German multinational automaker Volkswagen AG (DE: VOW) is set to sell a minority stake in its U.S. electric vehicle (EV) public fast charging business, Electrify America LLC, to the financial services arm of the industrial manufacturing company, Siemens AG (SIEGY), for approximately $2 billion. Shares of Volkswagen closed up 1.7% at €184.20, while SIEGY closed flat at $54.98.
Electrify America LLC was started in 2016 by Volkswagen Group to build the largest network of EV fast charging stations across the U.S. The establishment was also a step towards negating bad press after U.S. regulators fined the company for installing “defeat devices” on diesel cars to misstate emission levels.
As of March 2022, Electrify America had about 730 charging stations and over 2,438 individual charging units across the U.S. The funds from the minority stake sale will be utilized to expand the number of EV charging stations across the U.S. and Canada to 1,800 by 2026.
Siemens, on the other hand, is engaged in manufacturing EV chargers and charging equipment in the U.S. for electric buses, electric trucks, and heavy-duty EVs. This deal complements Siemen’s operations in the segment, which aims to make more than one million EV chargers over the next four years.
The EV shift is gaining massive popularity lately with the major emphasis on clean energy by governments worldwide. Unpredictable fuel prices are also pushing people toward EVs. Currently, EV giant Tesla (TSLA) holds the number one spot in both EV manufacturing and EV charging stations.
According to a Research and Markets report, the U.S. EV charging infrastructure market size is expected to reach $49.14 billion by 2030, at a compound annual growth rate (CAGR) of 36.9% from 2022 to 2030.
To ensure a smooth charging customer experience at the charging stations, companies are exploring innovative ways to implement seamless payments. In November 2020, Electrify America launched the Plug&Charge payment technology at its charging stations across the U.S., which facilitates vehicle authentication, identification, authorization, and billing of the customer’s registered account for the charging session.
The Wall Street analysts have a Moderate Buy consensus rating on the VOW stock based on four Buys and two Holds. The average Volkswagen price target of €209.17 implies 13.6% upside potential to current levels. Meanwhile, the stock has lost 27.9% so far this year.
Volkswagen is making tremendous efforts to make a mark on the EV charging network. A combination of all the right steps can make Electrify America a successful and preferred EV station across the U.S.