ChargePoint Holdings, Inc. (CHPT) Management Presents at Goldman Sachs Communacopia & Technology Brokers Conference (Transcript)

ChargePoint Holdings, Inc. (NYSE:CHPT) Goldman Sachs Communacopia & Technology Conference September 7, 2023 4:45 PM ET

Company Participants

Pasquale Romano - President, CEO

Conference Call Participants

Mark Delaney - Goldman Sachs

Mark Delaney

Okay, great. My name is Mark Delaney, and I have the pleasure of covering ChargePoint at Goldman Sachs. I'm very pleased to have with us, Pasquale Romano, the President and CEO of the company. Thanks so much for joining.

Pasquale Romano

Thanks very much for having me.

Question-and-Answer Session

Q - Mark Delaney

A lot to get into, but the company reported earnings results yesterday after the market closed, so I thought to kick us off maybe you could comment a little bit on what you reported, in particular, maybe some of the bigger and market trends that you're observing.

Pasquale Romano

Yeah, I think in general, the headline is quarter in line with our top line guidance. From a guidance perspective there was one distort development in there, and then we took an impairment charge on some hangover inventory that we had from back in the supply chain crisis we had some commitments on.

Components for one, first generation product actually, that we saw had on the inventory line that we had to correct to current standard, so we did that in one quarter. But net of that, that distortion generally a very good quarter for us in line with where we expected it to come out.

And we did a small restructuring yesterday. Part of it was just as we continued to evolve our organization for scale, it was planned, not financially motivated, and then part of it was to put some insurance policy in place so we can guarantee that we can get to that adjusted EBITDA profitability target that we've set and continually reiterated in Q4 of next year.

Mark Delaney

Yes, a lot for us to dig into on those things, and maybe talk a little bit on your outlook between the key end markets, commercial, fleet and residential.

Pasquale Romano

Yes, I mean they all – there’s always puts and takes on a quarterly basis, but in general all performed inside the envelope that we generally expected. A little light on the residential side. We kind of saw that coming. I mean I think overall in the industry, I think there was lightness on the residential side. We expect that to be back. There is some seasonality in the residential business as you move into fall. So we expect that to kind of return to general norm.

On the commercial side, on a percentage basis, percent of billings basis performed well for the quarter. But what we talked about yesterday on the call is in general we see on the discretionary charging infrastructure, which most of it is. Most is businesses, any business that has a parking lot as a ChargePoint customer or a potential ChargePoint customer.

When they respond to the need for charging or expand the charging infrastructure in their parking lot, it has a bit of time discretion and given the general hesitancy in the macro, it's every time -- you know we'll listen to CNBC when we’re brushing our teeth in the morning or Bloomberg that we maybe like to listen to in the morning. You know one morning it's a soft landing and the next morning it’s a crash and that tells every CFO to conserve capital until there's visibility.

And that just knocks right on into our business. What buoys the business, what keeps it, what back stops it pretty solidly are a lot of construction programs. There are building codes or it's so generally inexpensive to wire for EV charging at the time that you're doing construction, that all the construction projects that we see that are continuing, those all go with no interruption from a purchasing perspective, because at that point you might as well just put the charging infrastructure and then there are building codes that make it mandatory depending on the jurisdictions. So there's a lot of that going on, there's utility and incentive programs that have time fuses. So that stuff sort of back stops even on the discretionary side.

And then there's the less discretionary stuff on the fueling and community side and the stuff where that's becoming, that's becoming a focus. So that's the kind of puts and takes in the commercial business.

The fleet business, great progress on that. We continue to be successful there. Vehicle limited, which we've been a broken record on this. Please make more things that workmen and women use to go to work in the morning, because that's what's really limiting that entire space.

