On December 24, a positive trend was observed in the charging pile concept stocks, as they experienced a significant surge in valueJiuzhou Group notably hit its daily limit of a 20% increase, while other companies such as Taiyong Changzheng, Zhongheng Electric, and Aotexun also reached a 10% daily growthFurther upward movements were seen in companies like Yonggui Electric, Xiexin Energy Science, and Ocean Motor, indicating a sustained enthusiasm in the sector.

The growth of charging infrastructure in China is incredibly rapidReports from the Henan Charging Industry Alliance reveal that as of October 2024, the total number of charging facilities in China has reached an impressive 11.884 million, a significant increase of 3.288 million units, resulting in a year-on-year growth rate of 19.8%. This data reassures many stakeholders that after nearly a decade of struggle, the industry is finally on the brink of a golden age.

Similar to other sectors like power batteries and photovoltaics, charging piles have been under intense policy scrutiny and guidance

In 2014, a market release event for electric vehicle charging infrastructure was held by the State Grid Corporation of China in Beijing, formalizing the drive towards enhancing electric vehicle support mechanisms.

However, local governments have often led the charge with more proactive measures than top-down planning from central authoritiesThe cost of investment for various charging infrastructures is notable—550 yuan per kilowatt for DC chargers, 100 yuan per kilowatt for AC chargers, and 500,000 yuan per charging stationAt a time when the Chinese internet sector was booming and commercial models were entering a phase of aggressive expansion, a similar trend emerged in the charging pile marketBy 2017, there were already over 300 manufacturers and operators of charging piles in the country.

Investors back then envisioned a scenario where their strategic focus would be on securing users first, later capitalizing on this user base for profits

• Will XRP Experience a Price Surge in the Next Two Years?
• Temu: Thriving Amidst Criticism
• The Significance of New Energy in Carbon Reduction Goals
• Dow's 9-Day Losing Streak Breaks 46-Year Record
• From Cryptocurrency to a 2900% Profit!

Unfortunately, the vast gulf between expectations and reality soon became apparentA large number of companies in the sector swiftly fell victim to market forces, rendering many obsolete by the end of 2019. The count of charging pile operators plummeted from over 300 to just over 100, with more than half of these companies exiting the market within that year.

For those who remained, the journey was far from smoothOne of the leaders in the industry, Telidea, a subsidiary of Teradyne, showcased impressive figures: in 2022, they reported an operation count of 363,000 public charging piles, marking them as a principal player in the marketDespite this leadership position, the profitability eluded them, with significant financial losses evident as they struggled to turn a profit.

Teradyne's Chairman, Yu Dexiang, openly acknowledged the monumental challenges facing the sectorThe company invested around 5 billion yuan in the early years, incurring a staggering loss exceeding 800 million yuan within the first four years—an amount that nearly crippled the parent company

In 2018, Yu was compelled to issue a plea for assistance from shareholders, to co-create an ecosystem for Telidea’s charging network, calling on smart capital and resources from all corners.

Telidea's predicament mirrors much of the long-term struggles facing charging pile companies in ChinaThe challenges stem not from inadequate policies or a lack of effort among enterprises but from a significant misalignment between idealistic ambitions and harsh realities.

To many, charging piles may appear as a mere alternative to traditional gas stations in the new energy era; however, this perspective is misleadingLike gas stations, charging piles also carry the burden of being high-investment, asset-heavy ventures with low returnsThey fundamentally depend on scale and operational efficiency, and prior to 2020, national regulations restricted the service fee ceiling, making it impossible to increase profits simply through price hikes.

Thus, while the charging piles share similar vulnerabilities with gas stations, they lack their life-supporting mechanisms

In China, there are approximately 120,000 gas stations, with each averaging six refueling machinesThis translates to around 720,000 machines catering to nearly 300 million gasoline-powered vehicles, which averages out to around 400 vehicles per refueling machine.

Charging piles, however, paint a different pictureAccording to data from the Ministry of Public Security, by the end of 2022, the total number of new energy vehicles stood at 13.1 million, with public charging piles amounting only to 2.2716 million as of August 2023. The resulting ratio leaves each charging pile serving less than six cars, a stark contrast to gas stations.

