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This startup is convincing brands to pay for charging electric cars

Michael Menendez, CTO, and Scott Mercer, CEO of startup VoltaMichael Menendez, CTO, and Scott Mercer, CEO of startup Volta
Michael Menendez, CTO, and Scott Mercer, CEO of startup VoltaCourtesy of Volta

Are electric car chargers the latest untapped real estate for marketers to reach environmentally conscious consumers? A five-year-old San Francisco-based startup called Volta is starting to gain traction by offering free electric car charging to drivers, paid for by advertisers.

The company said Wednesday that it’s installed around 110 electric car charging stations in shopping centers across the country that feature ads from companies like solar provider Sungevity.

Along with the growth, Volta has raised a new round of $4.5 million in equity funding, led by Three Bridges Ventures, as well as a $3 million in project finance funding from SQN to install more kiosks.

Volta CEO Scott Mercer told Fortune that the company plans to use the funding to install 400 charging stations by the end of the year as well as to refine its technology. Right now the ads are mostly static, but the company plans to make its charging kiosks more interactive with users and plans to roll out a mobile app so drivers can check which stations are open before they arrive.

Co-founded by Mercer and CTO Michael Menendez, Volta first started out as a pilot project in Honolulu. Because Hawaii has one of the highest gas prices in the U.S., and its islands are relatively small, the state has been a natural breeding ground for electric cars.

As the company has grown, it has installed its chargers around San Francisco, Los Angeles, San Diego and Phoenix. The more populated areas mean more eyeballs for advertisers and more use of the chargers. Mercer says the company’s deal with Whole Foods includes 37 stations in the Los Angeles area, which are being heavily used.

tesla charging station, tesla 'gigafactory"
A Tesla with vanity license plate “GAS LOL” at a charging station in Truckee, CA, the closest station to the ‘gigafactory” site near Reno.Photograph by Winni Wintermeyer for Fortune
Photograph by Winni Wintermeyer for Fortune

Volta not only gives away the electricity for free to the user, but it also takes on the cost of installing the charging station for the shopping center. While that sounds like it could start getting expensive, Mercer says that the cost of the charging stations and the electricity are completely offset by the brand sponsorships.

Why would a brand want to sponsor a car charger? Mercer says that there’s a special kind of affinity created when an electric car owner is fueling up with free electricity while they shop.

Electric car owners also tend to be an attractive demographic for a company like Sungevity. If they drive an electric car, they are more likely to buy solar panels.

In the future, Volta may build kiosks that can interact with the user. The data collected could be interesting to a sponsor.

The concept behind Volta is drop dead simple. It’s merely tweaking a basic business model rather than inventing new technology. But this means that bigger companies with deeper pockets could easily mount a challenge by building a similar type of ad-based network. That’s also why Volta needs to grow in order to compete. Tesla already has its own charging stations installed around the U.S. offering free electricity to its customers.

The market for electric cars in the U.S. has grown more slowly than expected. But in certain areas in California — like the ones Volta is targeting — Nissan Leafs, Tesla Model S cars, and Chevy Volts are pretty common.