As industries grow and become more mature, they often become more consolidated, with a smaller number of companies dominating the market. This happens because it becomes increasingly difficult for new companies to enter the industry, given the high barriers to entry. The existing companies can then take advantage of their economies of scale to become even more efficient and profitable. This stage can later end when a novel technology or business practice upends it (disruption). This cycle can often repeat, but the scope of the overall industry may change during disruption.
The rise of EVs has definitely been a disruptive force in the automotive industry, allowing new companies to enter the market after Tesla painfully (both for itself and the wider industry) broke the barriers to entry. Not all new players will succeed, and we’ve already seen a number of new players come and go, but in an industry that went almost 100 years without new players, any successful newcomers at all is a sign of change and upheaval.
But, new industries will eventually not be new, and they’ll start heading toward maturity and consolidation. You’ll also see established players in other fields buy their way into the disrupted industry to get their foot in the door before it closes. A recent press release I found seems like it could indicate this happening in the EV industry.
Today, Orion Energy Systems, Inc. (Orion Lighting) announced its expansion into the market of electric vehicle (EV) charging stations through the acquisition of Voltrek, LLC. Voltrek had a 2021 revenue of $4.8 million primarily from projects in New England. As a provider of energy-efficient LED lighting and electrical installation and maintenance services, this is a natural next step for Orion Lighting.
Voltrek offers EV charging solutions and support to commercial businesses, acting as a value-adding reseller to leading Electric Vehicle Supply Equipment and providers. They offer turnkey solutions that cover everything from planning and installation to maintenance and management services. The company says it will continue operating with its existing employees but under the new Orion brand name.
Orion identifies several value drivers that motivated the decision to buy:
- 3,500+ charging ports under management and growing
- Voltrek is a nationally ranked top-tier value-added reseller (VAR) with an industry standard-setting service model
- National Grid Utility Make-Ready Program lead installer
- Eversource Utility Make-Ready Program installer
By acquiring this company, Orion has positioned itself in the rapidly-expanding EV charging infrastructure market. According to BloombergNEF estimates, global sales of passenger EVs will increase from 6.6 million units in 2021 to an estimated 20.6 million units by 2025 (approximately 23% of all new vehicle sales worldwide), resulting in a large demand for EV charging infrastructure.
Approximately $5 billion in state and federal programs will incentivize consumer adoption of electric vehicles (EVs) and support the buildout of EV charging infrastructure over the next five years. The National Electric Vehicle Infrastructure (NEVI) Formula Program, established by the Bipartisan Infrastructure Law, will provide funding for these programs.
“Voltrek’s turnkey EV charging solutions are an ideal fit for Orion’s national accounts and our partner network as they directly address a growing need expressed by our customers and fit well with our core areas of expertise.” said Orion COO, Mike Jenkins. “Charging stations are an increasingly important part of a high-quality retail experience, as well as an important amenity for employees and visitors. We see substantial cross-selling potential between our LED lighting and electrical maintenance solutions and EV charging and believe Voltrek places Orion in the forefront of this opportunity.”
Kathleen Connors, an established EV charging industry leader who will continue to lead Voltrek as its President, stated, “As a top-ranked ChargePoint EV charging station VAR and service provider, Voltrek is uniquely positioned to leverage our expertise in facilitating the conversion to electric mobility. We expect the added support of Orion’s customer reach, large partner network, financial resources, and its growing Maintenance Service Group will support our continued growth.”
Maturity Is Needed
The cult of the disruptor is strong, and for good reasons. It’s a fine line between maturity and stability and stagnation. An industry can be too stable and too regimented, and dominant players can get to the point where they stifle innovation to keep the gravy train going down the track. That gives the disruptor the opportunity to come along and get things moving and innovating again.
But, the disruptor can’t reign forever, at least not while disrupting. Innovative ideas do need a chance to succeed, and like seeds, repeated washouts in the garden keep anything from growing. A new or disrupted industry eventually has to settle into a new pattern of doing things if it wants to give the new ideas and ways a chance to succeed.
So, when I point out that we’re seeing signs of a stabilizing and maturing EV industry, don’t assume that I’m saying that’s a bad thing at all. EVs can’t succeed if everyone in the industry is always teetering on the edge of collapse and a steady supply of “heroes” have to keep fixing things. That may make for a cool story to share, but the cool story with that kind of plot can’t end well.
Seeing an established company that serves commercial customer’s lighting and electrical needs buy a newer company that supplies EV charging stations and installation shows us that EVs are becoming normal, and are even becoming a good investment. It isn’t a question anymore whether there’s going to be a serious rise in EVs on the road. Now, it’s just a question of who’s going to make the money and prosper as that happens and who’s going to miss out.
The number of new companies coming along and building something big from almost nothing is going to go down, but the number of successful companies that serve the EV industry will go up, even if there aren’t huge gains to be made investing in them. This is what we really need, and we need it to happen a lot more than we need endless novelty and disruption.
Featured image by Jennifer Sensiba.