Mark Delaney

That's very good context. On the commercial part of the business, one of the strong franchises that ChargePoint has. I mean of course you're broad base, but very strong in the commercial L2 charging area. And things like work-from-home and maybe some of its macroeconomic dynamics has been a little bit of an overhang there, but eventually right utilization goes up and these corporates would have to invest again. Anything you can share along those lines around what you're seeing around utilization rate?

Pasquale Romano

Yes, I mean we commented on it. So utilization rates are definitely up. If you take oddly workplace, we're in the very odd financial from a market – from a real-estate perspective, real-estate utilization in general, a very odd situation. Everyone seems to have agreed that three days a week in office synchronized is a reasonable stepping stone into maybe going being full time back in the office.

Well, the problem is now you're three-sevenths versus five-sevenths utilized on an asset that you're paying for. The good news for us is when you're synchronized on those days, the charging infrastructure goes with the demand on those days. So it basically looks like the same utilization pressure that you're in the office for five days. And that's showing up in all our customers that have returned to work programs where they've hit the button on mandatory return to work on at least three days a week.

So then what they've all done, many of them have done depending on their parking configuration, is they've used some of the software features to allow people to queue for chargers on our mobile app. And then once they exhaust that and they are effectively at 100% utilization over the hours of operation, they are stuck.

And a lot of them are getting into that red zone where they are stuck, because before the pandemic, when the pause button was hit on going into the office at all, EVs were here and now EVs are here. So even if only 80% of your people are in three days a week, you still have a lot more EVs showing up and that's been spayed across the board. We're seeing in the parking operations, retail parking lots, workplaces, they are all sort of over capacitated at this point.

This isn’t a – I mean in the long term, the pressure has to relieve, because eventually – right now, it's inconvenient. Eventually it becomes more than inconvenient for drivers, then it becomes a real issue.

Mark Delaney

Yes, apt timing with the red zone analogy. The NFL season I think kicks off tonight. So we'll track your red zone offense and hopefully you guys can convert and have some of that on [inaudible] commercial space.

Yes, I wanted to talk on, Tesla opening up its network. It's been a highly topical point in the investing community and broader media. What does it mean for ChargePoint with Tesla opening up its network. And for you guys, you feel a little bit about this last night on your earnings call, but you have – how costly is it for ChargePoint to retrofit some of its sites?

Pasquale Romano

It's actually the worst kind of revenue opportunity in my opinion. We don't own any of the charges on our network, right, so we don't do anything for free. I mean we are committed to our mission, but we're not philanthropists when it comes to – when it comes to – we had no guarantee on a technology shift to our customers. The technology shifts, they have to pay for the adjustment to the charges.

Now we have very inexpensive upgrades that are going to start to roll. We said, yesterday I start to roll in November, and then by product line, we'll roll out probably by the middle of next year, so we'll have it completed. We'll have upgrades and also availability of new product shipping.

One of the things to point out is that it's not either/or with our products. If it's a commercial charger that's serving the public, it will support simultaneously NACS and CCS, because we're in the difficult position. Not us, but the industry is in a difficult position where if this decision was going to get made, it should have been made a long time ago.

From our perspective, what I'd love to do is make a t-shirt and sell it on our website with the two connector pictures saying, please just pick one. They do not – by the way, there is such misinformation out there. There is no functionality difference aside from size and shape, right.

Between the two connectors, there isn’t a benefit to one versus the other, assuming a shape and ergonomics aside, there isn't a functionality difference between the two. We have modular cables on our system and some really nifty stuff for our duals to still be able to handle either connector type dynamically.

So we've got good solutions rolling out for that. It was stuff that was in design, because we had to support the – Tesla has so much market share, we had to support them as a de facto standard anyway a long time ago, but I think it's fairly criminal to have the auto industry take this long to settle.

I don't care which one they picked. We have no dog in that fight, because if it ain't on the car, we don't add it, because even if we like one versus the other, it's not our decision, right. The car wag, that we're the tail versus the dog and that perspective. We can't make OEMs put a particular connector on the vehicle, so even if we had one that was better, that was proprietary for us and would adopt it anyway. So it's one of those situations where we're in an unfortunate situation relative to Europe.

