Does Tesla Make Switchback Energy a Poor Cousin?

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Does Tesla Make Switchback Energy a Poor Cousin?
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Switchback Energy stock could turn out to be one of the better SPAC plays for outsized returns over the long haul

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If you’re thinking about investing in Switchback Energy (NYSE:SBE) and SBE stock — it’s expected to merge with ChargePoint, one of the world’s leading electric vehicle charging networks, by the end of the year — you might want to consider Tesla (NASDAQ:TSLA) before jumping on the SPAC bandwagon.

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Why’s that, you ask? Well, one of my favorite investment tenets is that you always have options.

Sure, I was extremely positive about the combination in October,  but that doesn’t mean you shouldn’t consider what Tesla and others have to offer you when it comes to investing in the fast-growing electric vehicle charging industry.

So, let’s start by comparing ChargePoint’s network to Tesla’s.

What ChargePoint Brings to the Table

InvestorPlace’s Louis Navellier discussed the ChargePoint network in October.

“Currently, the company has a customer base of more than 4,000, collectively operating a network of more than 115,000 public and private places to charge electric vehicles. The company says it also offers another 133,000 public places in North America and Europe through network roaming integrations,” Navellier wrote on Oct. 6.

“The size of this network is impressive. Already, ChargePoint says a driver plugs into ChargePoint’s network every two seconds, and the company has logged more than 82 million charging sessions.”

ChargePoint likes to point out that its EV charging network is the most open of any available, including Tesla. Navellier’s comments about the 133,000 public places where drivers can go outside the network certainly is a testament to its open network.

Peer-to-peer roaming doesn’t add surcharges for the driver, eliminates any middleman and provides access to more drivers without any additional effort for station owners. Best of all, the driver doesn’t have to sign up for any additional accounts or networks,” states the ChargePoint website.

“Everything is taken care of by their existing network. This makes it convenient for the driver to charge their EV, gives them confidence in being able to drive electric and increases their choice of where they charge.”

According to ChargePoint, one account covers 80% of Level 2 (AC) and 99% of DC fast charging spots. And, if you get one of its ChargePoint Home Flex charging stations for your garage, your electric vehicle, no matter the brand, is ready for action.

ChargePoint Gets a Major Expansion Partner

In February, ChargePoint announced a partnership with NATSO, the trade association representing more than 2,000 travel plazas and truckstops across America. The partnership involves building out the EV charging network over the next decade to more than 4,000 travel plazas and fuel stops across the country.

The collaborative effort includes more than $1 billion in infrastructure spending by truckstop owners across this country.

“The MOU [memorandum of understanding] announced today will help to establish public-private partnerships at off-highway fuel retailers across the nation, which will help to mitigate range anxiety and expand the Interstate network of charging facilities under the current program,” stated NATSO President and CEO Lisa Mullings.

One of those truck-stop owners happens to be Warren Buffett and Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). The holding company acquired 38.6% of Pilot Flying J travel centers in 2018. In 2023, it will acquire an additional 41.4% for an 80% stake in the business. Pilot Flying J owns 750 locations in the U.S. and Canada.

What do you know, an additional investing option other than Tesla?

Tesla’s Side of the Story

ZDNet contributor Ed Bott discussed Tesla’s Supercharger advantage in September.

“The availability of reliable, affordable places to pump electricity into your BEV matters a lot when you’re on a road trip, and it’s the reason why, for many people, Tesla is the only logical choice in that category right now,” Bott wrote on Sep. 19.

According to Tesla, it has more than 2,000 Supercharger Stations in the U.S., Canada, and Mexico, providing drivers with more than 18,000 charging stations to top up the vehicle while on the open road.

Tesla’s Canadian website suggests a Model 3 driver will spend 21 CAD per 500 kilometers at a Supercharger compared to 46 CAD for gasoline. The company’s V3 Superchargers can add 75 miles of range in five minutes. That’s more than 1,000 miles per hour. By comparison, ChargePoint’s Express 250 can add 21 miles of range in five minutes or 250 miles per hour.

That’s a clear advantage for Tesla drivers and a big reason why it continues to sell so many vehicles.

As Bott states, “Tesla’s Supercharger network is the gold standard.”

He’s not wrong.

The Bottom Line on Switchback Energy Stock

Ultimately, as more electric vehicles hit America’s roads, more charging stations will appear at businesses across the country. And that will bring the cost down, making it even more affordable for businesses of all sizes.

In the meantime, I’m a big believer in ChargePoint’s business model. Big business has gotten virtually a free ride when it comes to the employee commute. Whatever happens post-Covid, if companies want to attract top talent, they need to provide attractive benefits. Having charging stations available in large numbers is one of those perks.

As I said in October, the ChargePoint/Switchback SPAC combination is one of the best I’ve seen in recent years.

While Tesla’s worth owning for the long haul, I like the potential upside of Switchback Energy stock. Under $15, it’s an excellent speculative buy. Under $10, it’s a steal. By no means is it Tesla’s poor cousin.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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