Ep71: Pasquale Romano 'The Man in Charge of Charging'

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Michael Liebreich: Before we start, if you're enjoying these conversations, please make sure that you like or subscribe to Cleaning Up, it really helps other people to find us. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation. Hello, I'm Michael Liebreich, and this is Cleaning Up. My guest today is Pasquale Romano. He's the CEO of ChargePoint, the world's largest EV charging technology provider, also, for full disclosure, a company in which I was an early investor. Please join me in welcoming Pasquale Romano to Cleaning Up. Thank you very, very much for joining us here on Cleaning Up.

Pasquale Romano: Thanks, Michael. Great to have great to be here. And thanks for having me.

ML: Now, there is a bit of a time difference because you're over in California. I'm here in London. And, I've had a bit of a tough day, I've just been editing the transcript of our last, the last episode we recorded, which actually kicked off season five, and that was with former Secretary General of the UN Ban Ki-moon. So, I am going to be cracking a beer. And I know that you aren’t, at least I assume that you probably aren’t, is that right?

PR: No, no, it's 10:09am here on the west coast. And actually, I actually have done this for many years, I always do a completely alcohol-free January. So even if it was later in the afternoon, I would stick to my knitting there.

ML: Well, so I'm going to disappoint a lot of people in the audience then by demonstrating live on YouTube and podcast that I am not doing dry January. So, cheers. Thank you for joining me. Now what I wanted where I wanted to start was you're the CEO of ChargePoint for disclosure, I've been an investor in ChargePoint that's, you know, all over my bios, and I'm very proud of it. But the audience won't know exactly what ChargePoint does beyond EV charging. And in particular, why is ChargePoint different?

PR: So I think it's a great question. I get it all the time, or that question, that set of questions like, you know, what is your company about business model, etc. So a couple of brief things, I think will kind of crystallise them into folks minds. If you look at companies like take Airbnb, for example. They become the largest, effectively hotel chain by essentially, platformizing everybody's capex out there, everyone spare capex into one platform that's rentable by consumers. And, you know, while we're very, very different, very, very different application, it’s transportation, what we do is we make it look to the driver as if it's all one network. But in fact, every business, every business that has a parking lot, every landlord, etc. buys, pays for the chargers pays us of subscription to keep that those chargers on the ChargePoint network. So, we can look to one as one unified thing to drivers can be integrated with systems, our own mobile app, other people's mobile apps, etc. But the individual business retains control of those charges, who can use them, what the hours of operations are, is there any payment required to use them or by whom. So, one set of individual say employees could have things for free, maybe visitors have limited access, maybe the public can use them after hours, all kinds of things like that are possible on the platform. So what we've offence effectively done is crowdsource the largest network of EV chargers on the planet. Because it's the only tractable way from a capex perspective to do it. And what we've proven over 14 years is that businesses are willing to do this they were willing to do it even in the earlier days of the electric vehicle transition. And now the transition being you know, kind of entering early mass market it's precipitous, so we think it's the best way to essentially pool this together and make it all accessible to drivers. That's our that's our commercial business. Our fleet business that we're selling to the likes of large fleet operators, largest delivery companies, like commercial fleets, construction outfits, things like that. That's very, very different. That's a business sale that's when they want to use it for their own use. And then what we also do is we bridge the two, so we have a home business as well a home charging business, but a lot of fleets require that the vehicle get taken home and parked in the employee's driveway or on the street in front of their house. So, we have all the home reimbursement, energy metering, etc. capabilities to enable even those modes so and we can also broker things between fleets and after our parking at retailers, etc. So there's lots of things we can do here to basically make this web between fleets, consumers in their own home or apartment and the commercial universe all homogenized and all doing it was a very, very, very capex-light model.

ML: Okay, so you’ve dived straight in. So I think what is the key differentiator, it's all about business model. Because you could have started off by saying, Oh, you know, the world is going to go to electric transportation. And we're going to be big, and it's going to be great. But you've really gone into kind of network benefits, and then some of the segmental questions around fleets. So, is it a hardware business? Or is it a software business?

PR: So we're no more hardware business than Apple is. In that the delivery vehicle, obviously, for a service is a physical endpoint, in our case, it's a charger and we make those, we also have third party hardware capability on our network. So, we're a network company first, in that we will sell a business, whether it’s a fleet, a commercial business, the ability to use our network to manage their charging infrastructure, charge them on a subscription basis for that. And for the most part, most of our customers use our hardware as well, it tends to have the best integration with our network, because we can move the feature set of both in concert. So, we can have the best integration, which like you'd see in a mobile phone space. But if you wanted to have third party hardware, you had some legacy hardware and wanted to have it compatible with our network, we enable that as well. The one thing we don't do is we won't sell hardware, that’s not associated with our network, because we just don't want that that user experience and support headache of not being able to adequately have guarantee on a good user experience there. So, we don't do that. But you can use our network without our hardware.

ML: But the thesis then, it's very much that there's a network benefit to be managing these assets. And sort of by extension of that, a competing model might be that you'd have kind of lots of different networks, and then all the value going to some kind of roaming provider that sits on top of ChargePoint and everybody else, and becomes you know, transparent to the so that that's what the user sees. Why isn't that a solution?

