With the rising number of battery electric vehicles on the roads worldwide, batteries seem to have outpaced hydrogen fuel cells as the preferred choice for automakers. At the end of 2020, there were 10 million electric vehicles, including plug-in hybrids, on roads worldwide. By comparison, there were a mere 35,000 fuel cell electric vehicles globally at the end of last year.
Yet, hydrogen fuel cells offer a few advantages over batteries, and can potentially be far more useful in some areas such as marine, heavy-duty vehicles, and certain stationary applications. Besides, both Plug Power (PLUG +1.61%) and ChargePoint Holdings (CHPT +1.25%) will need a lot more than sectoral tailwinds to succeed. Let's see which of the two companies has better long-term prospects.
Two different businesses
Plug Power's hydrogen fuel cells find varying applications. They can be used in forklifts, as a backup power source, and in hydrogen-powered vehicles. More than 90% of the company's revenue right now comes from its materials handling segment, which provides fuel cells for use in forklifts. The company is focusing on expanding into the electric vehicles market and has formed partnerships with automaker Renault and Korea's SK Group to this end.
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ChargePoint is an EV charging company with a network of more than 112,000 charging stations in North America and Europe. It is a leader in EV charging in North America, where it generates more than 90% of its revenue.
ChargePoint's market share in North America in the level 2 chargers -- which can charge for a range of 100 miles in around four to five hours -- is more than 70%. The company also offers fast chargers. ChargePoint was founded in 2007, though it got listed, through a special purpose acquisition vehicle, in February this year.
Financial performance
Plug Power expects to report first-quarter gross billing of $70 million, a 60% year-over-year growth. It has provided annual gross billing guidance of $475 million for 2021. Plug Power is yet to report its first-quarter results. The company reported a net loss of $39 million in the third quarter last year, before plunging to a net loss of $476 million in the fourth quarter, due to the effects of certain warrants.
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ChargePoint generated revenue of $40.5 million in Q1 and expects to generate $195 million to $205 million in revenue for its fiscal year ending Jan. 31, 2022. ChargePoint too is taking losses and reported a net loss of $39.4 million in the first quarter.
ChargePoint expects to achieve EBITDA breakeven in 2024, when it hopes to generate around $86 million in adjusted EBITDA. In comparison, Plug Power expects to generate $250 million in adjusted EBITDA in 2024. Both companies are yet to prove that they can carry out their operations profitably.
The EV charging stock looks better
Based on their past financial performance and guidance, both Plug Power and ChargePoint seem to be in the same boat. However, there are a couple of factors that make ChargePoint look better. First, it doesn't have a history of failing to meet guidance numbers like Plug Power. Second, it has not been diluting existing shareholders for years, as Plug Power had been doing.
Finally, with battery electric vehicles leading the growth in the low-carbon environment-friendly vehicles segment, the prospects for ChargePoint seem better than those for Plug Power. The company's model of growth focused on commercial customers, instead of one based on selling electricity, should support its EBITDA goals.
Having said that, a major chunk of growth in EV charging could go to home or private chargers. Furthermore, there is competition from other charging networks as well as from automakers like Tesla, which have their own charging infrastructure. So, the road to profitability for ChargePoint won't be an easy one either.
