Q&A: Volta touts survival prospects of alternative EV charging business model
In advance of inspiratia’s upcoming EVS Summit we spoke with Scott Mercer, co-founder and CEO of Volta Industries, who is set to take part in the event in Whistler
Founded in 2010, Volta is in the process of developing free EV charging networks across the US, with its 500 charging kiosks generating revenue from adverts that display on video screens. Volta has also proved it has a knack for fundraising, having won investments from venture capital funds Energize Ventures and Energy Impact Partners.
Co-founder and CEO Scott Mercer gives us the low-down on the company.
What is Volta’s business model?
At its core, Volta is all about building, owning and operating public EV charging networks and it started with a very simple thesis. It was the idea that if you want to build EV infrastructure that remains relevant as EV uptake grows, then you must build a business model that is quite nimble.
We go out and we map cities where EVs are popular and then place charging infrastructure at key locations for free. We then monetise the business through novel ways, such as our core advertising model.
Because we provide an amenity to the businesses and communities that we work with, this make us nimbler than a billboard company. We provide a service that people actually care about. Nobody wants a billboard in a community – apart from the billboard company – but if you can provide amenities that are valuable, then you can go after high-quality locations that are useful to EV drivers and lucrative for advertisers.
What makes a good location for a Volta EV charger?
It is not necessarily about what makes a good location or city for EV chargers, it is about what makes a good first city in a network. You start out with a couple of small bets and then we compile a lot of information about how drivers use the chargers we have installed. We can then map where infrastructure ought to go in order to be catalytic for usage and demand.
Volta is a city-network business, so we want to be able to take a city, rank the top 1,000 locations in that city and then start at number one, going down the list, installing chargers to build-out the network.
How much scepticism do you face when pitching to potential investors?
I started this company because I didn’t think there was a business model in EV charging that could survive and I wanted to create a counterpoint to the industry that proved this wrong. When you go out and you try to raise capital in an industry that you started in because you were very sceptical of it, you realise that a lot of the investors are very sceptical too.
So, the first years were difficult because you saw a lot if investors and companies struggling. Now we’ve reached an inflection point in EV uptake and it has become much more appealing as an investment proposition.
Investor scepticism is still there to a degree, but now it is more about business models rather than the industry itself and the future.
Was your deal with Energize in 2018 something of turning point in terms of financing?
Energize led our Series C funding round, which was done in two parts. We have just closed our Series C.2 round with US$55 million (£45m €49m) in equity being raised. We had US$35 million (£29m €31m) in 2018 thanks to Energize and we have since raised a further US$20 million (£16m €18m) from investors such as Schneider.
Alongside this, we have raised US$44 million (£36m €40m) in project financing to deploy the hardware itself from investors such as Energy Impact Partners.
It has been a good year and a half from a fundraising perspective. The business is growing 300% year-on-year in revenue so if that happens over a few years you start to get interesting numbers.
How did the deal with Energize come about?
We are a classic Silicon Valley company, so we go out and press the flesh with all the venture capital groups. We have raised three venture rounds, we went out fundraising for six months for Series C and Energize was one of the last firms that we spoke with. We were about to close the round and then we just clicked with those guys.
With Volta you have to synthesise two very different industries. We are an EV charging infrastructure company that is funded primarily by our success in the media [advertising] industry, so you need to find investors who can understand our track record on both sides of that spectrum and this is pretty rare, but it was there with Energize.
Are you facing more competition to win investment from new start-ups?
There are a lot of early start-ups, certainly, but we also find that there are a lot of the larger-scale companies too. Traditionally, it is the upstart start-ups that don’t know what they are doing, but right now it seems like it’s the Fortune 50s, the OEMs and the oil and energy companies that really want to play in this space, but they don’t have the track record and don’t really understand the business.
Would Volta be happy to receive investment from an oil major?
Frankly no, although it’s potentially fated to happen that they will take an interest. Oil majors win a lot of press when they make investments in EV charging infrastructure, but really they are only investing one tenth of 1% of their capital investments overall in charging and all their policies are directed at pulling the EV industry backwards.
So, I’m Machiavellian. Would I take their money? Yes. Would I give them any control over my business? No.
So, have you turned down an oil major?
Yes. Their interest is primarily in extracting every single barrel of oil out of the ground and that is counter to my interest. Of course, this can be a difficult conversation to have when you are talking to large oil companies that have funds they are very interested in investing.
We turned down one in our Series C fundraise and they said that they had never been turned down before. I mean, we would love to see these guys rebuild in our image, but ultimately, we want to destroy the oil industry, that is the core goal.
What is next for Volta?
We want to build EV charging infrastructure in the top 15 EV markets in the US and grow our real estate partners. Concurrent to that, we are starting to look internationally, and we are in discussions with potential partners in the UK and Europe, such as Orsted. We are currently trying to figure out which European city would be the best place to start and what partnership to leverage.
Where would you like to see the company in five years’ time?
What I’m looking for in five years is for Volta to be a real competitor as a fuelling business powered by different revenue streams. The oil companies figured out that it was easier to sell cookies and Coca Cola at gas stations to make a viable business and we are trying to focus on how to build EV charging infrastructure with revenue streams that will keep the business profitable.