PR: That's a complete nightmare. And so the analogy I use for that is parking meters. Parking meters, actually, if you go up to the average consumer and you say, you know, parking meters are kind of a mess, it's a shame that no technology was really brought to bear on that industry. They'll be like, What do you mean I go to a parking metre and I stick coins in or whatever, use mobile app for whatever and can park and I'm like, Yeah, okay, here's what's interesting. So, let's say the parking metre even though it's the city, city metre, let's say that parking metre is in front of three businesses. And that business basically said, hey, you know, if you come in and have a coffee here, we'll pay for your session, well, you can't do that. There's, there's no fluidity there. Businesses that have their own private parking, that's a completely different environment, if they want to basically administer that, there's no fluidity, there's no interoperability, etc. So, parking metres are a perfect example of what not to do with EV charging. In fact, charging is a subset of parking. So, what I'm really talking about here is we should improve the parking experience, and include charging in that as we move forward. And to answer your question specifically about the roaming partners. It's not about a vending machine for electrons. What if an employer wants to give you power and control access, you can't be anonymous, because I want to make sure that only my employees are getting that benefit. And having a roaming partner in there. That, by definition, is the central nexus for the whole thing for that business to exist, it has to tax the transactions. And that's the problem. You don't want to a third party, it’s not adding any value taxing the transactions. So, what we do is we to wherever degree possible, do peer to peer roaming, much like you've seen the internet. And then we also by policy, do not allow any surcharges to be placed on any transactions by third party network, or third-party mobile apps or any fee that the station owner will have set. Remember, we don't set the price on any of our stations and we don't make any money there. We're the payment agent. But that's not what we do. We're facilitating that for the station owner. And so, we're kind of a guardian there and that we don't let a third-party tax that and we guarantee that we, if a user's using our mobile app to access a non-ChargePoint network station, we won't place any surcharge on that. So, we hold ourselves accountable to the same rule that we apply to other folks. Now, we think that, because this is a much lower cost way of fueling your vehicle, it's a much lower cost of ownership experience in general. Why insert the friction on what is relatively infrequent thing infrequent, meaning, if I'm working someplace with ChargePoint, I'm going to use ChargePoint as my dominant mobile application. Because it's where I'm working most of the time when I'm not at home. Or if I happen to frequent a downtown area where I live and it's ChargePoint, I'm going to use the ChargePoint mobile application because it's the lowest friction. And if not, I'm going to use something else. And I don't want to create an environment here where we're creating artificial friction when you're not going to buy us a consumer to go park somewhere versus somewhere else, just on the basis of who's charger who's charging network is there, it's very secondary to consumer, you want to drop the friction. And so that's why we have the policies that we do. And we want to let the user experience extend beyond a vending machine for electrons. So, this is kind of why we've evolved to the way we've evolved, it's been very successful and been broadly accepted.

ML: Alright, so we're exploring the kind of the value stack here. And you know, I pushed to say, well, you know, is there a kind of a place where you could sit above ChargePoint and extract little rents? And you've said, basically, no, it doesn't work that way. What about going down and saying, well, you know, why are you actually making any hardware? I mean, I know you're great at it. I've been out at your know, your place in Cupertino, and you've opened up one of these things, and it looks beautiful, it's all solid state, it's great. But other people can do that. Why don't you just release reference designs and say, we manage the network, that's what we do. And anybody else who's better at making hardware, you know, here's a reference design, if you can improve on it - great.

PR: You know, in theory, we explored that, in the earlier days of the company, we actually gave that a serious think. So, it's not what you're proposing is, is, you know, we, anyone in the right mind has to think about that option. I would point to a couple things, if you look at much more mature industries, they usually, let's take the PC industry, or the laptop industry, PCs in general, and let's take mobile phones. In many cases, they started out fully integrated, some vendors delaminated, they split into software and hardware. And now what you're seeing as things mature, for competitive reasons, for speed, for serviceability, for user experience reasons, things are converging again back to it's all increasingly coming from one vendor. You see it with Microsoft, which was sort of the hallmark there with Windows, in the early days, kind of fully federating the PC industry, where you had this huge cottage industry, not only around the vendors that can make a PC, but all the sub components, the modularity and compatibility that went into that, unfortunately, the, if you remember if you, if you're old enough, the blue screen of death problem where you would constantly, you plug in a hard drive from a third party manufacturer, and it wasn't properly interoperability tested, and you'd get the instability things. And, you'd kind of get hamstrung as a software developer not being able to move the hardware in concert with the software. So, you want to bring new features to market, but you're slowed down by that. It's hard to support because the customer wants one throat to choke, right? So, they want a business customer wants to know, hey, my employees’ laptops aren't working, I would like you to fix it. And then there's a bunch of finger-pointing where the operating system vendor says, well, it's not my issue. It's the memory provider that you decided to use, or it's the peripheral provider dejour that you decided to use. So all these problems, make what you're saying, a much bigger challenge in in the early days of a market where we're trying to provide the lowest friction possible for a business to electrify. We're saying, look, we're going to continue to make hardware until we see evidence that we can control it move at the pace that we want to move and not be impeded at all by having to be subjects to other company’s whims. I don't necessarily see a world where that can be guaranteed, but things could change. And if they did, we'd reconsider.

ML: Right, because it's great that you're talking about these analogies from the PC industry. And you've got one model, which is Apple, you're on an Apple computer you're going to use Apple software. But then there's also the example of the Microsoft environment, which went a different way, as you said, you're used to a delaminated and I suppose you need to be flexible because it could go either way, or does it possibly end up as you know Maybe even with a kind of Linux equivalent or somebody saying, well, we can do a stripped down very basic operating system, make it free. And, you know, and ChargePoint is going to have to compete with that as well.

PR: Yeah, but the problem is the integration with the ecosystem. So, what it's not about the operating system on the physical device, it's about the services that it's connected to much like your mobile phone is, is so hard to displace…

ML: It’s booking, it’s payments…

PR: And not only that, it's all the in-dash navigation systems, it's all the fleet, we made some announcements recently with Fleet Fuel Card providers in the fleet segment, we've got integration with telematics vendors in that fleet segment, we've got integration with, you know, umpteen million mapping and providers, Google Maps, Apple Maps, etc. Going beyond that with other applications that are vertical specific. And in other spaces that we haven't announced yet. So the integration with the world… If you zoom back, cars are mobile, they move around. And so the context, it's obvious, right, so the context that a car is in is really kind of limitless, right? And so the ecosystem that you got to be plugged into is complex, and I think that's where the generic operating system, kind of, I'm not saying it's impossible, but I said, there's a huge amount of barriers there. And if you look at Microsoft in particular, you know, look at the Surface and all of the other hardware options that you have that are coming directly from Microsoft that are extremely well integrated, right. And so even they, while you can still buy a Dell and HP etc, etc. laptop with the Microsoft operating system on it, you can also now buy a direct piece of hardware from Microsoft made by them so they can control their flagship. We let third party hardware on our network. That's not a problem, but it may not have all the features not because we would limit it, we wouldn’t limit it. Its’s because they don't necessarily have the hardware functionality or the or the protocol compatibility for that.

