Tuesday, November 1, 2022
What’s it going to take to reach mass adoption of electric vehicles (EVs)?
EVs have been on the road for years. But a survey from car maker Volvo reveals most car buyers suffer from something called “range anxiety.”
Range anxiety is the fear of not having enough battery charge in your EV to get you where you need to go. Nearly sixty percent of car buyers avoid EVs because they fear a lack of charging stations could leave them stranded by the side of the road.
Given this information, it seems odd Volvo intends to go fully electric by the end of this decade. But perhaps that’s because it knows the strategy that charging-station executives are taking.
It’s an idea the ancient Egyptians pioneered…
And it’s one that gives you the chance to potentially double your money.
The strategy I’m referring to is advertising.
The first evidence of ads can be traced back to 2,000 BC, when Egyptians carved and displayed public notices carved in steel.
Today, ads have gone digital. The global digital advertising market is set to reach $786 billion within the next four years.
And now, digital ads are how charging-station companies will help make EVs mass market.
Let me explain…
Many EV charging stations are located near retailers — malls, shopping centers, grocery stores, etc.
ChargePoint Holdings Inc. (CHPT) is America’s largest EV-charging provider, with more than fifty-seven percent of the country’s charging stations. And now it will start showing ads using digital displays installed in its stations.
You’ve probably experienced this concept already. Many gas stations show ads at the pump while you refuel.
But at charging stations, the concept has even greater potential…
That’s because stations equipped with digital screens will be located directly outside the stores that sell the products being advertised.
Volta Inc. (VLTA), a smaller charging-station provider, has already rolled out something similar. For example, it might play a Coke ad for people recharging their cars outside of grocery stores.
In fact, that’s exactly how ChargePoint will market this idea. Businesses looking to buy and install ChargePoint charging stations will be able to defray the costs by having ads play.
It’s a match made in advertising heaven. And for businesses looking to draw more EV drivers by installing charging stations, it makes financial sense, too.
A single commercial Level II EV charger — the most common kind — costs about $6,000. So even a small set of five stations will run around $30,000.
Defraying this cost by allowing ads to play is a no-brainer, especially if those ads lead the driver to spend more money at the company’s store.
This is just another way in which digital ads are on the rise.
And with consumers shopping online more than ever, they’ve become a more efficient way for marketers to track and optimize their spending.
It’s no wonder the global market for digital ads is set to grow by nearly fourteen percent a year through 2026.
And it’s here that we find our opportunity as investors…
Based in Ventura, California, The Trade Desk Inc. (TTD) is the world’s largest provider of ad management for digital marketers.
Trade Desk provides a cloud-based platform to buy, track, and optimize ads placed across more than seventy advertising networks. We’re talking about ads on sports and news websites, on smart TVs, on mobile apps, on podcasts — you name it.
Simply put, this company offers the ability to market to anyone, anywhere, through almost any means. And once charging-station ads take off, you can be sure Trade Desk will offer advertisers the ability to buy ad spots there, too.
Ad platforms like Google’s DoubleClick and Meta’s Facebook Ads get all the headlines. But Trade Desk’s offering is more popular among marketers.
That’s because it gives them access to real-time pricing for ads. For smaller businesses that don’t have much wiggle room in their budget, that’s important.
Trade Desk’s marketplace handles more than ten million queries per second, or about 800 billion per day. That means its systems have to handle responses in less than fifteen milliseconds — faster than the blink of an eye.
It’s no wonder the company has seen impressive growth. Last year, spending on the platform surged forty-seven percent to more than six billion dollars.
Sure, earnings per share cooled a bit last quarter as companies cut back on advertising. But earnings per share still rose eleven percent from the same quarter a year ago.
Besides, it pays to take the long view here. Over the past three years, per share profits have grown an average of fifty-four percent annually.
Even if we cut that number in half to account for an economic slowdown that could put a dent in global advertising, earnings could still double in about two-and-a-half years.
Bottom line: there are still fortunes to be made in the digital economy…
And Trade Desk presents an exciting opportunity to profit from the move to EVs.