Blink hails L2 charging cost advantage

Executives of US charging firm Blink Charging point to cost advantages of level 2 (L2) EV charging and emphasise that demand in the segment is understated, as the company reports a strong third quarter and edges closer to breakeven.

“Gigawatts dispersed via Blink's own and operated network model comes at a lower cost versus our competitors, due to the predominant L2 nature of these installations, which requires significantly lower capex investment and the operating expense is greatly reduced as well,” Blink CEO Brendan Jones says.

After deploying 5,965 chargers globally in the third quarter, Blink now operates nearly 85,000 chargers globally, the majority of which are L2. But in addition to this, Blink is also experiencing an uptick in demand for its DC fast charger sales.

The company has generated c.$27mn in revenue in 2023 thus far from DC fast chargers sales — out of a total revenue of $98mn — Jones says, although he expects “that L2 chargers will continue to represent the majority of our installed chargers in the near-term”.

And he cites research from consultancies Bloomberg NEF and McKinsey that 90pc of new chargers are forecasted to be level 2 chargers, “creating another immense opportunity for Blink”.

Blink’s DC fast charging revenue making up 28pc of 2023 revenue — despite executives also hailing the higher margins on L2 chargers — is therefore an interesting kink. Jones sees their growth in importance as being incremental.

“We are seeing a long-term trend with increased sales of our DC fast chargers as they grow to a larger proportion of our revenue mix,” he notes.

But L2 continues to be the primary strength of the business because of its prominent role in the company’s owner-operator model revenues, which accounted for $35mn in revenue in the quarter and was the fastest growing revenue stream at 162pc growth year-on-year.

“If I am looking at an owner-operated model and install an L2 that is full turnkey by Blink, I just need 18 months for a payback on 10pc utilisation. And if it is a hybrid, I need a year at 10pc utilisation,” he continues. “DC fast charging does not have the same profile,” Jones explains.

Blink offers four distinct business models to its customers, ranging from sites where Blink fully owns and operates the site and shares revenue with the site host, to a fully host-owned model to Blink’s ‘as a service’ subscription programme which provides site hosts with low upfront costs and cedes operational control.

Blink’s revenue from its service model, which includes subscription revenues, network fees, and car-sharing service revenue, saw an increase of 119pc to $6.7mn in the quarter. And analyst Craig Irwin of Roth Capital Partners identifies this as an opportunity for firms across the charging industry.

“Charging service revenue is just doing fantastic. So, [Blink is] obviously seeing the same benefit that EVgo is. People are driving their EVs more and using third-party charging more,” Irwin says.

Level up

In addition to vertical integration on the production side, Blink focuses on L2 chargers not only because of higher margins and lower opex, but because there is pent-up demand, which Jones says is underappreciated.

 “The pace of L2 is increasing dramatically. Although, if you do a share of voice analysis, all you hear about is DC fast charging. But that share of voice analysis does not equate to the volume. All the L2 lines are increasing dramatically.

“When we look at that 30mn charger need — and that is at 35pc penetration rate, we have got to keep in mind that California in 2023 is at 22pc — that is 28mn+ chargers that are L2, designated for multifamily dwelling, designated for fleet, designated for other municipal fleet and for in-home charging,” the CEO says.

“That is Blink's sweet spot. So that is where the sales are coming from today and that is where we see the sales coming from for the foreseeable future,” he adds.

Blink has accordingly upgraded its revenue guidance to a range of $128-133mn — up from a previous upper limit of $120mn. But considering the company’s revenue growth rate, some analysts query if this updated guidance is somewhat conservative.

But Jones cautions that Q4 may see a downturn. “We had some of bookings [which] were going to be in Q4, but they ended up in Q3, which really gave us a good number, so there is a smoothing effect going in to Q4,” he admits.

The Blink chiefs maintains, though that with the company’s current momentum, Q4 “is still going to be one of the best we have ever had”.