Many electric vehicle charging stocks are down from their all-time highs. Shares of one of the biggest EV charging companies, ChargePoint Holdings (CHPT), are trading for under $14 per share. This is just a fraction of its all-time high share price of $46. EVgo (EVGO), another EV charging leader, is also down, trading for $7 per share from an all-time high of $22 per share.
Despite these poor stock performances, the electric vehicle charging industry is just getting fueled up as money flows into the industry.
The recently-passed Inflation Reduction Act includes a number of different perks for EVs which, in turn, should increase demand for EV chargers. The 2021 infrastructure bill also reserved $7.5 billion for EV chargers over the next decade. On top of that, some states, such as California, are beginning to phase out combustion-engine automobiles altogether.
With these measures in place, the future roads of America are sure to be lined with EVs and EV chargers. What exactly will that look like?
Paving the Way
Right now, electric vehicle charging companies are scrambling to build the necessary infrastructure to support the inevitable EV takeover. However, given travel habits are constantly changing, it’s tough to know exactly what future consumers will want.
For example, after receiving fresh government funding, EVgo is set to start building fast chargers along highway corridors. But will consumers want to recharge along highways? At convenience stores? From home?
EVgo might be right in its assessment that consumers will need fast electric recharging. Yet, it could fail if their product fails to match up with what future EV consumers want.
This is the biggest risk for investors when investing in emerging industries.
Investing in EV Charging
By this point, there’s little doubt that the future of American automobiles will be electric. Subsequently, there will be a massive need for electric vehicle charging stations. However, investors need to be careful not to put all their eggs in one basket.
There are certainly several companies at this stage that have a head start in the EV charging race, but the race is far from over. In fact, it’s possible that the most popular EV charging company of 2035 doesn’t even exist yet.
Investors may be intrigued by the idea of investing in EV charging companies. However, the wise approach could involve spreading investments across a number of different companies. Alternatively, there are index funds that track the entire EV industry. Both of these strategies offer reduced risk, in comparison to investing in a single company.
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