Volkswagen is looking to sell a partial stake in Electrify America LLC, according to a Reuters report. The story states that, “two people familiar with the matter” said the automaker is seeking the assistance of Citi to raise $1 billion to fund charging infrastructure.
When asked by The Detroit Bureau, Volkswagen had no comment.
Electrify America: a company born of scandal
Electrify America was created by Volkswagen as a part a $2 billion settlement with the U.S. and California in the wake of the company’s diesel emissions scandal. According to Electrify America, the company has more than 600 electric vehicle charging stations and nearly 2,600 individual fast chargers currently operating across the continental United States. The company is seeking a presence in 29 metro areas and 45 states, with plans for two cross-country routes. The company is planning to add stations in Hawaii, South Dakota, Wyoming and Vermont for the first time by next year, according to the company’s website.
“With our rapid station deployment, we are on track to have 800 charging stations with about 3,500 chargers open or under development by the end of this year,” said Giovanni Palazzo, president and chief executive officer of Electrify America, in an April statement.
After creating Electrify America as part of it diesel scandal settlement, VW laid out a ten-year plan for Electrify America. It called for roughly equal amounts of spending each year, with that money to be largely divided between setting up a national charger network, and a pro-EV marketing campaign. But with EV adoption accelerating at a quickening pace, it has become clear to company officials that there is the opportunity to grow the charger network more rapidly than the original charging plan called for.
A small, but growing, market
Electrified vehicles in all their various forms, from HEVs to BEVs, accounted for less than 6% of the U.S. market last year. Plug-based models, including both BEVs and PHEVs, barely generated 2% of that. However, the market began to accelerate in 2020 even while the overall new vehicle market tumbled due to the Pandemic. The trend has only accelerated in 2021 with industry data showing demand for plug-based models, including PHEVs and BEVs alone, increased by 95% in the first quarter. That has been driven in large part by the arrival of new products such as the Ford Mustang Mach-E and the Volkswagen I.D.4.
Competitors also seek funding
Electrify America is just one a number of public charging companies that hope to take advantage of growing demand, while also being in a position to benefit from the Biden Administration’s push to put up a network of 5,000 chargers around the country by 2030.
Last week EVgo, a competing electric vehicle charging company, went public after the company merged with Climate Change Crisis Real Impact I Acquisition Corp, a special purpose acquisition company, or SPAC. Similarly, ChargePoint merged with publicly-traded SPAC Switchback Energy Acquisition Corporation in February. Three other electric vehicle charging companies are in the midst of completing their SPAC deals: Volta is merging with Tortoise Acquisition II Corp., EVbox is combining with TPG Pace Beneficial Finance Corp., and WallBox is looking to tie-up with with Kensington Capital Acquisition II Corp., according to Barron’s.
A growing partnership with OEMs
Despite Volkswagen’s role, Electrify America has formed relations with some competing manufacturers. In June, it announced a deal with Mercedes-Benz to provide two years of free charging for buyers of the all-electric EQS sedan scheduled to go on sale late this year. Others include traditional automakers including Hyundai, Kia, Ford and Jeep, as well as start-up Fisker and Lucid. The company has laos reached agreements with Walmart, Bank of America, Love’s Travel Stops, and others.
But officials with several other manufacturers, speaking to TheDetroitBureau.com on background have indicated a reluctance to partner with Electrify America because of it relationship to VW.
Paul A. Eisenstein contributed to this report.