Mark Delaney

Yes. Yes, its helpful context. And I think you guys have commented before too, the majority of the charging sessions on your network are actually Tesla drivers in the U.S. when you think about [Multiple Speakers]

Pasquale Romano

Well yes, we wouldn't exist. If Teslas weren't out there, we would do much smaller, and much smaller, which means we probably wouldn't exist. Without Teslas out there and I have nothing against the technology of the connector or what have you, but I also don't see it as anything more than a connector at this point.

But the car itself speaks CCS protocol. Tesla speaks CCS protocol when it's connected to a non-Tesla charger over an NACS cable. So it actually speaks the other standard is how that actually works on the protocol. So it's literally a CCS connector with a shape change is the way the charger thinks about it.

Mark Delaney

Very interesting. Maybe talk about the industry and what's needed to support broader EV adoption and something you and I have spoken on in the past, but what is needed for the grid to support widespread EV ownership in the U.S. and we all see examples where it's too hot out and air conditioning causes blackouts, you hear claims from some in the media and even in the investment community, well too much EV ownership cause those sorts of problems for the grid. Any thoughts you have on that topic?

Pasquale Romano

Yes, so we've talked about this at length in different forms. So a car is 4% utilized. Well its 96% of the time as I fondly say often, it might as well be a cardboard cutout, you wouldn’t know the difference.

Also, if you went to college and took a remedial finance class, as a piece of CapEx you shouldn't technically own given how little you use it relative to how expensive it is, but we've all been accustomed to owning cars, because of the convenience, so 4% utilized. That means it's sitting there parked somewhere where there's power 96% of the time. And so what it says is that it's a very easy thing to dynamically charge when there's available energy and curtail charging when there isn't if it's plugged in, not 100% while it's parked, but in a lot of the places where it's parked.

Battery sizes are at a point much like phones where you don't need to charge every day. Some people might, because they have an outlying commute, but for the most part you don't need to charge every day. So you've got an incredible amount of discretion. If you're plugged in and home, you're plugged in at work, with a little bit of utility integration and signaling, it's a unnoticeable – you can fit it in the cracks. The first 150 million cars, you can fit in the cracks of the load curve, right, you can fit it in the dips.

And that's with utility load control integration, which we've done with a bunch of utilities and it really is utility limited. It really is an investment in technology on their side more than our side. We have the API sitting there. They just have to basically make it – create a commercial program and do the work on their side to be able to do it pervasively.

We’d even do some things for them on the home side. Like for example, we can do some if they wanted us to turn on, do their access so we don't start all the charging sessions at the same time when someone comes home or start them when the utility rates click over to off-peak rates. The software can do all that stuff. It's just something that they have to put the programs in place.

So 70% of the fuel or so it's going to come in, and if you add workplace charging and around town charging, which is low load charging, that's going to be upwards of 85% of the fuel, maybe 90% in some cases. You only have to deal with the fast charge infrastructure for long haul driving, you don't do that that often.

So utility can handle those isolated little islands where you need a bolt of lightning. It really isn't that bad a problem when you break it down that way. So again, I think the technology is there. It's a question of, the will on the part of what are fairly slow moving utilities that use in some cases arguments to drive regulators to an outcome in the broader rate case discussions that we have going on with their regulators.

Mark Delaney

That's a helpful perspective. Can you speak to some of the government programs that are out there in the U.S., things like NEVI and the IRA and what impact that's having on your business?

Pasquale Romano

Well okay, so we've been famous for this one. I don't think we got – I think we got – we get criticized early on in most forms that I was in. When NEVI got announced, when the infrastructure bill got announced before it was known as NEVI, you know I was on panels and with more chairs than this and I'd be sitting there with my colleagues from other charging companies. Maybe all this great and it's going to be like, and I’m like yeah, you're not going to see anything until 2024.

