How to Invest in EV Charging Stations

Key Points

• Electric vehicles (EVs) are automobiles powered by electricity stored in rechargeable batteries rather than gasoline or diesel fuel. 
• The federal government has introduced a number of subsidies to encourage EV production, development, and purchase, attracting investors to the EV charging sector.
• There are multiple ways to invest in the future of EV charging, from directly purchasing a charging station to buying charging tech stocks.

The rise of electric vehicles (EVs) has marked a massive shift in the automotive industry, opening new investment opportunities. With growing demand for cleaner transportation and substantial government support, investing in EV charging stations presents an exciting frontier for investors.

If you're wondering how to invest in EV charging stations, you're in luck because there is still time to invest in the early stages of EV technology. Read on to learn more about electric vehicles, the many types of companies that make up the industry, and how you can invest in the future of power for U.S. vehicles.

Why Invest in EV Charging Stations?

In 2024, the push for EV adoption remains a central goal for policymakers and manufacturers. The Biden administration continues to prioritize EVs, aiming for at least 50% of U.S. vehicle sales to be electric by 2030. The government has already allocated $7.5 billion specifically for EV charging infrastructure, with plans to build more than 500,000 charging stations across the country by 2030. This is just part of a broader $17 billion commitment toward clean transportation and EV battery development.

Combined with the tax benefits that accompany purchasing an electric vehicle, these initiatives are fueling growth in EV-related industries, making charging stations a critical element in supporting the transition to electric vehicles. As EVs become more prevalent, the demand for charging infrastructure is expected to skyrocket, creating a lucrative opportunity for investors.

Overview of EV Charging Stations in the United States

As of mid-2024, there are approximately 60,000 EV charging stations across the United States, up from nearly 52,000 in 2023. The U.S. Department of Energy provides tools for tracking these locations, which are crucial to the expansion of electric vehicle use. The ongoing rollout of new stations, backed by both private and public investments, indicates that the market is still in its early growth stages, offering significant potential for long-term returns.

Market Forecast of EV Charging Stations in the United States

The demand for EV charging infrastructure is expected to continue rising rapidly over the next several years. By 2030, the United States aims to have half a million charging stations, a target that underscores the government’s commitment to supporting the EV revolution. This growth is anticipated to be accompanied by a variety of investment opportunities, including in charging station infrastructure, equipment manufacturing, and related sectors.

Ways to Invest in EV Charging Stations

You may see the massive need for EV infrastructure as an opportunity, but wonder how to invest in electric charging stations. Let's examine several options.

1. Traditional Charging Networks

Investing directly in charging stations involves purchasing or partnering to install the infrastructure on commercial properties. If you own land in a high-traffic area, such as retail spaces or office buildings, installing EV chargers can create an immediate revenue stream. Some property owners may also qualify for tax incentives, making it an attractive investment.

While this approach can provide a steady income, it requires substantial upfront costs. Installing a single charging station can cost thousands of dollars, so some investors might prefer to buy stock in companies that build and operate EV charging networks instead.

2. EV Charging Stocks

Investing in publicly traded companies that manufacture and operate EV charging stations offers a lower-cost entry into the market. Major players in the industry include ChargePoint Holdings Inc. NYSE: CHPT and EVGo Inc. NYSE: EVGO. These companies build and maintain charging stations, offering a way for investors to benefit from the growth of EV infrastructure without directly purchasing equipment.

Additionally, some electric vehicle manufacturers are major providers of charging stations. Tesla Inc. NASDAQ: TSLA, for example, has developed an extensive network of fast chargers, making it a significant player in the EV charging space.

3. Emerging Technologies

The EV market is evolving rapidly, with ongoing advancements in battery technology, energy efficiency, and charging speed. Companies like Tesla and Rivian Automotive NASDAQ: RIVN are at the forefront of these innovations, making them attractive options for investors looking to capitalize on future technological breakthroughs. As these technologies develop, they may improve the efficiency and profitability of EV charging stations, further enhancing their investment potential.

Pros and Cons of Investing in EV Charging Stations

Like any investment opportunity, risks and rewards occur when pursuing investments in EV charging. It's always important to research any potential investment to ensure you are comfortable with the company's direction or the installation cost if you install actual hardware rather than investing in a stock.

Pros

With ambitious goals for EV ownership in the United States and worldwide, the EV charging market seems primed for success.

• Government Support: Significant funding from the government has been provided to support the expansion of EV charging infrastructure.
• Growing Market: The shift toward electric vehicles is expected to create sustained demand for charging stations, offering the potential for long-term returns. Many exciting companies in the EV sector invest heavily in growth, research, and development opportunities, allowing investors to enter a growing industry early. 
• Diverse Investment Options: Investors can choose from various entry points, including purchasing stocks in EV charging companies or investing in the physical infrastructure.

Cons

While it seems like EV charging is the wave of the future, there is no such thing as guaranteed success in investing or technology. As new innovation happens, there are opportunities for success but risks.

• Infrastructure Challenges: The current power grid and EV charging infrastructure is insufficient to meet growing consumer demand. Power grid and other infrastructure issues could slow EV growth, leading to a slower return on investment. 
• High Upfront Costs: For investors looking to install EV charging stations themselves, the upfront costs can be substantial.
• Technological Uncertainty: As battery technology evolves, existing charging infrastructure may become outdated, posing risks for long-term investors. The EV industry has been plagued by supply chain issues, which may impact how batteries are produced in the future.

Future of EV Charging

Today, auto manufacturers and the government are going full speed ahead on EVs, incentivizing their ownership and putting massive amounts of money into their development. With so many new cars on the road, EV charging has the potential to become an enormous part of the American economy, both in homes and via charging stations across the country.

The industry is undergoing constant innovation, and improvements to the range and life expectancy of car batteries will likely improve. Breakthroughs in infrastructure are necessary for the goal of EVs to become a reality, as improvements to the power grid and accessibility will occur to serve the number of cars projected by the federal government.

Summing Up EV Charging

Significant change is coming to the automotive industry, and the impact of the switch to EVs in the next five to ten years has the potential to change it substantially. With billions of dollars flowing into EV production and the creation of EV charging stations across the nation, there is an obvious investment opportunity.

Whether through direct ownership of charging stations or investments in EV stocks, there are multiple ways to capitalize on this growing trend. However, it's important to diversify your investments to avoid concentrated losses by a single sector or company. Consider investing in multiple sectors of the EV industry through individual stock purchases or an ETF. 

By staying informed about market trends and diversifying your portfolio, you can position yourself to benefit from the future of electric transportation.

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FAQs

Look at a few frequently asked questions about EV charging investments. 

Is an EV Charging Station a Good Investment?

Many EV charging stations advertise a consistent revenue stream for people who install them on their property. In addition, if you own a commercial space such as a shopping mall, apartment community, etc., installing charging stations gives you an advantage over comparable businesses. However, each station may cost upwards of $2,600 to install. 

Are EV Charging Stations Profitable?

The amount of revenue investors will see will depend on which EV charging company you partner with and the traffic your property receives. Aside from the profit you receive from the station, you will likely see an increase in traffic to your location, especially if there are no charging stations nearby.

What Is the Best EV Charging Station Stock to Buy?

On the surface, it might seem like you have limited options for EV charging stocks, but there are several to choose from. The best one for your portfolio will depend on your investment goals and which companies you believe are at the forefront of innovation in the EV charging space. Popular options include ChargePoint Holdings and Tesla.