Strategic vendors and European utilities responsible for 80% of EV charging M&A activity over last decade

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Strategic vendors – companies that offer products or services in the electric vehicle (EV) market – and European utilities were responsible for over 80% of EV charging mergers and acquisitions (M&A) activity from 2010 through 1H2019, according to new research from Wood Mackenzie.

The report,
Corporate Activity in the EV Infrastructure Space, reveals that strategic vendors were responsible for 50% of acquisitions during the period studied. European utilities were the second most active group in EV infrastructure M&A, completing 10 acquisitions.

Commenting on the research, Kelly McCoy, Wood Mackenzie Research Associate, says: ‘Since 2011, there have been 32 acquisitions of EV infrastructure companies. Some 26 of those were completed by strategic vendors and European utilities. These companies are using acquisitions to enter and strengthen their position in the EV charging market. They often involve other elements of flexibility, such as energy storage or demand response – both of which are becoming increasingly important to utilities in particular.’

‘Acquisitions of network operators, EV charger manufacturers and vertically integrated vendors accounted for over half of the deals for both vendors and utilities.’

‘Since 2010, 61 EV charging infrastructure vendors have raised a cumulative total of $1.7bn across 133 investment rounds. A total of 29% of these rounds did not disclose the investment value, indicating the value of investments is even higher.’

‘Vendors strategically acquired companies that strengthen their current EV charging offerings or open up a new regional market. Acquisitions of these vendors by utilities reflects a shift in the utility mindset and business model. In Europe, most of the charging infrastructure is operated by utilities.’

BP and Shell most active oil and gas firms in EV M&A space
Across all EV infrastructure submarkets, non-strategic investors – those that may invest in both energy and non-energy companies – accounted for one-third of all M&A deals. Strategic oil and gas activity did not lead any of the rounds until 2017, the same year of the first acquisition made by an oil and gas player.

‘EV charger manufacturers, network operators and vertically integrated vendors have accounted for half of EV infrastructure venture-capital investment activity by deal count and disclosed value since 2012. These investments were most frequently backed by non-strategic investment firms and strategic vendors,’ notes McCoy.

‘BP and Shell have been the most active oil and gas firms. They have acquired three network operators and vertically integrated vendors between them, falling in line with their strategy to develop a presence in power and transport electrification.’

‘Smart charging and vehicle-to-grid software are two submarkets on the rise. Since the first venture capital round in 2014, deal count has increased each year for these submarkets. This will continue to be important as utilities, aggregators and grid operators seek point or enterprise solutions – such as a distributed energy resource management system (DERMS) – to manage EV load and other distributed resources.’

Aligning with regional trends
M&A activity in the EV infrastructure market has aligned with regional trends and differences, according to the report.

‘Utilities in Europe are very active in acquiring charger companies to gain additional market share and position themselves to benefit from continued policy support for the electrification of transport. Regulated US utilities typically cannot own or operate their own charger networks and therefore seek to engage in partnerships to expand access to chargers in their service territory,’ explains McCoy.

‘Oil and gas companies are investing in or acquiring companies in their target markets. For example, Chevron announced a partnership with EVgo to deploy chargers at some of its California-based gas stations.’

Infrastructure build-out required to meet EV demand
Rapid growth in the rate of EV adoption is reinforcing the need for more infrastructure build-out.

‘Among EV categories, cumulative passenger EV stock has the fastest annual growth rate of over 50% since 2013. Global passenger vehicle stock surpassed 5mn in 2018,’ says McCoy.

‘Policymakers are beginning to focus on medium and heavy-duty electrification as well. The market for these vehicles remains in nascent piloting phases outside of the e-bus market in China, which has exploded to over 400,000 vehicles on the road.’

‘As the market continues to grow and expand, more public chargers will be needed to both reduce range anxiety fears and improve access. New chargers must be deployed to support emerging vehicle classes and partnerships will be needed to balance grid needs and customer charging demand.’

Figure 1: Disclosed EV infrastructure M&A deals by type of investor
Source: Wood Mackenzie

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