And then you get hisses from the audience and people want to throw a bottle of water at me that I was sitting next to. And I'm like guys, I mean we've been through the VW Appendix D programs. We've been through all the core road builds in different states. We've even been through it with like Mercedes-Benz of most recent history, Volvo Starbucks. We know how long these take.

We announced that Volvo Starbucks deal. I even forget how long ago it was. We're just getting the completion now, right, because getting all the side contracts in place, getting it all – I mean just the mechanics of working with a car company and stuff take a while.

Now imagine going through federal, down to the state, RFP goes out, bids come in, right. Then permitting construction utility interconnect. By the way, every four ports of charging is bigger than a U.S. grocery store, it’s worth a load. The U.S. grocery stores are 400 kilowatts, there about. So every four ports that you see or so is more than a U.S. grocery store.

So if you go see at the NEVI spec level, NEVI's over spec by the way. You don't need 150 kilowatts full-time per port because you can switch it. So no one car, you have to be able to give full power to a car or something it will take it. But a full-time provision, 150 kilowatts is a complete overkill and wasted money, but that's how it's speced.

And so when you put that much power conversion in place, if you were to fully utilize the 150 kilowatts per port of full-time power, because that's what you need the utility drop to support, because that's the way NEVI is speced, it's more than a grocery store. So if you go to a 16 port site, it's like five grocery stores, right.

So just to think about the perspective of how much energy that is, right, that's why it takes a while to put those sorts of programs in place. So I sit down and like yes, it's necessary. It's going to get overbuilt, so it doesn't have to come that quickly, right, because we're – no one's not – I mean right now, you don't see huge public outcry. You'll get the occasional bait, click bait chasing reporter that'll find the one place you can't drive to reload his Tesla in the winter, uphill both ways, right. But for the most part, no one's having a problem owning an electric vehicle and going wherever they need to go and that's at current infrastructure levels, which are only going to get better.

But this stuff is going to take a while and assuming that these grant programs are going to move your needle in a couple of – in three years, if NEVI’s moving our needle we are dead. Because it shouldn't be that big a percentage of our revenue relative to what the revenue should be. It says we have no market share.

So important for coverage in rural areas, not saying it's not a good program, but not something that anyone should latch on to, even though we're got a good win rate so far, right. I'm not saying we have a bad one, so I'm not making excuses for win rate. I’m just saying you should not latch on to that as an indicator at all, because it is one tiny use case for charging. And in three years the market needs to be so much bigger, that if that's moving your needle, you've got no market share. Do you know what I mean?

Mark Delaney

Yes, that's interesting. Well, on some of these broader industry topics, you serve on the National Infrastructure Advisory Council. Maybe… [Multiple Speakers]

Pasquale Romano

I'm meeting in two weeks.

Mark Delaney

Yes. We'll maybe you could talk a little bit more on what that body does and any insights you can share?

Pasquale Romano

Well, this was kind of a – is it kind of a reconstitution of the NIAC and I've got to say, we did our first report recommendation to the administration. The way it works is, by the way, it's subject to – I’ll spare you the acronyms, but it's subject to a set of rules that say everything has to be in the public domain. And the way it works is, you get asked by the administration, the executive branch to study topics and provide recommendations and then that should inform the administration to drive policy in that direction.

So the first one is -- was information security on critical infrastructure. That's something we've done a lot of work on, on our own network, and then we've have our CSO and our engineering team that's focused on securities working with the NSC, on combined standards, and we're trying to make recommendations for cross agency standards.

Because even within the federal government, I'll give you an example, the USPS deal that we have requires FedRAMP compliance, but it doesn't require other security requirements that other federal agencies have. So what's interesting is it has a tight security set of requirements, but it's not consistent across federal agencies, let alone across water, rail, other critical infrastructure pieces, so that's what we're trying to do.