An even bigger challenge lies in the charging speed; while refueling a gasoline vehicle takes merely a couple of minutes, electric vehicles require several hours for a full chargeThis discrepancy is a critical impediment to higher turnover rates for charging stations

Consequently, many charging piles, despite being constructed in large numbers, go largely unused, especially those situated away from city centers, making it impractical for users to charge their vehicles overnight.

This scenario has led to a double-edged sword: some charging stations become overcrowded while others are neglected, causing significant under-utilization of resourcesA report for 2023 indicated that the average utilization rates of public charging piles across 36 major cities in China were dismally low—recording times of only 11.3% for average time utilization, 51.8% for average pile utilization, and a mere 3.2% turnover rate, with an average charging duration of 52.8 minutes per session.

Charging pile operators face challenges not just downstream with users, but also upstream in negotiations with power suppliers for cost reductionsState-owned enterprises such as State Grid and Southern Power Grid possess a leverage that private operators like Telidea seem to struggle against, leaving them in a precarious position.

With the inclusion of charging piles in the national new infrastructure initiative in 2020, the sector entered its second accelerated growth phase, and Yu once felt a glimmer of hope claiming his predictions came true

Yet the reality soon proved to be harsh once againData released in Teradyne's financial reports indicated that between 2020 and 2022, Telidea reported revenues of 1.577 billion yuan, 3.104 billion yuan, and 4.570 billion yuan, but incurred losses of 37.86 million, 51.32 million, and 26 million yuan during the same period.

While there have been ambitions to separate Telidea for independent public listing, those dreams have remained unfulfilled, with the leading domestic player continuing to draw from its parent company's resourcesBy the end of 2022, Telidea’s total debt soared to a staggering 6.235 billion yuan, with a liabilities-to-assets ratio reaching 76.04%.

The salvation of the charging pile industry may ultimately rest on accelerated industrial processes and technological advancementsOne clear fact is that profitability hinges significantly on utilization rates

Previous calculations from Irak Research argued that for a common 60 kW DC charger and a 7 kW AC charger, an average service fee of 0.6 yuan could change profitability metrics drastically: improving utilization from 8.7% to 10.6% could reduce investment return periods from 6 years to just 4 years.

To enhance utilization, a corresponding increase in the number of electric vehicles alongside improved replenishment speed is essentialAnd indeed, this is currently underwayAccording to data from the China Association of Automobile Manufacturers, from January to October 2023, production and sales of new energy vehicles reached 7.352 million and 7.28 million units, respectively, reflecting a year-on-year growth of 33.9% and 37.8%, with market penetration hitting 30.4%. The ongoing release of new models by automakers is accelerating the adoption of electric vehicles at an extraordinary pace.

In the grand scheme, the enhancement of replenishment speed stands to benefit charging piles even more than the growth in vehicle penetration

The relationship between power (W=P×t) and current (I) illustrates that to minimize charging time, increasing power is essential, which in turn requires higher voltage and current incrementsLong-term goals suggest achieving rapid charging (5-10 minutes) would require over 400 kW power levels, necessitating voltage platforms exceeding 800V.

Interestingly, electric vehicles capable of 800V fast charging have already penetrated the 200,000 yuan market segment, with notable examples including the Xiaopeng G6, whose pricing ranges from 209,900 to 276,900 yuanMoreover, several other forthcoming models are anticipated to feature 800V platforms, most of which are expected to start from the 200,000 yuan price point, thus projecting fast charging toward substantial market uptake.

Revelations earlier by Yu Chengdong indicated that HarmonyOS Intelligent Charging Services have spread across more than 340 cities, encompassing 4,500 highway charging stations and around 700,000 public charging guns, with ambitious plans to have over 100,000 Huawei ultra-fast cooling stations in place by the end of next year.

With their 600/720 kW main units paired with ultra-fast charging terminals capable of 600 kW and 250 kW fast charging terminals, Huawei’s full liquid-cooled ultra-fast charging solution can replenish 200 km of range in just 5 minutes