Electric Vehicle Charging | Founders' Review Editorial

We collected the potential risk factors and mitigations of Electric Vehicle charging stations.

We collected a few ideas for business professionals on how to reduce risks. You can investigate these first before talking to a more expensive lawyer or finance professional.

Technology is the first risk. Tesla is still dominant and their price category allows them to do some experimentation. Chargers may appear that use Natrium vs. Lithium. The commodities of such technology can be much cheaper. Existing financing is still to be paid when competition starts selling at lower prices. It is important to leave headroom for sales and marketing budget and discounts.

Funding is more difficult in a high interest rate environment. Short-term debt and SAFE obligations may be a less risky option to find investors.

Regulations are always a risk, especially here in California. It is a good idea not to nail down any property contracts too early. It is better to consider multiple cities and states, so than the company can switch, if chargers are left to deploy.

Inflation is the major topic today. Lowering fixed costs makes corporations more elastic and less affected by inflation. Rentals, leasing and cloud services can all reduce your fixed expenses.

Governments flooding in debt will eventually allow more capital to flow. Indebted governments contract the tax base with higher tax rates. They will be more likely to ease regulations to give access to capital and debt markets. More companies will pay income taxes that help to pay back government debt. This is an opportunity for minority small businesses.

Employment risks can vary. The solution is usually more reliable equipment. Low maintenance and low support cost devices reduce risks and interest rates.

Products with fluctuating and seasonal prices are outside of core inflation, but they can affect the risks of corporations. Food and energy price fluctuation can be offset by adding fixed diversified revenue streams. An additional dwelling unit can sell snacks, to smoothen the revenue base when gas margins are lower.

Upstream risks are the risks of commodities. My rule of thumb is to check the bulk solar equipment pricing on Amazon Business as a baseline. A $1100 cost of a kW solar panel and inverters can be spread across 5 years, 365 days and 4 kWh sunlight per day in some places in California. This will give you a baseline electricity price of 15 cents per kWh. Higher interest rates can double the costs making it rather 30 cents per kWh.

Upstream risks can also be offset by charging batteries, or deploying charging stations on properties with a for-lease sign for a long time. Such property owners probably will value adding some revenue to their mortgage payments with the extra electric grid capacity not used by tenants.

Downstream risks can also be mitigated. Underutilized grid capacity can be used by rental EV vehicles charged, when not in use.

Revenue risks can be mitigated with additional services. ADU Shops can be deployed next to chargers luring people working remotely for meeting rooms or some focus time. One reason, why WeWork had issues is that their customer base were early stage startups trying to lower fixed costs. They also needed privacy of stealth products rather than co-working. Private rooms promote more value to such businesses.

Warranty issues, and breakdowns may require expensive insurance. Insurance is hard to find in the case of renewable energy supplies. New technology lacks the amount of data collected. A bigger face value of debt used only when needed, may lower the actual risk numbers. A line of credit may replace the insurance costs, except when it is required by law. Consult with a local financial professional, as reinvestment may require extra licensing.

Many Silicon Valley startups thrive with marketing and show business with fat equity budgets. Keeping a lower profile in marketing focusing less on people and more on the product and services may lower risks. It is more suitable for tight marketing budgets. It is also a good idea to keep a distance from show business. Sometimes it is a zero-sum game vs. infrastructure being a positive sum game.

Some investors actually buy the design. They invest in arts rather than the raw cash flow. Sticking to the benchmark reduces the risks of investor expectations.

Equipment and software has its own risks. Multiple vendors gives you an edge to experiment and secure supply chains.

Stick to simple software. Any asynchronous or complex logic can incur support costs later. Ransomware may increase stealth maintenance costs statistically compared to competitors. Make sure you never pay for ransomware. It just fuels them.

Some companies collect debt assets into separate entities. Consult with a business expert from a consulting firm with details.

Predatory investors appear if a liability appears like a lawsuit, regulatory problems, or employment issues. Fraudsters can be deterred by simple contracts, licensing.

Legal risks can be mitigated requiring red tape only when necessary like using an LLC instead of a Delaware Corporation. There are dozens of knobs in corporate agreements of legal benchmarks. Some of them are business friendly, some of them are investor friendly. Each choice is a risk incurring legal costs and liquidity issues.

Vandalism can be prevented by checking neighborhood statistics, or driving around after midnight to see how many law enforcement vehicles are around, or what kind of people show up. Littering, graffiti may be just a sign that predatory investors trying to push down the prices in a neighborhood.

Capital can be raised through multiple investment banks. Multiple partners usually help to ensure that the contracts are standard.

Vis major cases can be handled by extra credit lines. Refinancing adds to the unexpected expenses. Refinancing always adds risks to the original investors deterring them from the markets.

Offshoring of maintenance may pose long term risks of arbitrage. Paying competitive rates of the country of employment helps to reduce employment risks while eliminating current account deficits. This will also limit the pressure on migration and risks on currency fluctuation and arbitrage as a result.

This article is mainly from a business plan perspective. Please consult with a business, legal, or financing professional for details. The author or Schmied Enterprises LLC may own temporarily or permanently shares in public corporations mentioned in the article.