And so hopefully people listen. We're hopeful, right. We're not stopping. We're going to make our stuff as secure as evenly possible. You can never be hacker proof, but at least make it hard, so anyway.

Mark Delaney

Well, fascinating stuff. And one more industry type of a question is on permitting, and do you think major permitting reform is needed in order to speed up charging site development?

Pasquale Romano

Yes, I mean I think though -- the short answer -- yeah headline, yes absolutely. I was telling Pat in the car on the way up here, I’ve got my own permitting woes and then I’ve got a leaky deck at home, and I am trying to get it fixed before it starts raining and I’m hung up – its a deck, it’s not like complicated, and I am hung up be because the fire department hasn’t reviewed the permit yet. And this is a simple little residential project, and I’m thinking to myself, oh my God, this is exactly a microcosm of what every single construction project downstream from anything, including EV charging a subject to.

So the answer is yes, but the reason for the analogy is all the other construction associated with that site also needs expediting and so does utility prioritization of EV charging. That can't just put the interconnect ticket in the queue with other interconnect tickets right, which is what they do now for the most part.

So you can't solve just the permanent problem for EV charging, because if that's in conjunction with a complete hard-scape reorganization of a parking lot, they are going to be like, well it's really great that I got the EV charging permit, but I'm not going to have the backhoe come out and tear up the parking lot until I get these six other permits.

So you really need general, permit streamlining to actually happen and then the utility interconnect streamlining also has to happen if a utility upgrade is required on the site. So it's a lot more complicated than just get EV charging permitted.

Mark Delaney

Okay. A final industry one, and you can take this wherever you would like, but if you could design the IRA from scratch, would you change anything?

Pasquale Romano

The IRA from scratch, yes, I was talking to actually Mark Deso [ph] at the DOE about this exact thing and I would create a very simple clean way to sell the tax equity, without having to build a complicated tax equity structure. Because it effectively creates – it turns the tax credit into a rebate program, which I think would be the simplest way, because a lot of people either can't use the tax credit or find it to complicated.

But if there was a simple way, if there was a simple exchange or a simple credit system that could be made to work around that. So Mark, we had a glass of wine and so Mark seemed to agree with me, but I don't know if it went anywhere when you know the wine wore off.

Mark Delaney

Well, we'll keep an eye on how industry standards progress. You have some ChargePoint, specific ones and following up on some of the topics you spoke about yesterday. You have your target to be EBITDA positive in the fourth quarter of calendar ‘24. Talk about some of the key levers and what's needed to get there?

Pasquale Romano

Well, I mean we're the – complicated to understand because we're in a few different businesses and on two geographies, but we're very simple financially. It's revenue times margin, less OpEx, add back CapEx depreciation gives you a adjusted EBITDA. And we gave, I think, relatively pretty good bread crumbs yesterday. We're not a CapEx intense business, right, so there's not much CapEx depreciation, so you can even zero that line out if you really wanted to.

And so what you got to believe in, you got to believe in, what the growth trajectory is for the company to be able to model it accurately. You got to be able to model a margin trajectory. I don't think you have to be – I don't think you have to super heat that to unrealistic levels to kind of get there.

And then you've got to look at our historical management of the OpEx and what we did yesterday to just pull a step down, right, so that Q4 this year is still sitting down around $79 million to $82 million in that range that we guided to. And so that's an easy one, because we've been pretty – there's an eight quarter history of us managing OpEx pretty effectively.

So if you believe the growth story, put a reasonable margin recovery story, you don't have to be too aggressive on that to get to the number, and you just basically drop it down, you can pretty much model what we're thinking. And we pretty much said that on the call, that's what we would have to do. There's no magic to getting there. It’s not a complicated model at all.

Mark Delaney

Yes, I think you made some comments to around cash on hand and the duration of that relative to reaching cash flow positive.

