Fastned is building a network of fast charging stations for electric vehicles, directly along the highway. They not only enable the transition to electric cars but make also sure that the energy provided is 100% renewable (solar and wind). Their revenues come from the difference between the cost of the electricity they buy and the price they are selling it at. They are based in Amsterdam and naturally began in the Netherlands where awareness of sustainable issues is high. Today they already operate dozens of stations in the Netherlands and Belgium and are planning to expand to the UK and Germany. Fastned can be considered as pioneers: they are probably the first ones in addressing the problem of charging stations on the highway in Europe, not discriminating car brands. Tesla already operates its own network but they discriminate brands and other electric car manufacturers are still focused on urban – small distance uses. One of the main consequences of being pioneer is that they still face a low utilization rate of their charging stations.
And that leads to the main threat of their operating model. As they are not waiting for regulation or behavioral changes but act as enabler of these changes, they face the big risk of a too slow transition. Even more because they decided to own the stations, which represents a considerable capital expenditure. They are financing these investments issuing bonds, which is quite unusual for a start-up. That means that they will probably have liquidity concerns if the trend is too slow to settle, endangering continuity of the business. It’s the opposite situation of traditional industries which are afraid of not being able to adapt if regulation changes too quickly.
On the other hand, they have the first mover advantage. They will learn what type of station works, where to build them, how to update hardware and software efficiently, and start building brand equity. That is true in the Netherlands and Belgium and could be true in the UK, Germany and other countries if they are able to keep expanding internationally. If the trend for greener transportation modes picks up quickly in next years, they will be in the first row to harvest the fruits.
From my point of view, I see two main steps Fastned could consider to lower their risk exposition to the trend of green transportation. The first one is related to financing: given high uncertainty of revenue streams and probable long horizon to break even, the start-up could bring in investors and compensate them with equity. Again, that’s something very usual in the entrepreneurial ecosystem but I really think that for this king of business model and revenue streams it’s necessary to avoid liquidity issues. The second one is trying to leverage their expertise in charging stations on the highway to grab a part of the urban market. This is a different business, in particular because of the space constraints, but I think Fastned has access to the technology to build efficient urban charging stations. The objective here is to earn some revenues, more stable, in a market a bit more mature and where regulations are already in place. A good example is the city of Paris.
I believe that fast-charge stations will become a necessity for EVs becoming widespread. In that sense, Fastned is moving into the right market. Many drivers, especially in countries were longer distances are common, are difficult to convince to go electric as long as range remains a negative factor. This is especially true as diesel engines are becoming incredibly efficient, approaching low single-digit liters/100km consumptions, further decreasing adoption of EVs.
How long can Fastned wait for the trend to materialise? How feasible would it be for Fastned to collaborate with utilities, in the same way as gas stations are owned by oil companies? Would they not a good investor given the vertical integration and interest in renewable energy, with deep enough pockets to wait for the market to grow?
What about partnering up with car manufacturers? What is your take on having multiple different charging stations at the same locations for the different brands in relation to the main objective; green transportation