ML: And I have to concede this part of the discussion completely to you because I am actually recording this on a Microsoft Surface, which is the ChargePoint equivalent in in architectural terms. Now we've been going up and down the value stack to you know, could there be a kind of a booking app? No, not really. Do you need to do hardware? Well, there's some good reasons for doing that. Same reason why Microsoft got into the Surface? What about if we go out to the sides? And we say, what kind of behaviors are you seeing? Cars are mobile vehicles are mobile. But most people, do they tend to, you know, charge always at home? Or do they really, you know, how many? How many locations do people charge? You've mentioned fleets, fleets are obviously kind of anchored to the depot. Unless there you also mentioned charging at home, but, you know, what sort of behaviors does the normal EV driver, if there is such a thing, actually engage in?

PR: So we've got 14 years of data on this, because and here's what's interesting. And you didn't ask this question, but it's being begged by the context. Battery size changes the frequency of plug in, but it doesn't change really the distribution of where a driver plugs in. So, I'll give you some examples if you have free charging at work and you have 250 mile real range vehicle, which there are a plethora of them now available on the market. You likely won’t plug in every day because you don't necessarily need to, but everyone has their own floor, their own battery level floor where they start to think about hey, the next available plug I'm going to plug in. At work around, around town locations, hotels, restaurants, things like that. In many cases, they're giving you power retailers, they're giving you power as a courtesy as an amenity or if or they're using it as an enticement, if it's a retailer, they may be interested in having you as a rewards card holder so maybe the only way that you have free power or extended parking times is if you're a rewards card holder, they're always looking at ways of getting you to sign up for the rewards card or their credit card etc. So they're using it more as an incentive, as an amenity. And what that what that does is it gives the user a flip in how they think about feeling when you drive a gas car you drive around until a little yellow light comes on, which is always right when you're late for a meeting if you remember when we were actually going to work about two years ago, right when you're late for a meeting and you're like, Damn I gotta make the 10 minute stop on my way to the highway entrance to be able to fuel up I'm going to be 10 minutes late for the meeting and it's you know all hell's gonna break loose. So that's the way we used to fuel but the minute we flip to electric what happens within a couple of days is it flips to kind of like the cell phone model where once batteries got big enough on cell phones and you weren't like, you know, searching for an outlet every two seconds to keep your lifeline to the universe alive, you stop thinking about it, you saw a wireless pad or you had an outlet at an airport while you were in an airport lounge and you charge up a little bit. Did you care if you fill it? No. Did you care if it was fully empty and didn't really need to charge immediately? No, you just sort of kind of take on some juice. And that's the way people behave when they're driving an electric vehicle. And it really is something where if it's an amenity, and it's free at work, much like people could bring employers could make you bring your lunch, but a lot of times they highly subsidise or even make food free. So what do employees do they avail themselves to it. And utilities may want the load there during the day, so that they can dump surplus at favorable rates, etc, into vehicles which helps them smooth the load curve out. So, you're gonna see lots of forces in the market, enabling this thing to be an amenity. So we're actually taking fuel from what is a strictly revenue generating thing, unless it's a retailer gas stations use it as an emetic kind of bait, right? It's a loss leader to get you to, to use the other retail stuff that's on the site, but what you're doing as a consumer is you're flipping your mode into a top up model, you're availing yourself to charging kind of like you would with your cell phone, and on top of what you're not plugging in every day, not even plugging in at home everyday or in your apartment or street. So you're not doing that, because you have a big enough battery. And you're just sort of keeping managing the battery level, kind of implicitly. And it's only when you're going on a long trip, that you're searching for something that used to look like a gas station. So, you can fill up in the minimum amount of time, or the amount of time it takes you to get a coffee or a bottled water, or some snacks, and maybe, you know, use the restroom or whatever that you need to do to make a pit stop on your way to you know, holiday. And, and that's it. So, it really flips to a piece of consumer electronics. So, the big screen inside of most EVs that looks more like your iPad, when you're actually thinking about your whole vehicle, as if it's an iPad, you're kind of just charging it that way really is amazing. It's an amazing flip.

ML: And you've got this kind of 14 years of data which is very special. And it's the biggest data set likely in in the world, can you give a sense of you know, how many people are charging, you know, at home, off street, in the community? And how often do people really do that kind of, you know, I'm on a 500 mile, 700 mile drive, and I really, really need to go to a gas station type thing.

PR: So, let's talk about it on a percent of fuel that electric, right, your car is consuming. About somewhere around 10% of the fuel you consume, plus or minus, right plus, in some cases, if you have a vacation house that you go to every weekend and less, if you're like me and you just work. But if it's around 10% on average and that's much less than 10% of the charging sessions. So, the frequency that you acquire, that 10% of your fuel to go on those long trips, is not very frequent. It's a handful of sessions, a dozen or so a year max, that you're that you're going to stop and use something that looks like a fast charger if you're a typical person that is it on a regular basis every weekend trying to drive three 400 miles. So, and even then you only have 52 weekends in a year, right? So, there's not that many opportunities, you're not gonna go away every weekend. So, if you just think about the practicality of this, the frequency of using something that looks like a traditional gas station is really quite low. But when you need it, you need it what actually which actually poses one of the biggest challenges for the industry at large is until utilizations are high enough many of the places that you need that connect metro areas don't have high enough utilization to justify the cost even if you charge a reasonable amount for a charging session, don't they think they can't support themselves from the retail traffic they generate or the direct fees that would be generated. So that's one of the that's one of the things that you've seen Tesla invest in with their Supercharger network is they view it as something that they need to do to make sure that they can remove that buying objection from the consumers mind but you're seeing a lot of funding now, you're seeing a lot of public policy to reduce that friction, to subsidize those locations, etc. And once we kind of get that sorted out, I think we're well on our way, once we get all that sorted, there really isn't any place that you can't take on that 10% of fuel, conveniently on your long trips, and that really then it gets into this natural organic fill-in as more and more cars come into the population utilization rises. And the world figures it out on its own, right, organically, gas stations have organically placed themselves all over the US and Europe and all over the world, based on good locations for where people want to stop.

