost of the equipment and advertising that over its life, and what we have to distribute to the property owners. But as things progressed, we’re going to have more location-based pricing, and that certain systems that we’re building into our network. There are certain times where energy is less expensive in certain areas. And today, we don’t really change them a little bit, like in California scenarios, or Hawaii was extremely expensive electricity, we charge a little bit more, but we have a uniform plan, how to make it simple.
But as your utilization increases, as more EV drivers on the road, just like you have at a gas station, you might have one corner 99 — whatever, 499 another corner of 510. We’re going to have similar pricing and will be based upon, again, what our distribution costs are to the property owners, especially specifically our electricity costs, which are going to be impact that number, but it is going to be location based shortly.
Unidentified Analyst
Okay. So maybe we could touch upon your SemaConnect acquisition. That was a transfer formative transaction for you guys. Can you remind us what type of synergies investors should expect from the integration of SemaConnect into Blink,
Michael Farkas
first off, the reduction of cost per unit. Sema manufacture their own hardware, that facilities in India and the U.S. , and who outsourced our production to a third party contract manufacturer. Sema handles all of that internally, that is going to be bringing us a huge benefit across the board, more control on equipment, less susceptible to dealing with supply chain issues. So there’s going to be a lot of really amazing things on the manufacturing side and the hardware side.
Unidentified Analyst
But, you have duplicative efforts from management, overlapping management that we can then focus some of our team on other resources, having a much, much stronger development staff, technology staff. There’s so many benefits to the teams being integrated. It’s just a matter of building the teams.
Right now, one of the biggest issues that this industry has in pretty much every industry is finding really, really good people. And most people is finding experienced people, especially because this is a sort of new industry that people are still learning about. So having the team Mahi and his group at Sema is something that’s been very beneficial to us. From a hardware side firmware side, these are things that we didn’t have beforehand. So now that brings in certain core competencies that really makes us the most vertically integrated player in the space.
Unidentified Analyst
And can you remind us about SemaConnect progress on DC chargers? And how fast you can be compliant with the built in America requirements?
Michael Farkas
Okay. Through a Sema , we already comply. Their facility is in the U.S. content to the unit’s comply. When it comes to DC, this is a new product line for Sema. If you’re talking about, you know, synergies and scale, we were both developing DC fast chargers, next generation DC fast chargers. So instead of us both doing that, and spending the millions of dollars in doing so, we now completely combine those efforts. So as a combined company, we will be saving a tremendous amount of money in the in developing that hardware.
And in certain, technology and concepts and ideas that they had. We didn’t have in certain concepts and technologies and ideas that we had. So integrating and having two different perspectives is really, really helpful.
Unidentified Analyst
And how helpful has it been on the AC side?
Michael Farkas
Okay, we are right now. I would say — I would say we’re now the reigning leader on AC and then people say, fuel cell charge was so much bigger than you. Yeah, they were. And they still are. But when we’re getting the validation that we’re getting from the GMs of the world, and the Subarus of the world and other OEMs and the validation that we’re getting from Audi. And people don’t really understand that validation, but it’s massive.
Audi is a sister company to Electrify America, both of them are owned by Volkswagen. And when Audi selected us as the hardware vendor, and provider for all the Audi dealerships, I could tell you, there was hell raised at the VW Board level. And the reason why is because Giovanni who happens to be the Head of Electrify America is also on the Board of Volkswagen. He was very, very unhappy with that selection.
And the reason why they selected us is they went through a very, very detailed vetting process. And when they put our equipment against Electrify and all of our competitors, we were selected. And the reason why is very simple. The dealerships are paying for this money. And it’s our responsibility to make sure that the best equipment that alleviates obsolescence is what these dealerships are paying for. And after going through a vetting process, they clearly selected us. And I can’t find better validation.
It’s one thing when a real estate company selects do or McDonald’s or someone, they don’t go to the same degree of validating the technology, Volkswagen and Audi and they literally took these units apart, broke them down into pieces and compare them to everybody else. And we were the victor. It wasn’t ChargePoint, it wasn’t EVgo, it wasn’t our competitors. And this is happening, more show and with other OEMs. And we have a lot of exciting news about more relationships that we have.
But those that are in the know, those that are building the cars, those that are testing their cars with charging stations, for those organizations to select us is I think something that’s massive for Blink.
Unidentified Analyst
So I think that’s an interesting example that you brought up with Volkswagen. Because earlier comments, you’re talking about how hardware is going to be commoditized. So why don’t we talk about your hardware? How do you differentiate yourself from the competition? Why is it that you know, someone like Volkswagen went with you guys?
Michael Farkas
It’s a different philosophy and developing hardware is very simple. We develop the hardware for us to make money off the sale of electricity. Our competitors develop hardware to sell hardware. It’s very simple. Our competitors look at a charging station, like an iPhone, and we look at a charging station, like a hot water heater. We need it to last as long as possible, we need to alleviate obsolescence. Because every time there’s a problem with that charging station, we’re spending our money to go roll the truck to go get that unit repaired.
So for us to spend a little bit more money on a stronger cord, strong connector, stronger components really saves us money in the long-term. Because building a unit that’s easy to install, because we’re saving money on the installation, it directly impacts us. This is a completely different philosophy.
There’s not one other manufacturer who owns and operates charging stations. They don’t have the same experience that we do. There’s a lot that you learn after someone receives the box with the charging station in their site surveys, site evaluation, the installation of the unit, the maintenance of the unit, dealing with the EV drivers, the customers on a daily basis, there’s so much information that you gather and experience that you get from doing that, that you build into further generations of hardware.