Pasquale Romano

Yes, yes, I mean the one thing there, I think a little more difficult for investors to unpack is, is just because there's not enough information in the financials is how much inventory is going to be needed out in that fourth quarter. If you're shooting a revenue growth, it's required to basically get to adjust the dividend positive. And the comments that we made, that we have made publicly is that the composition of that inventory line is not 100% finished goods inventory. We haven't given a break down. It's not 100% finished goods inventory.

So as we consume the things that are more peace part oriented or pre-paid credits into CM’s or things like that that are there that we made comments on before, the inventory can still support – the inventory number that’s there can support an incrementally bigger line. And then as we work on other things, hopefully we can keep the inventory requirements and not put too much pressure on working capital as we get out there. And then if you factor in that we have an undrawn line of credit, which is sitting there, $150 million with some pretty good banks.

And you know, we don’t like our stock price, so we don't want to go willy-nilly with the ATM, but we do have it there to just do some balance sheet grooming as Rex, our CFO has mentioned on multiple earnings calls, and you're sitting at $264 million on the balance sheet at the end of the quarter.

You know it's a healthy position, a healthy position, especially if you look at the competitive set in the end and where that is, I think we're in an enviable position there. More cash is always better. More cash is always better, no question, but in terms of our ability to maneuver, I think we got some pretty solid ability to maneuver.

Mark Delaney

So helpful context. Maybe if you could talk on DC fast charging. In particular you spoke already around some of the supply chain costs and had to adjust the legacy product. Yes, so what do you go from here right? And what is DC fast charging profitability ahead of that trend and progress over time?

A - Pasquale Romano

Well, I mean it's a more complicated product line, than our AC product line and it's younger. So it's at – the differential margin, it’s one of – mostly driven by a maturity disparity and a complexity disparity between the two, but that's narrowing really fast. And that product that we took the rights on, that was the first that we've ever built.

And I can tell you that the first of anything. I mean, if you still have one line around you know in a bin somewhere at home, go look at the first iPhone versus the one in your pocket and you thought that was awesome. Like when you got that first iPhone, however 13 years ago or whatever, 14 years ago. Man, you thought that was the space shuttle in your pocket, and the space shuttle is pretty blowing the toot now as a space X rocket in your pocket, right, at the time right. And now you look at the thing and you're like, wow, I can't believe I used this thing right.

And so that first product was our first iPhone effectively, and we're on – I don’t know if you want to count it generationally, we're on third I think and we've got a brand new architecture that's in development, that's going to revamp the entire DC product line that won’t be out this year, but it's in the pipeline.

So when you keep accumulating all those learnings, and then you accumulate the volume, which gives you a lot more leverage with your supply chain and your CMs I think, I think it normalizes before – I mean we're at the front end of such a long growth cycle in this market before it penetrates you know very deeply at all, those margins start to uniformize.

Mark Delaney

Well, I think part of the issue as well if I'm not mistaken was your supply chain right and enter the high cost of components. So maybe we can talk on supply chain, because I mean last year when we were on the stage and we were talking, that was a really big issue for you and everyone else in the industry. Where do you stand today with that?

Pasquale Romano

Oh! I mean right now we can build it well.

Mark Delaney

Okay.

Pasquale Romano

I mean, we can build it well. For the tough stuff we've got capacity reservation agreements, for the stuff that's still impacted. It does not mean much stuff that’s still impacted at all. And so that’s the problem. When you optimize for assurance of supply and you don't know when the supply chain crisis is going to end, sometimes you need to make commitments on stuff and take it down and put it in a warehouse and its higher priced stuff, and then you just – you got to build it to recover the cash.

And the price increases, we commented on this yesterday. The pricing crisis that went into effect during the pandemic, which we’ll always consider to be temporary in nature, the sort of service scarcity premium, have gone, because everyone's got stuff. So it all is floated back down to kind of normal ASP levels. So yes, you're getting a double whammy on that and so you just got to reset it. But again, that was – that's contained to one, basically one product.