ML: And that kind of 10% figure was what I was fishing for that actually all of the acres of newsprint. I mean, we don't have newsprint anymore, but we have the digital version, but the acres of equivalent newsprint that goes into talking about range anxiety, and it actually relates to those very small number of journeys, where you really drive beyond the range of, you know, if you're doing those long journeys, you'll buy a car with 200, 300 or 400 miles of range. So it's a it's a minority. The problem is it does cast a long shadow. And I know this because, you know, I'm still driving a 4.4 liter petrol SUV, because I drive London to the Alps. And at the end, I've got a very steep icy hill and I do this with six people in the car, and I don't have there is no electric car that enables that number one and number two, where would I charge that because I don't want to stop, you know, 2, 3, 4 times along the way to exhibit this kind of Ooh, you know, I'm now a laptop, I now I'm now a tablet, I'm a mobile phone type behaviour. I want to I want to get to the Alps. And then I want to get back from the Alps. So, it does cast a long shadow, doesn't it this problem?

PR: How many kilometres is that trip?

ML: It's 1000 kilometres door to door. Now I haven't stopped for the shuttle, you know, the UK is an island. So we go on the train under the under the channel. And obviously, that enables, you know, maybe 20 minutes charging typically something like that without even interrupting the journey. You know, I'm looking for a car, I'll be honest, my spec, if you see anybody from the car industry, if you happen to know anybody from I don't know, Daimler or Rivian or Tesla. I'm looking for about 450 maybe 500 miles range, because cold weather it'll come down…

PR: Miles or kilometers?

ML: Miles because I want to do one long charge when I have lunch or dinner halfway between Calais and the Alps. As soon as that exists, and then you know, as soon as the car exists and the charging exists. I'm done. I'm yours.

PR: Okay, I mean, I think you can easily do it with a lot of cars on the market with two stops right now. With one stop, I think you're you may be waiting a long time for the following reason. There's not a lot of reason to cover that use case for most consumers. So let's take a step back because you started with range anxiety, range anxiety I'd liken to it's a ghost, because consumers will head fake you if you're not careful. Consumers aren't carefully thinking about this paradigm shift into what will it be like when I drive electric through just pattern matching on what they've done with gasoline cars. So, they're saying, well, what's the range of my gas tank, it's 400 miles, I'm going to have to go to a charger. And every week and you know, kind of reload, they're not thinking about the paradigm shift. This is analogous to when the iPhone was introduced. And if you remember, Walt Mossberg from the Wall Street Journal, is an incredible guy so I'm not, you know, basically criticizing Walt. But he wrote an article, a review of the original iPhone, and in that there were some statements to the effect of, I don't see a consumer giving up their plastic BlackBerry keyboard. And the rest is history. And the reason is if you were a cellphone vendor, and you surveyed your customers, and you were legacy cell phone vendor, and you surveyed your customers, and you said, could you deal with life with no keyboard and just type on the little screen? The consumer would say, No, I love my little clicker chiclet keyboard. It's that's what I'm married to. Of course not. I can't imagine life without that keyboard. I could never type as fast or as accurately on a screen, and then you hand them an iPhone, and they go, oh, this is great. Suddenly, all the surveys went out the window. So, range anxiety is a ghost. The minute you hit, it's the equivalent of the chiclet keyboard. It's what people think their perception will be when they get behind the wheel of electric vehicle. In a couple of days, they get behind the wheel and what was I worried about? I could plenty arrange because I'm refueling at home and refueling at work. It's only when I'm going on a long trip, they need that accessibility. So that use case you just talked about, that's important. They need that accessibility, but they're like, wow, this is really nice. It's very different I because I have a gas station in my house, and I have one at work. And I have one where I park to go to dinner and around town and stuff like that. And I'm doing this without stopping because I'm naturally stopping anyway. So all I have to do is plug in the vehicle. Where am I going with this? It turns out that you got to be careful, there's too much chatter that's being generated by simple surveys where you know, consumers are being surveyed and they're not taking it that seriously. They're like no, I'm, you know, I want the same amount of range that's in my gas tank, which by the way, batteries are approaching that anyway. Maybe not your diesel car, which has an incredible range…

ML: Petrol.

PR: It's got an incredible range for a petrol car. But you know, why I think you're gonna be waiting for a long time, is I think most consumers won't see the value in 500 miles of real range. Not fake range, not I'm talking all weather uphill, you know, real range, you get to 500 miles of real range, the number of times in the life of that vehicle, that a consumer is going to want to exercise that range is so low.

ML: That's an interesting question. Look, I'm not really find myself on the other side of this, when people tell me oh, I'll never do this. And I'll never do that. And I agree entirely with the kind of the day-to-day use. The way I put it is when people worry about rage, it's like I remember when people said we will never have video on demand, there just isn't enough bandwidth. Of course, now in my household will often be watching two different things on Netflix at once. And, and it was obviously…

PR: By the way, that was my that was my graduate thesis. I worked on that in 1989.

ML: Right, and, you know, there's nothing that you know, 10, 20, 30 years of infrastructure build out won't solve effectively worldwide in terms of, you know, lots and lots of electricity everywhere. I just think that, you know, I want to stop once on a long journey, not twice for I don't mind taking one meal stop. I don't want necessarily to stop twice. And I'm not sure that I'm that unique. So I don't know. But equally, in terms of…

PR: I think you’re pretty unique in driving 1000 miles.

ML: 1000 kilometres, 700 miles.

PR: I think you're pretty unique in that.

ML: Don't lots of Americans drive off to, you know, much further you live in, you know, I mean, is it not that common? Certainly, if you talk to Australians they are driving those sorts of distances, like all the time, no, they go that far for a burger.

PR: Well, I don't I don't think they go that far that often. But let's say they did, let's say they did, let's say it's 700 miles, when you get to 300 miles of real range, real not fake range in a vehicle, not the sticker range. But the real range in all weather conditions, somewhere between 250 and 300, I think so is the  break point, what happens is you would make to very short stops, two very short stops, because you don't need to get to full, you don't want to go all the way out. You don't want to go past about 80%, 85%, that second stop isn't even going to be as long as the first one. So, you're talking about maybe a 20-minute stop and a 10 minute stop. And most people are okay, with a 10-minute stop. They get a bottle of water. I mean, it's about the same amount of time as it takes to fill a tank of gasoline. That's not a lot.

