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Electric vehicles: Why one charging company is focusing on auto dealerships first

Charge Enterprises CEO Andrew Fox joins Yahoo Finance Live to discuss company earnings, electric vehicle adoption, supply chain issues, and the outlook for growth.

Video transcript

AKIKO FUJITA: Well, Charge Enterprises is yes, getting charged up today. That stock is up more than 5%, climbing after reporting an increase in revenue of $163 million in the first quarter. The company has a portfolio of businesses mainly focused on 5G and EV charging installation. And joining us to discuss is Charge Enterprise's founder, Chairman, and CEO, Andrew Fox. Alongside our autos reporter, Pras Subramanian.

Andrew, it's good to talk to you today. Certainly a good quarter for you. Talk to me about how rapidly you're scaling up right now as we see this acceleration towards EV adoption.

ANDREW FOX: Well, I mean, I think it's continuing to go up nicely. I think the reality is, is that given some of the demands in the global supply chain, it probably will take a little longer than a lot of the OEMs have anticipated to reach their goals. But I think that we're the enablers and so the infrastructure has to come first before the auto sales come.

And so I think that what you're seeing from us is the execution of our business plan. I think over the next 25 to 30 years though-- and it's like being at the dawn of the telecommunications for wireless-- we're just at the very, very first inning now on infrastructure for EV. And so I'm super excited by the tailwinds in our business and certainly, you're seeing it in terms of the acceleration of our infrastructure revenue.

PRAS SUBRAMANIAN: Hey, Andrew. Pras here, so I know we spoke recently about your business, and how you guys were basically agnostic about who you use as your technology partners, talk to me about that, why you guys are going that route? And also why you're also kind of focusing on places like car dealerships to build up that EV infrastructure at the moment?

ANDREW FOX: Yeah. I mean, I think if you look at the elasticity in spend for EV infrastructure, the real infrastructure spends are first going to be what you see inside of the auto dealers because they need to build the facilities in order to sell electric vehicles. So I think the key to success in any business is a laser focus. And so our laser focus for our customer segment is the automotive section, predominantly the 18,000 US auto dealers. And once they upgrade their facilities to be able to sell, then the next category as we see it are the fleets, the people they are selling to.

And so it's in a little bit of a race right now. And so there are lots of people focusing on retail, and I'm not saying that we're not identifying retail but really in order to enable the EV industry to jump-start, you really need infrastructure inside the auto dealers. And so that's predominantly why we start there. And then the reason why we're agnostic to the hardware is simply put, the standards today that are coming down from the large OEMs, and then you've got ChargePoint and Tesla systems, and so we decided that we'd rather work with all of them than be beholden to one. And so I think that strategy for us at this stage really works well.

BRIAN CHEUNG: You know, Andrew this is such an interesting kind of talking point because we know that there are a lot of other companies that are putting up infrastructure, and it's not even competition per se because we need all of these companies to provide that. But what do you see as the endgame here? Is the idea that your company's strategy to kind of stake with those dealers and kind of pick those types of locations over retail, are you hoping that at some point you can get up to scale where you can go into M&A and kind of team up with other types of EV makers? What do you see the industry looking like in five years?

ANDREW FOX: Yeah, I think it's a-- yeah, it's a sequence of events. So think of it as stairs that we're climbing. We can't be everything to everybody, we have to be focused. And there's a tremendous tailwind in the industry but there's really not like you just said, a lot of workers to do it. And so I would rather be the best in a category right now than once again try to be everything to everybody.

Now, what's happening is as we build the skill teams and the area of expertise around it, then what you're seeing is the natural progression for us into those other multifamily real estate, large municipal real estate projects, government projects, and all the others. And so a lot of people don't know too much about our business. But we only raised $7 million of pure equity when we started the business to tackle this. We focused on revenue growth. We've got ourselves to NASDAQ, we've done a lot of really hard work with very little capital because we see the market is like there are people who are spending tons of money on the infrastructure side but aren't producing the returns. And then you need the enablers guys like us who can do the work and there is margin there. And so that's why we've picked this angle but it's also important to note we've done five acquisitions and we like the acquisition strategy because it gives us skill teams in markets.

AKIKO FUJITA: Andrew, you alluded to supply chain issues that you've had to deal with as well. Where are you seeing the biggest bottlenecks right now? And to what extent does that slow you down?

ANDREW FOX: Well, it's not just us, it's everybody. I mean, from geopolitical tension to just the after-effects of COVID, I think that no industry has been immune to this. And so I think that it's why I'm laser-focused on one category and not trying to do all the categories. What I see is companies that are trying to do everything for everybody right now won't be able to meet demand. Staying laser-focused like we are trying to stay, enables us to not have the same distractions but there are certainly distractions for everybody.

And I think the biggest part of it right now you know, outside of the chip shortage, is just there's a lot of geopolitical uncertainty right now that's just slowing certain things down independent of how we believe. The good news is that on the infrastructure side, we're seeing such crazy tailwinds both-- and it's bipartisan for a national infrastructure for EV but just consumers are starting to see it. And I think once we can eliminate some of the range anxiety by putting more infrastructure out there, you'll see the adoption rate for EVs substantially increase.

PRAS SUBRAMANIAN: Hey, Andrew, one quick last one, you mentioned tailwinds, are you guys seeing a big boost from the Biden EV spending plan for that build-out? And also, what do you think we need to do here in this country to really get to that next level in terms of building that infrastructure that we need for people to buy these cars, feel comfortable driving them around in our country?

ANDREW FOX: Yeah, I mean, I think that-- so there's a lot of conversations going on about this in DC. There are a lot of people camped in DC. Once again I'm so laser-focused on our segment and keeping our, kind of our pinky toe in what's going on in Washington because the money's going to go to the states, and then the states are going to decide how they divvy it up.

I'm concerned that if a state has an ailing water tower or water treatment plant and it just got all this money for EV infrastructure they might divert it. And so my biggest concern is not making our business completely contingent on what happens with the federal government spend. In a best-case scenario, We start building the 500,000 you know, EV charging stations that the Biden administration would love to see built. And I think we'll be a huge beneficiary of that when that happens. But right now it's still just in the talking phases.

BRIAN CHEUNG: Andrew Fox of Charge, as well as Yahoo Finance's Pras Subramanian. Thanks so much for that conversation. Appreciate it.

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