Daimler Leads $100 Million Funding Round as ChargePoint Targets Europe
ChargePoint, the Californian operator of the world’s largest charging network for electric vehicles, is raising over $100 million to break into the European market.
The Campbell, Ca.-based company is aiming to capitalize on a surge in demand for electric vehicles that is only gathering pace amid a huge public backlash against diesel vehicles in the wake of the Volkswagen scandal.
Dieselgate (as it became known) exposed the extent of the pollution problems caused by diesel vehicles, which until recently accounted for half of new car registrations in the EU. As such, it forced wrenching strategic changes on Volkswagen and others who had focused until 2015 on defending the dominance of their existing conventional engines. VW (VLKAY) said last year it will aim for EVs to account for 25% of sales by 2025.
The initial $82 million part of the latest funding round for ChargePoint was led by Daimler (DDAIF), the maker of Mercedes-Benz, Smart and Freightliner Trucks, which now joins local rival BMW Group (BMWYY) as an investor in ChargePoint.
Daimler’s head of Connected and Electric Vehicles Axel Harries will join ChargePoint’s board of directors. The company’s other early-stage investors, Linse Capital, Rho Capital Partners, and Braemar Energy Ventures, are also contributing.
In all, Europe is the world’s second-largest market for EVs—behind China but ahead of the U.S.—but the roll-out of charging infrastructure had been sluggish until last year. Where it does exist, the market is fragmented and offers “a confusing and cumbersome” experience, according to ChargePoint.
Still, in recent months there have been signs that the industry is getting its act together. In November, the big three German makers, along with Ford (F), joined forces to roll out a $1 billion high-speed charging network of their own. (BMW and VW have also backed the roll-out of ChargePoint infrastructure in the U.S..)
High-speed charging networks often grab the most attention, because they address the fear of running out of battery half-way through a long-distance journey. But as Romano points out, they account for less than 10% of all recharging (because most journeys are shorter than a car’s range). ChargePoint’s 33,000 charging spots across—which include both high speed and regular chargers—are spread among 7,000 sites that span a full range of single and multi-family homes, and parking lots at office and retail locations.
In some ways, cracking Europe could be easier than the U.S.: Europe has a greater density of cities, meaning that range issues affect fewer journeys, proportionally speaking, while pollution issues are more acute. And while government mandates to support EVs initially lagged trailblazers like California, they’re now kicking into gear in a big way: Over 60 German cities have now ordered bans on at least some diesel vehicles from 2019 or earlier; Paris, Madrid and even cash-strapped Athens are banning the worst offenders completely, and London is introducing a ‘toxicity charge’ for them.
The Dieselgate scandal “has accelerated the need for electric vehicles to penetrate the market quickly,” ChargePoint CEO Pasquale Romano told Fortune.
The company gave no details regarding the valuation implicit in the latest funding round. Romano said he expects the window for an initial public offering to open for it “within the next year or two.”
Daimler said in an accompanying statement that “Daimler and ChargePoint are systematically pursuing the same goal: to promote the breakthrough of electric mobility through the targeted expansion of infrastructure and services.” The German company has earmarked 10 billion euros in investment in e-mobility over the next few years.