ML: Yeah, I think that's where that's where I'm going to concede this section as well, too. Because I think the issue is, I don't mind, I stop every couple of hours for 20 minutes anyway, because it's safer. And I have a bladder, and these things are not infinite, apparently. But what I don't want to be doing is fiddling around with six different cards, and four different cables for 15 minutes when I stop, and all I want to do is grab a coffee and visit the restroom. And I suppose at the moment, that's my perception. And I do drive an electric car as well. In fact, in the UK, I don't drive a gas car. But it is unbelievably inconvenient, trying to actually go somewhere new, and find out which network it's on and which cable to use, and so on.

PR: So I'm going to help you here as an investor, clearly, I've been doing you a disservice and not spending enough time trying to help you with this. If you use our mobile app, we roam in Europe and in the United States. But let's just take Europe, we roam with just about every network that's out there. So, on one mobile app, you can find, authenticate, and pay, especially for public fast chargers that are dealing with that use case because they're typically all roaming and all wide open. You can find an enormous number in Europe. So, download our mobile app, load it, look at it. What you'll see is and set the filter to fast chargers. So, it takes away all of the kind of longer duration parking, slower chargers. And you'll see the frequency of charging that you have available to you with all being aggregated through roaming with no surcharge on your ChargePoint account. That infrastructure is there.

ML: That's fabulous. That's now turned into us kind of commercial for ChargePoint, which is fine, because I am an investor, and I'm good with that. And but talk about the difference between Europe and the US because you do have this ferocious market share in the US, which is actually, I'll be honest, why I initially invested, I think you know that it wasn't just your, you know, your looks and the chance to go to California occasionally. But in Europe, it is a much more fragmented environment, and it's been a lot harder, you've not been able to establish the sort of, you know, what is it you've got some 76%? I don't know what the number is, market share in level two chargers in those corporate car parks. So how does Europe differ from the US?

PR: We entered later. In my opinion. I don't… there's too many companies chasing the asset ownership route. I think that's gonna be fairly fragile, you're gonna see a lot of consolidation there, because I don't think it's very easy to resell electricity that for profit with chargers, when so much of the energy is going to come in at home and around town, being sponsored by businesses that are treating electricity as an amenity, there's just not going to be enough juice there to in the financial sense, not in the electricity sense to kind of cover all the assets that people are talking about deploying. So I think it's fragmented, but it's temporary. If you look at the acquisition that we just made, there on the commercial side has to be we've moved up quite a bit from market share perspective, in terms of the number of ports that are on our network, we've got, you know, the exact number, I don't want to misquote it, but it's upwards of 50,000 or so ports, plus or minus in Europe and climbing pretty quickly. It'll take us a little bit, we've only been there about four years, in earnest and we weren't in every segment and every vertical and every language and every country and every payment and currency etc. So you're kind of moving up the curve, so to speak, if you're us. And we're very committed to it. And we expect to have leading market share there and we expect it to consolidate, we expect a lot of the stuff that you see in the vestiges of the early days consolidate and it's just natural and part of it there which I applaud is, there's so much there's been such long validated policy and political will. And where that has really worked, are simple things like date certain by 2030, 2035, 2040, no more ICE sales, or no more access to the central business district of a major city, by an ICE vehicle post this date or no congestion charges, if you're driving electric but congestion charges if you're not. All these little political things that aren't really imposing anything that's financially you know, a lever but just creating policy saying you've got enough lead time here, but you know, auto manufacturers you're on notice you've got, you know, a decade or more to kind of get your act together, but you can't sell these things anymore. You’ve got emission standards there that have been even post-diesel gate, there was no relief. There was no relief. No one said oh, well, you know, I guess we have to relax the emission standards since people were cheating. Well, no, they no one did that. They said no, your feet are held to the fire there, you've got those emission standards, regardless of whether you're cheating, I guess you're gonna have to find a solution. So they did. Everything's a plug-in hybrid at a minimum now in Europe available in that configuration. And I think you're going to see it continue. So, you’ve got a massive amount of political will what you what you now have growing in the United States. And I think, by the way, it's a foregone conclusion with or without the political will the things electrify because it's a big world out there. You can't just you can't sell a gas car in the US and afford the R&D for that and the R&D be an electric vehicle provider and good at it in other parts of the world. So the least common denominator is electric. So every part of the world regardless of political will is going to go there but Europe's done a better job galvanizing itself around what is a very big problem climate change and so they've they put those dates or things out there they put some money out there by the way they put probably now if you look at the Infrastructure Bill and Build Back Better there's probably more money in the US that's being deployed in terms of billions on a go forward basis then there's on the table in Europe in the collection of countries that are out there but because they've been at it longer and they have they have those date certain out there to a larger degree I think it's just it's been it's been very good at what’s happened and but I think it all normalizes, Michael, I think the US and Europe and the whole world in general it all normalizes very quickly. Look at the announcements even yesterday from Chrysler, no more gas cars after 2028. Look at GM, look at Ford tripling production capacity on the F150. Due to the amazing, amazing level of demand for the vehicle in the US where pickup truck are key, distances are large. And there you go 200,000 pre orders and they had to shut it off on the F150.

ML:So I talked about this thing called I call it the sneeze. Right and because a lot of you know economic models, they go crazy with kind of logistics curves and log log and you know an S curve and they do lots of… I just talk about the sneeze. And why I do that is when you get a new technology, naught to 1% kind of takes forever, whether it's a smartphone, or whether it's a black and white television, going to colour whatever, naught to 1%, these are early adopters. And it takes forever. And then it kind of goes from 1% to 5%. And it's like waiting for the sneeze, you know for, it's waiting for a sneeze, you know it's going to happen, you know it's going to be explosive, you just can't tell when. We've got in EVs in Europe, the sneeze big time, right where you had, you know, 3%, 4% of EVs two years ago. And now in countries like Germany, the latest figures I heard is that 37% of new cars have got a plug of some sort. And that's the sneeze. And that's where everything goes kind of. You know, you get the restructurings, you get the bankruptcies, you get the consolidations you get, okay, so the sneeze. US is not quite there, Europe undergoing the sneeze, what drives it, if I could give you 100 points, let's say to allocate between the technology is just better. Those local incentives like being able to go in this bus lane, or, you know, the kind of the local factors of well, I'm going to have to change this car because the mayor Stuttgart's not gonna allow me to drive in with a diesel anymore, or money. So three buckets – technology being better, local incentives being in place and money. What drives the sneeze? Pasquale, let me put charging infrastructure, so four buckets.

