On December 24, all charging pile concept stocks surged, with Jiuzhou Group capping gains at 20%, and Tailong Electric, Zhongheng Electric, Autoelectric, Yonggui Electric, GCL Energy Technology, and Broad-Ocean Motor also recording significant gains.

The scale of charging facilities is rapidly expanding.

According to the Henan Charging Industry Alliance, as of October 2024, China's cumulative number of charging infrastructure reached 11.884 million units, an increase of 3.288 million units, representing a year-on-year growth of 19.8%.

It is evident that the charging pile industry, which has struggled for nearly a decade, is edging closer to a breakthrough.

Similar to power batteries and photovoltaic technology, charging piles are an industry that receives high policy attention and guidance.

In 2014, the State Grid Corporation of China held a press conference in Beijing on the newly opened distributed power grid connection project and electric vehicle charging station facility market, officially announcing the opening of these sectors to social capital, with supporting policies soon to follow.

In 2015, the National Development and Reform Commission, the National Energy Administration, the Ministry of Industry and Information Technology, and the Ministry of Housing and Urban-Rural Development jointly issued the "Guidelines for the Development of Electric Vehicle Charging Infrastructure (2015-2020)," stipulating that by 2020, the ratio of new energy vehicles to charging piles in China should reach nearly 1:1.

Local governments have consistently been more proactive than the central government.

Taking Zhuhai as an example, its "Implementation Rules for the Use of Special Funds for the Promotion and Application of Provincial New Energy Vehicle Charging and Swapping Facilities in Zhuhai City in 2015" clearly outlines generous subsidy standards:

DC charging piles at 550 yuan per kilowatt, AC charging piles at 100 yuan per kilowatt, and battery swapping stations at 500,000 yuan per station.

On the industrial front, the domestic Internet industry was booming at the time, and the land-grabbing business model was prevalent, becoming the mainstream trend for social investment. Investors hoped to replicate this success in their respective fields. Consequently, a significant amount of capital poured into the charging pile industry, driven by policies. According to relevant data from 2017, there were over 300 domestic charging pile manufacturers and operators.

Early investors in charging piles revealed that the initial strategy was to attract users first and then monetize these existing users. However, there was a vast disparity between reality and expectations.

Numerous charging pile enterprises were swiftly relegated to the annals of history. By the end of 2019, the number of charging pile enterprises nationwide had plummeted from over 300 to just over 100, with more than 50% of charging pile operators closing down or exiting the market that year.

Even those that survived were severely battered.

TGOOD's subsidiary TELD has long been an industry leader. According to data from the China EV Charging Infrastructure Promotion Alliance, in 2022, TELD operated 363,000 public charging piles, leading the industry in terms of the number of public charging piles, DC charging piles, and annual charging volume, with market shares of 20%, 28%, and 27% respectively. However, even as the industry leader, TELD struggled to see any prospect of profitability.

Yu Dexiang, Chairman of TGOOD, once admitted that TELD had invested approximately 5 billion yuan in previous years, with losses exceeding 800 million yuan in the first four years alone, almost bankrupting the parent company TGOOD, which scared him for a while.

In 2018, overwhelmed by the financial burden, Yu Dexiang could only send a distress signal. In his "Letter to TGOOD Shareholders," he appealed to TGOOD shareholders to participate in the construction of the TELD charging network ecosystem, contributing money or resources as they could.

TELD's situation is a microcosm of the overall development of the charging pile industry. The root cause of this prolonged dilemma is not poor policy or lack of enterprise effort but a significant mismatch between ideal and reality.

In the eyes of many, charging piles are the new-age equivalent of gas stations, but this is far from the truth.

Like gas stations, charging piles are asset-heavy, high-investment, and low-yield assets. Essentially, they generate revenue through scale and turnover. Especially before 2020, when the government capped charging service fees, increasing prices to enhance profitability was not an option.

Charging piles share similar issues with gas stations but lack their profitability.

There are approximately 120,000 gas stations in China. Assuming an average of six pumps per station, there are a total of 720,000 pumps, corresponding to approximately 300 million gasoline-powered vehicles. On average, one pump serves over 400 vehicles.

Charging piles are entirely different. According to data from the Ministry of Public Security, as of the end of 2022, there were 13.1 million new energy vehicles in China, while as of August 2023, there were 2.2716 million public charging piles in China, roughly translating to fewer than six vehicles per charging pile.

A more significant issue is charging speed. It takes only two minutes to refuel a gasoline-powered vehicle, but electric vehicles need several hours to charge, significantly impacting turnover rates. This also raises another concern: although many charging piles have been built, many located away from city centers remain unused due to the slow charging process. It's impractical for drivers to travel to a distant charging station overnight and then take a taxi back the next day.

A direct consequence of this situation is that some charging piles have long queues, while others remain unused. In summary, resources are not fully utilized.

