Seeking Alpha • Oct 27
Allego: Building The Charging Sites That Electric Vehicles Need
Summary
Charging networks are a key element in the world of electric vehicles.
Allego N.V. operates in a very large market that provides it with plenty of room to grow.
Allego has an attractive business model supported by a strong marketing and growth strategy.
Description
At the current price of $3.52, I think Allego N.V. (ALLG) has more than a fivefold upside from where it is today. Allego is an important part of the world of electric vehicles because it offers high-value electric vehicle ("EV") charging services to customers outside of the company and is one of the largest public EV charging networks in Europe.
Company overview
Allego provides high-value-added EV charging services to third-party clients and operates one of Europe's largest public EV charging networks. As of December 31, 2021, Allego had over 672,000 distinct network users, and it owned or operated over 31,000 public charging ports, 16,000 public and private sites, and 14 different countries. All EV drivers of cars, trucks, and buses have easy access to Europe's vast, vehicle-neutral public network. To become more vehicle agnostic, Allego has focused on EV charging options that can be accessed by the greatest number of vehicles, regardless of vehicle type or OEM. ALLG makes the majority of its money through the sale of charging equipment, installation services, and the use and maintenance of setting equipment.
Charging network is a key element in the world of electric vehicles
Allego's primary business is the development, ownership, and management of fast and ultra-rapid EV charging stations. It is one of Europe's most prominent public EV charging networks. ALLG employs proprietary Allamo software to locate premium charging locations and forecast demand based on outside traffic data. These sites are typically in densely populated urban or suburban areas, and Allamo has been instrumental in establishing a dependable pipeline. All EV drivers benefit from interoperability and a better user experience thanks to the proprietary software developed by Allego.
Allego charging stations can charge vehicles regardless of their OEM or user group. EV charging station owners can also use the Allego EVCloud to get software solutions for payment, analytics, and customer service.
This is a very large market
In the major European markets of Benelux, Denmark, France, Germany, Hungary, Norway, Switzerland, Portugal, Sweden, and the United Kingdom, Allego estimates it holds a 12% share of the fast and ultra-fast charging locations market. To keep its position as the market leader in electric vehicle charging, the firm plans to expand its system of public charging stations. Additionally, management hopes to develop the services industry and public charging infrastructure. The objective is to grow the Allego user base and strengthen ties with B2B customers. ALLG also gives EV drivers who use the Allego network or its services access to more features of the Allego software platform.
Oct 22 investors presentation
The industry has high government regulatory hurdles
Differences in European, national, and regional regulations governing EV policy, as well as building and grid connection permits, can cause installation delays or cost differences between jurisdictions. In the regions where Allego is active, two primary licenses are essential. Separate permits are needed for both building the charging station and connecting it to the distribution grid operator's network.
Since Allego is familiar with the rules and regulations in this field, it may be able to speed up the installation and commissioning process, making it more efficient and lower operational costs.
Attractive business model
The foundation of Allego's business strategy is the provision of highly reliable charging outlets to all categories of EV users. The company has made a one-of-a-kind, proprietary software platform that any mobility service provider [MSP] can use to manage hardware chargers and charging sessions on Allego's network.
Allego offers high-value-added third-party services as a strategic focus for technologies that aren't central to the company's operations. This industry is propelled by lucrative service contracts with third parties for tasks like web design and technical layout. Allego's white-label software suite allows it to manage large and complex solutions and act as a one-stop-shop for its clients. From concept to completion, Allego develops the entire charging system for its clients, including all necessary components, setup, and ongoing support. The charging chain between lease car companies and EV drivers can be set up, or OEM dealerships can be outfitted with chargers and run by a third party.
By investing funds in its own charging stations, Allego hopes to attract and keep EV drivers as customers for the long haul. It is possible that the services market will see an uptick in foot traffic if fleet companies or last-mile providers start looking for solutions to provide charging on the go.
Allego doesn't make its own hardware, but it has a wide variety of reliable suppliers from which it can obtain unique features. Furthermore, Allego is in a prime position to pick out optimal hardware because it is hardware agnostic. Allego also collaborates with OEMs on firmware and hardware. At the moment, Allego is putting all of its efforts into creating a system that can directly interact with EV drivers to manage charging sessions and payments.
Business model supported by a strong marketing and growth strategy
Allego has local teams and subsidiaries in each country where it operates to manage public charging networks. Site selection is handled by a centralized network team, while lease agreements are handled at the site level. The Allego team communicates well with retailers, real estate companies, cities, and other groups that need space or charging and may be able to get it from Allego.
The way Allego provides customer service is divided into two segments.
Commercial customers: There are already plenty of businesses that either own or rent parking lots. To that end, Allego caters to businesses that want to convert their parking lots into fully electric facilities. This is typically done through a sale or service, though Allego may choose to invest in the network if site quality warrants it. The charging stations would join the Allego charging network if the company ever decides to construct one. Businesses can set their own prices for using the Allego software platform while still making it available to the public. The ability to invest in real estate has allowed Allego to secure prime locations and develop lasting partnerships with its commercial clientele. As a result, Allego has a compelling offering for many European commercial sites thanks to its ability to provide a dual-tracked approach based on customer needs.
Fleet customers: Allego's fleet customers include businesses operating in the industries of transportation, logistics, sales, service, motorpool, shared transit, and ridesharing. Fleet customers can take advantage of Allego's full suite of charging options, from home chargers and installations to priority access to the company's network and discounted rates, as well as charging infrastructure tailored to their needs. However, EV drivers can only get Allego's home charging solutions through B2B contracts.