PR: You know how the sneeze is always preceded by the contortions of one's face as it's coming but it's not quite there yet. So that you know that Europe is in the sneeze. And the US is in that really uncomfortable phase where you know, it's coming and you're kind of contorting, and you're hoping you get it over with

ML: And your eyes are watering.

PR: Exactly. And it's always it always happens when you're on a call like this, and you really don't want to embarrass yourself. But if you really look at it, the technology is there, right now you can go buy a lot of cars right now, not at the lower price points. So, I think we have a little bit of ways to go there on the trickle down the price curve. The technology is there, I think what you have more there on the technology side is a consumer confidence that the technology is there versus the technology being there. So, they have to believe and there's a delay, a natural delay, because a car is the second largest purchase that someone makes. So, you know, they're kind of thinking about it, like their mortgage kind of sort of, right? It's not like it's discretionary. So that's why you get that I need to really believe in this because this is a big deal to me. So, in terms of technology confidence, I would actually put that, you know, it's probably relative to where the production capacity is, and the price points are, it's probably actually pretty low right now. It's probably a 20% factor. So it's not a big factor. Because we're not at the price points where the really pressurised financial decisions for consumers, they just don't have vehicles available in those price segments yet. Anyway. The the biggest thing I think that is not talked about in let's talk Europe, and specifically because of the the date certains of the bans on the sale of new ICE vehicles, not used but new. What's interesting about that is it causes the residual value of the vehicle to come into question. And so I placed outsize, outsize emphasis I, it's hard to call a percentage on that, because the quote, you don't need to get very close to a ban date. Given a piece of capex that's gonna last a decade, its value is calculated on an order of magnitude of about a decade, or a decade away from the onset of the earliest ban dates. So now you gotta be sitting there, if you're a leasing company, or you're a business that provides company cars through a leasing company to some of its employees as part of their compensation, you've got to be thinking to yourself, now wait a minute here, do I handicap the residual value of any gas vehicle because I'm going to have increasing shortages of petrol stations, I'm going to have increasing speculation on the or shadow-casting on the residual value of that vehicle. So now I have to front load more of the payment. So now, the financing mechanisms for vehicles actually make the price go up because of those bans. So I actually said this on several public forums, I love bans, and I don't care where they are, you can put a ban out in 2040, I'm still happy. And the reason I'm happy is you start feeling the effects of that ban in 2040, sometime around 2030, because it's within that decade. And we're not that far from that it's 2022, we're only eight years from that and you've got some ban dates that earlier, then you've got other incentives, like access to city centers, I think in Europe, it's really significant. It's really significant. And as a result of that, it gets people into the vehicles. And then what happened and by the way, the gas mileage petrol mileage requirements are forcing a lot of vehicles to be plug in hybrids, because that's how they get the average fleet miles up if you're an auto OEM, but what's amazing is that that's a, that they're not vehicles that I think are very good to own. But they're halfway house vehicles for consumer that is a consumer walks into a dealership in Europe, and everything's, you know, got some amount of electrification capability, if it's a plug in hybrid, and then the minute they take the vehicle home, they are chewing their leg off to keep it on electricity, because they hate it when the gasoline engine comes on and they convert. So what it's doing actually it's like a little priest of a new religion, it's out there preaching to the masses as a, as a, as a plug in hybrid, it makes absolutely no sense. By the way, a plug-in hybrid makes no economic sense, you get the worst of both worlds, you have a battery that's too small, and you get the maintenance profile of a gasoline vehicle. Right. And the cost structure of both drive trains jammed into one thing,  like for whatever reason, because of the political regulation. It's at which by the way, costs nothing. It's just a piece of paper that someone signs, and suddenly it's something that everyone has to comply with. And it's forcing everything in Europe down that path. And in the US, because we backed off the throttle, no pun intended. Notice I didn't say gas pedal, we back off the throttle on the get the mileage regulations and you know, had a bunch of stuff with the previous administration, which is now past. We kind of slowed that progress down, but I think it's caught fire now anyway. So, in the US, I think it's catching up. But these are some of the things I think the puts and takes. And notice most of my emphasis here is on the little subtle things that have called that residuals value in the question, right?

ML: I'm going to without ascribing exact percentages, it was kind of technology, not really driver 20%. It's these local things and the bands and then the money presumably as the rest, but it's another smaller. You talked about the previous administration. You did. I mean, to be fair, you did just hire the former Secretary of Transport onto the board of ChargePoint. So you can't be too you can't be too negative about the previous administration can you?

PR: So we made a lot of progress as a country, regardless of the administration going all the way back to Obama, We not made great progress as a country electrifying not as committed not as much political will, frankly, under either administration, not as much political will, in comparison to Europe to set these things in motion, these policy things in motion that are not financially related, but that are indirect forces to cause a conversion to happen, so you know, I don't I I'm not being overly critical. I'm not I wasn't happy with calling the California the ZEV additional requirements on top of the EPA requirements in the states that signed on to those EV requirements put additional pressure on auto OEMs to meet the higher level of mileage, I wasn't happy with that being called into question. But that's not being holding the question anymore.

ML: This is where this was the attempt to say California can't set your own rules, you have to use the same as the rest of the US. And that's all kind of gone away. Now, this conversation would not be complete without talking about competing technologies. Because I mean, this is you are ChargePoint is my investment in ChargePoint is a bet on electrification. And then there are going to be lots of people listening to this going, but it's a temporary thing, because the real goal, and the end point is clearly going to be the hydrogen vehicle. They may say hydrogen car, they may not be brave enough to say that, although I'm sure they're still thinking it, but they're saying the hydrogen vehicle is of course, ultimately, the no compromise no regrets endpoint, what do you say to them?