Mark Delaney

We got time for one or two more questions I can ask then, otherwise I wanted to see if there's a question from the audience. Yes, in the front.

Unidentified Analyst

Is there going to be more than much any stations due to the utility upgrade, especially the electricity grid network is going to be a bottleneck in the future?

A - Pasquale Romano

It depends. So for most AC charging, for most top-up charging, around town charging, you can stretch the utility drop. Ultimately you probably need a utility drop upgrade at a site, but you can stretch the utility drop, because the cars are typically parked there for a reasonable amount of time if you're looking at workplace or around kind of a round town charging, and they are not at a particularly high charging rates.

So because our software – I'll give you an example. Let's say one of the charging ports is provisioned at 50 amps, right. You may occupy 10, 50 amp breakers in a panel, but we can use software to limit the entire, that would be 500 amps total, but we could set in software that the combined set of chargers can't use more than 200, and so you can treat it as an intermittent load.

So because we can use software to basically override the permanent load kind of peak requirement, you can stretch the utility drop at the site. So I think we're a ways away from all around town charging becoming a bottleneck.

On the DC charging side for a long haul charging, that's – and that's not a everyday use case. Going back to the gap – just to give people a data point. If you want to go back to a gas station model where you put both a lightning in your vehicle in five minutes, its a megawatt and a half to two megawatts. You multiply that by eight pumps, you get 16 megawatts to replicate a gas station. Gas stations footprint doesn't have enough space for the utility infrastructure, so you're not – and then you got the problem you're talking about in specs.

You're not going to go back to the gas station nor should you, because – I think the asymptote for mileage in a battery is 300 real all weather miles. It's not the BS ratings that you see, no, especially WLTP ratings are completely overstated, right. The EPA range numbers are overstated, not as bad as the WLTP numbers.

So when you get to 300 real miles in the winter right, in a vehicle and you can count on that, the number of times a year you need to use a fast charger is not going to be that great and it's not going to go back to being primary fuel. So at the sites that you need it right, if you had say a 15 to 20 minute well to get the same throughput as a gas station that has five minutes well, you're going to need 3x to 5x the amount, because you’ll probably go in and have some dead spot in your charging time, because you bought a coffee or something like that. You need 3x to 5x the number of stalls.

So if you think eight ports, it goes to 24 to 40 ports. That's why right now EB charging sites that are fairly high, because they look so big so early in the market, it's because you need a lot of ports to get the equivalent throughput at peak times, because we're all synchronized as humans, right, that's the difference. It’s the dwell time difference and that's why the parking configuration also can't be pulled through.

It says gas stations are the wrong architecture, the wrong real estate architecture. Boy, this is not a gas station business. It never goes back there and there's also not enough traffic to basically drive enough business to the number of little depots that we have right now. So that model is going to change dramatically. It's real estate wrong and it's overbuilt for what we're going to need in the long term.

So I think from that vantage point, the utilities just need to respond and that's much more of a regulation and policy thing, they've got to respond. It's not – they've got to look the other way on fast charge. We're already driving some non-demand charge alternative rate structures in a lot of states who demand charge, that to go away, that's a distortion for a fast charger right, that has to go away for the economic store.

And then utilities have to basically say – be told by the regulators, you will go fast on this and you will build out the infrastructure, because for the other 90% of the fuel, it's a really beneficial thing for the grid if you load manage it, because you get more volumetric electrons moving through on a percentage basis, lower percentage or lesser amount of CapEx per electron, so you win.

And until that goes click, and until we get off this legacy model, we're going to have the problem that you are talking about right. Luckily we're at the front end of this thing, so we got a little time, right. We got 20 years over time. We have to fix this over 20 years. It's not a five year problem.

Mark Delaney

Speaking of time, we are out of time for this session. Thank you so much for joining us.

Pasquale Romano

Thank you. I appreciate it