The 2023 "Monitoring Report on Charging Infrastructure in Major Chinese Cities" reveals that the average time utilization rate, average pile utilization rate, and average turnover rate of public charging piles in 36 major cities in China are 11.3%, 51.8%, and 3.2%, respectively, with an average charging time of 52.8 minutes.

Charging pile operators struggle to increase efficiency for downstream users or reduce costs for upstream suppliers.

State-owned enterprises like the State Grid and China Southern Power Grid have some discursive power, but private enterprises like TELD are at a disadvantage in negotiations for power and land resources, barely surviving in a tight spot.

In 2020, charging piles were included in China's new infrastructure plan, propelling the industry into a second phase of accelerated development. Yu Dexiang, who believed he had made the right bet, was swiftly taught a harsh lesson by reality.

According to TGOOD's financial reports, from 2020 to 2022, TELD's revenue was 1.577 billion yuan, 3.104 billion yuan, and 4.57 billion yuan, respectively, with losses of 37.8649 million yuan, 51.3208 million yuan, and 26 million yuan over the same period.

TGOOD had long planned to spin off TELD for a separate listing but has been unsuccessful. To date, the domestic charging pile leader still relies on its parent company.

As of 2022, TELD and its subsidiaries had obtained loans totaling approximately 1.508 billion yuan from banks guaranteed by TGOOD. By the end of last year, TELD's total liabilities were 6.235 billion yuan, with a debt-to-asset ratio as high as 76.04%.

Only industrial process acceleration and technological advancements can save the charging pile industry.

It is undeniable that the key to the profitability of charging piles lies in utilization rate.

According to previous calculations by iResearch, for a typical 60kW DC pile and a 7kW AC pile, with an average national service fee of 0.6 yuan, if the utilization rate of charging piles increases from 8.7% to 10.6%, the payback period will be shortened from 6 years to 4 years.

To enhance utilization, it is imperative to increase the number of electric vehicles and charging speeds, which is precisely what is currently happening.

According to data from the China Association of Automobile Manufacturers, from January to October 2023, the production and sales of new energy vehicles reached 7.352 million and 7.28 million units, respectively, increasing by 33.9% and 37.8% year-on-year, with a market share of 30.4%. As major automakers continuously release new models at a high frequency, new energy vehicles in China are accelerating their adoption at a rapid pace, leading to a growing stock of electric vehicles.

Compared to market penetration, the improvement in charging speed is more significant for charging piles.

According to the formula W=P×t and P=U×I, the primary factor influencing charging time, with a certain amount of charging power, is the charging power. To shorten the time, it is necessary to increase the power, which requires boosting the current and voltage. In the long run, achieving 5-10 minutes of fast charging necessitates a charging power exceeding 400kW, with a corresponding voltage platform above 800V.

It is noteworthy that 800V fast-charging models have already entered the 200,000 yuan price range in 2023, with Xiaopeng G6 as a typical representative, priced at 209,900-276,900 yuan per vehicle. Other recently launched or upcoming 800V platform models include the Zeekr CS1E, Aion Hyper SSR, and NIO Alps, most of which are volume models starting at around 200,000 yuan.

The floodgates have opened, and it is anticipated that the 800V fast-charging platform will soon witness a surge in sales for both B-segment and C-segment vehicles and above. This price range represents the largest market segment, and the widespread adoption of fast charging is imminent.

Previously, Yu Chengdong announced that Huawei's HarmonyOS Smart Travel Charging Service covers over 340 cities, 4,500 highway charging stations, and 700,000 public charging guns nationwide, with plans to deploy over 100,000 Huawei full-liquid-cooled ultra-fast chargers by the end of next year.

Huawei's full-liquid-cooled ultra-fast charging solution combines a 600/720kW host with a 600kW ultra-fast charging terminal and a 250kW fast-charging terminal, achieving a maximum current of 600A and enabling a 200km charge in just 5 minutes.

According to information disclosed on Huawei's Digital Energy official account, the company's full-liquid-cooled ultra-fast charging solution, through self-developed topology, liquid-cooled heat dissipation, and intelligent optimization, can not only improve system efficiency by more than 1% but also ultimately reduce the total life cycle operating costs by 46%. In terms of vehicle compatibility, after long-term testing and collaboration with automakers, Huawei's solution can now be adapted to different vehicle models, with a one-time charging success rate exceeding 99%.

Evidently, Huawei is once again playing a pivotal role, and its entry into the market is poised to significantly propel the charging pile industry forward, both in cost reduction and efficiency enhancement.

Simultaneously, charging pile operators substantially increased service fees in 2023. Recent media reports have indicated that service fees for public charging piles in some cities have increased by up to 50%.

All these indicators suggest that charging pile operators are rapidly approaching the profitability inflection point.

Disclaimer

This article contains content related to listed companies based on the author's personal analysis and judgment, derived from information disclosed by the companies in accordance with legal obligations (including but not limited to temporary announcements, periodic reports, and official interaction platforms). The information or opinions in this article do not constitute any investment or other business advice. Market Value Observation shall not be held responsible for any actions taken based on this article.

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