PR: Oh, Jesus. First of all, hydrogen vehicles are an EV with a small battery. They are electric vehicles with a fuel cell, and they have to have a battery because the fuel cell makes electricity to constant rate, you need to buffer it. So for acceleration deceleration other reasons, right?

ML: They'll say, okay, fine. So, you've got all the electric vehicles. But now we're not going to use the ChargePoint network, because we don't need to because the small battery, you know, whatever. But we're going to have the fuel cell and the hydrogen that's the way we're gonna…

PR: You can go back to… so first of all, you can have the chore of recreating a massive supply chain for commodity of feedstock, essentially, that has to be constantly moved, moved around, which is what we're kind of finally getting ourselves out from under with like electricity, and then you're going back to a chore of having to go reload fuel as a, as a purposeful trip, when you don't do that most of the time, unless you're on that long, long journey that you're talking about. So, I'm going back to a chore that I don't want to have, I have to build an entire new infrastructure around transporting hydrogen. And then lastly, I'll make the I'll make an analogy. Since we've made many analogies on this wonderful conversation. If you look at solar, everyone in the early days of solar was saying, well, you know, we're going to hit some limit in the production of, you know, silicon based, you know, solar panels. And what we're going to need is concentrated photovoltaics, complicated tracking systems, other technologies to convert sunlight, your molten salt with mirrors pointing at it all this junk. And lo and behold, the little train that could Moore's Law kept improving the silicon based solar panels to the point where nothing else could compete, because it just kept chugging along. And it's such a natural, it fits into everything that we already do in silicon production, it leverages so much stuff, boom, do you ever hear that other stuff anymore? No, but it was gonna kill the polycrystal. And PV industry was gonna kill it. There was there was the boogeyman under the bed for that industry for 10 years. So hydrogen is going to get destroyed by battery technology, constantly eating into the few niches where you can say, a, there is a place I could use hydrogen. Oh, okay, for now. And is it? Is that Is there enough of those niches or niches even if they survived to justify an entire hydrogen supply chain? Are you kidding?

ML: And you know, the one that people talk about probably most is long distance freight, which is not I mean, it's a niche, but it's not that small of a niche. What do you think will be the solution? Let's say if we kind of could cryogenically freeze ourselves and come back in 2050? You know, what do you think long distance freight would look like? Maybe well, I'll still be around in 2050. Probably you will be as well. I'm not sure we'll be doing the same things but 2050 long distance freight.

PR: So long-distance freight. It turns out, I was just in this conversation with a with a fleet with a vehicle company yesterday. So, the overwhelming majority of transportation for fleets in general for logistics, is less than 100 miles. They don't go very far. So, for the overwhelming majority of freight motion, except for super long haul freight motion, it’s really easy to electrify. For overland class eight big large trucks. It's completely tractable if you do a ground up truck design and don't try to retrofit electrification into an existing cab. I think before you blink, you're going to have 800 kilowatt hour trucks that are capable of dealing with the long haul routes with maybe one stop, or maybe an infrequent stop every four to five hours. And they have to take a break, at least in the United States, some shorter, similar rules in Europe where they have to take a break every so many hours for just for safety reasons. And so the recharge cycle for those vehicles will fit into that into that window. And it should be a relatively straightforward thing to electrify because you don't need that many waypoints for trucks, you've got these natural truck stops that are where trucks are stopping, they're not that frequent on highways, because of the nature of the fact that the drivers of those vehicles don't stop unless they absolutely are required to take those breaks because time is money. And so electrifying areas where trucks currently refuel, not that many locations in the US the one problem, I will be fair to the challenge there, there is usually transmission lines coincident with highways, that's the good news. Here's the bad news, there's no distribution, coincident with highway. So if you're at a truck stop, and you look out your truck’s window, you can see megawatts, but you can't get at it, unless you build a substation to basically tap into that transmission infrastructure purpose built for those, there's there isn't megawatts available at most truck stops currently, and the ones in rural locations. So what is going to be required is some purposeful distribution build out to provide the megawatts of energy necessary at those locations to fuel those long haul trucks? Now, here's the good news, anytime, any locations, and relative to the cost of an entire hydrogen economy just for that application, it's a drop in the bucket.

ML: Right. Very good. And there's also talk about catenary system. So dynamic charging, yeah, looking at that.

PR: No, no. Are you kidding me? I'm like, What is the world thinking? That's the other technique, that's the equivalent of the mirrors in the molten salt to make electricity versus solar panel. Looks like a really, really honestly… Okay, now, let's think of looking at a road, especially where you have high seasonal variation of temperature, you get expansion, contraction, buckling. So the inductive systems in a road. Sure, could you do it? Sure. Why? Why just when the driver needs to stop,

ML: <inaudible> not the under road stuff. The overhead, the stuff that comes down from overhead, and could you have an autonomous truck gets in a lane just you know, like, you know, like a trolleybus just clicks in charges up.

PR: The problem is that the promise the, let's say, you can charge the truck in 45 minutes at very high power. Okay, a couple megawatts. So now, here's the challenge with that. So to make the catenary wires small, you're probably AC in those catenary wires, and you're probably at very high voltage. And even if you're DC, a very high voltage, but you probably at AC, a very high voltage, you would have to have the equivalent of a megawatt DC fast charger sitting in the truck to fill its battery while it was under that catenary system, because you can't just directly take the current off that system and slam it into the battery, you have to match its voltage and current requirements instantaneously where it is in its state of charge. It's not so simple. So why would I ever do that? And then if it took, let's say, even out a megawatt, it took 45 minutes to load the truck. How far is the truck driving 45 minutes? Pretty far. So now I need the catenary system, I have to put in all that wire, or what I can do is when the driver takes his break every four to five hours, just plug in the damn truck in that one location. Okay, and then I get the maintenance on all that overhead stuff for what? It makes no sense to me at all.