If you don’t do that, you don’t have that insight. So that’s what I believe is one of our biggest advantages is because we’re so built in into that entire chain from literally from developing the hardware to dealing with the consumer who plugs into that hardware, that we’re able to adapt those changes much quicker than anybody else.
People add our functionality, a generation or two after we do again, because of that firsthand experience. And that’s what I think, separates our hardware, from everybody else’s. Our hardware is faster than anybody, you can’t buy an L2 charging station from ChargePoint with 19.2 kilowatts of output. Reason why is they wanted an upgrade cycle.
We asked them to build that for us six years ago, they refused to because they wanted to go from 3.3 to 7.2, 2010, to 12 and then to ultimately 19.2. We had to jump that entire process because we’re the ones who invested in that hardware pay to deploy and the last thing we can do is afford for it to become obsolete.
Unidentified Analyst
So going back to this owner operator model. It is more capital intensive but the criticism also is that the pathway to profitability takes longer. So can you talk about your pathway and when you expect to be profitable.
Michael Farkas
That’s a great comment, The pathway to profitability, I think that’s the Holy Grail in EV charging for everybody. But yet, we have companies who just sell hardware, they don’t have the expenses of investing in hardware and their revenues are gaining and gaining but so are their losses.
If you look at the ratio between our sales and our losses is actually contracting. Some of our competitors where it’s actually widening. And we’re trying to manage as best as we can to achieve profitability. But we’re also very realistic about where we stand again, I need to repeat these numbers. There are a couple million viable charging stations globally. We need 400 million to 450 million of them by 2040. It’s about a land grab, whoever owns the most charging stations wins. It’s not about selling the hardware, if you don’t own and operate the hardware and you’re just selling the hardware, you’re going to be out of business.
It’s not a sustainable model. And if you just own and operate without providing the hardware without owning your own network again, that’s unjust stainable you need to control every facet of the business, because every penny counts in this business. And you need to be able to service every single type of customer. It was funny because, we had a competition where all of these EV charging companies competed with. And we were the victor.
And when sitting with McDonald’s in Illinois, I was told by the Head of Sustainability, that McDonald’s has as many varieties of property owners as they do have a Big Mac. And that’s one of the reasons why we’re winning the types of contracts that we’re winning right now, whether it’s Cushman Wakefield, or McDonald’s or these large garage operators. They manage properties for third parties, they don’t own these locations. And each of these property managers have different ways of deploying capital at their locations.
So you have property managers who don’t want to have all different vendors coming to the location, they want to have a vendor that could satisfy every different property owner. Today, that’s only us. And I’ll give you a perfect real world example, if you have a ChargePoint salesperson walk into a potential customer, and that that potential customer is excited about the offering. And they’re like, okay, I want to I’m asset light, I want you to own and operate the infrastructure in my location, guess what, that ChargePoint salesperson walks out the door.
On the other hand, if you have EVgo, Electrify America, or any of the others, they walk into the door to prospective client, and that client was like, okay, this is great. I love this. I want to own and operate this stuff, I don’t have more skin in the game. Those salespeople are out the door.
We’re the only company today that could walk into a location. And instead of pitching our service or pitching our product, we actually ask them, how do you deploy capital in your locations? Do you own and operate stuff? Do you typically outsource everything? And then we explain to them hey, this is the service that we have. It’s completely different approach to the customers than our competitors have. It’s not about us pitching what we have, it’s about really listening to the customer, and finding out what they want, and then filling that gap.
Unidentified Analyst
All about the customer.
Michael Farkas
It’s all right, the customer.
Unidentified Analyst
Okay, I am almost out of time, so I’m just going to squeak — we have a question.
Michael Farkas
It’s not as confusing as you think. Unfortunately, there’s a lot of misinformation. We believe in making sure that there’s a hardware solution for every location, we have DC fast chargers from 350 kilowatts, all the way down to 34 fleet. We have AC chargers, from single family home to alter types of commercial locations. So we believe in having the right product mix for the right location.
I think there’s a huge misunderstanding of the marketplace. And I think people that are focusing on just DC are going to make a very big mistake. The concept of going somewhere to fuel your car is going the way of the dinosaur. Wherever cars are going to be there’s going to be charging infrastructure, and it’s not going to be DC fast chargers.
Most people are going to charge overnight, most people are going to charge in their home. And if they have a single family dedicated parking spaces, that’s where they’re going to charge. And if not, they’re going to charge in their home, either in their garage, in buildings like right around here or if you’re right, outside the city, like in places like Staten Island, Queens, Brooklyn, and similarly in other dense urban areas. We’re putting chargers on streets, now. We’re putting chargers where you can access them as a home charger, but it’s not necessarily a home charger.
Batteries now that are — the energy density is increasing tremendously, and the cost is coming down ridiculously. CETL just announced that they have a battery that are coming out with 400 and some odd miles for a model three. You’re going to need to charge your car once every 10-12 days. The whole concept of going somewhere to fuel a car is over. Everywhere where you park your car, there’s going to be charging stations, that’s where we believe most of the charging to take place. It costs a lot more money to use DC charging to fuel your car than it does AC. And when people take those costs into consideration, they’re very rarely going to use DC fast charging other than long distance traveling. It’s going to be there. It’s not going to be there.
But when you look at the number, I was talking to you about a 440 million to 450 million charges. You have to understand something. Single digits of those will be DC. That’s it. Most of the charging, 85%-90% of all charging from everybody’s estimates is going to be done on AC charging globally.
Unidentified Analyst
All right. So we’re out of time. But thank you so much for coming.
Michael Farkas
Thank you for having me.
Be the first to comment