High-Voltage Potential
Fast-charging station maker XCHG Ltd. has impressively revved up the market with its intentions to go public on the Nasdaq. Anticipated to be valued at under $100 million, XCHG’s modest IPO isn’t representative of its potential to surge ahead, fueled by a combination of solid prospects and a robust underwriting team that includes big names like Deutsche Bank, as well as China-focused powerhouses Huatai Securities and Tiger Brokers.
XCHG’s electric vehicle (EV) chargers are part of a global energy storage solutions market that’s expected to be worth $90 billion by 2026. The demand for fast chargers is projected to spiral up by approximately 33% annually from 4.0 TWh in 2021 to 52.0 TWh in 2030. XCHG ranks as the second-largest seller of DC fast chargers in Europe, a fragmented and competitive market.
Charging Up Against Titans
Challenging competitors like Tesla, NaaS Technology, EVgo, and Blink Charging, XCHG’s projected market value of about $60 million based on its expected sales for this year, positions it attractively with respect to its peers. Blink Charging currently trades at a price-to-sales (P/S) ratio of 1.72, while EVgo trades slightly lower at 1.56, establishing a comparable industry standard for XCHG.
Although XCHG presents a bold front as a global front-runner, the company’s sales volume and revenues remain relatively modest. However, its rapid sales growth and improving gross margins paint a positive picture. Its innovative product lines include the Net Zero Series with the unique ability to return excess power to the grid, potentially driving down operating costs and setting it apart in the marketplace.
Breaking Free From Tesla
Founded in 2015 by former Tesla project managers Hou Yifei and Ding Rui, XCHG initially targeted the burgeoning Chinese and European markets for new energy vehicles (NEVs). By providing solutions for vehicle fleets and service stations, XCHG carved a niche for itself and witnessed exponential growth, with European revenues surpassing that of China. Its partnerships with industry giants like Shell Ventures further consolidate its position in the market.
Despite a critical analysis from a Seeking Alpha analyst, XCHG aims to leverage IPO proceeds for further expansion and development, showcasing strategic foresight by prioritizing the European market over the slower developing U.S. market. The untapped potential in Europe, outpacing North America’s growth in installed chargers, implies substantial opportunities in the market awaiting a leader to emerge.
Powering Up for the Future
XCHG’s IPO aims to channel funds into the development of a charger factory in the U.S. for its Net Zero Series, adding impetus to its vision to lead the global market. With the potential to emerge as a game-changer in the charging station industry, XCHG must now demonstrate that it can harness its power and ascend to a leadership role in the field.
This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.