ML: Okay, so we're going like, this is great news. You know, speaking as an investor, I'm very much hoping that you're right. I want to just finish with a question about one other thing. Because you have gone through a SPAC, the Special Purpose Acquisition Company or Corporation. You're now a public company, and you went through this process, which is very much and it's probably like the word of the year 2020-2021 was SPAC and how has it felt? What is it what is you know, when you look at it, do you think, you know, gee, I'm glad I did that? Or do you think, wow, I wish I had just done a conventional IPO? Or, you know, where are you are that? What did it feel like?

PR: I mean, hindsight is 2020. Right. Let's look at it without hindsight. I'm not saying I wouldn't have done it that way, with hindsight. But at the time, and, talk to Michael whose fund you're in, that's invested in us, the board level, because he's on our board, and our largest investor, he, we had a lot of conversation, as a board about the timing of going public and access to public market capital. And the way the board and management looked at going public, when we did was that it's probably a bit early in the financial maturity of the company, given the market is in such an early phase. So but if the window was open, where public market investors were willing to go on that journey, and they proven that they were willing to do that with Tesla and, and other companies. So if the window was open, were public investors were willing to go on the journey and invest the time to really understand the differentiation of companies and how to think about the market opportunity in front of them, then what it meant was that we could move in by somewhere between 18 months and two years, the access to public market capital, and now would be itself a differentiator for the company on a go forward basis. And so you don't think normally in an IPO, you think about it as access to public market capital, synchronous with liquidity for the early investors that have supported the company through its, its private phase, not that any investor would be itching to get out on something is as big as as electric vehicle charging, but they also have their own fund constraints. So there's a lot of reasons why, you know, they have timing reasons why, you know, investors look at liquidity windows. And normally, they're synchronous, the way our board looked at it as well, it's a little asynchronous. Now, it's access to public market capital a little early, right. And so the actual opportune time for the market to give liquidity to our early investors may be a little further out as things develop more, and the valuation of the company continues to evolve. And so that's the way we looked at it, we looked at it, we had to, because if anyone, if any other people in our space, were to take a bold move, and get access to that, and the window would close, for our ability to do that we would be we would have to find private means to make up for that. And so the best thing to do for the investors in the company, the employees, the future prospects of being able to really go for it and really be… cement our lead as a as a long term first mover in the in the space was to take it public, because now we'll talk about SPACS. In a SPAC you have a lot more capability, at least in the at the time that we were doing it to place a little more forward guidance out there in your filings. Now that's been calling the question as to whether that is a practice that, you know, the SEC wants to continue to foster. But at the time, there was the ability to tell a more fulsome financial story in providing a little bit more forward guidance there. And having, you know, fuller conversations than you would in a normal IPO auction process with pipe investors, which is usually a component in a SPAC. So that's the reasoning that we went the way we did. With hindsight, we probably could have gone either way, meaning we probably could have done a normal, straight up traditional IPO.

ML: Because the question that it raises is now you know, a lot of a number of your competitors, when the SPAC route they're out there. And you know, we've had a very compelling story about your business model, the network, that it's a network game, and that, you know, ChargePoint is best positioned of all of these companies to achieve that. But meanwhile, there's a lot of confusion out there, there are companies, other models, advertising, funded all sorts of other stuff. So they all got out that window, and your valuation actually is not just to a certain extent, gonna be driven by their success or failure, you know, in their business models, but also, you've got these kinds of vertical takeoff. You know, the VTOL companies that have promised stuff that you know, the laws of physics doesn't allow, let alone the laws of certifying components through the aviation regulatory bodies. And so you know, you are a SPAC and to a certain extent your share price is just going to go to, you know, correlate with SPAC, you're not correlating with Tesla, you're correlating with SPACs to a certain extent.

PR: I don't think so anymore. I don't think so anymore. I think you know, it, you know, maybe in the early days, we were associated with that. But I think over time, I mean, fundamentally, and structurally, we're just a public company. There's no vestige of any process in terms of how we became public left in the company. We don't we don't have any board members from the previous bag. Not that… they were good, folks. I think they were very good to do a transaction with but there's nothing left …  We’re on the list of SPACS companies, but a few but what I would say is that the performance of the company as a public company, relative to its commitments, and has been good. And we will continue to do that. And on the basis of that reputation, I think we just over I mean, we're probably already there, we just get placed in the category of a normal public company. And I think that's evidence to have, you know, it's evidence by, you know, what you've seen support wise, relative to the deal price that we, you know, all SPACS have a nominal $10 value. And things tend to be aligned with that as you kind of go through the equity kind of reconciliation process through that merge process as you go public. And if you look at the performance of the company, as a potential measure, a potential measure of what the market thinks you're worth, relative to what you thought you were worth, when you went through the SPAC process, we've been performing favourably with respective now, obviously, that's up to the market to continue to judge us. And I think they'll continue to judge us based on how well we perform relative to the commitments we make. We’re just a normal everyday public company.

ML: And I'm, you know, I'm delighted that, you know, you are one of the SPACs that's trading above and not below that $10. I continue to be delighted I continue obviously, to, to track your progress. And I continue to thank you personally Pasquale, because you are the CEO of a company that I've invested in, you've done a fantastic job. Since I first spoke to you, in I don't know 2015-2016. We are out of time. So I'm going to thank you also for spending a little bit of time here with me on Cleaning Up. And I wish you all the very best for 2022.

PR: Michael, thank you so much. And I have to say one thing. I'm very grateful for your investment in ChargePoint. But I'm most grateful for the entertainment value of having you associated with ChargePoint. You are one of the most I love reading what you write and I love having conversations with you just because you're I just find you… You can you can make people aware of deep, deep elements of topics in a fun way. And I think when it's fun, it's retained. So thank you for providing that service to the industry.

ML: You're very kind. I'm blushing. Thank you for your time tonight. Thank you. So that was Pasquale Romano, CEO of ChargePoint. My guest next week is Nathan Gambling. He's a lecturer and consultant on heating, and he hosts the award-winning podcast Beta Teach. Please join me at this time next week for a conversation with Nathan Gambling. Cleaning Up is brought to you by the Liebreich Foundation and the Gilardini Foundation.