A recent press release from ChargePoint shows that the company is going to have to roll with some more punches to stay afloat if the ChargePoint reorganization plan is to work out.
Last year, the company worked to tackle two big problems: reliability and compatibility. Now that everyone is about to need to compete with Tesla’s supercharging network, ChargePoint launched an effort to improve its reliability. Better installation, network monitoring, and customer service were all pillars of the plan.
On top of better reliability, the company is also offering NACS retrofit plugs so that everyone can get a charge. With most EVs on the road being Teslas, it’s essential to do this.
Another big story from last year was the company’s financial problems. ChargePoint’s creditors agreed to cut them some slack on investment and repayment terms, which gave it some much needed breathing room while the company worked to solve its problems.
But, the company apparently still needs some room. While it’s not going bankrupt, it is doing some restructuring and layoffs to get on better footing. The biggest change? A 12% reduction in workforce.
The reorganization is projected to generate around $14 million in restructuring charges, consisting of approximately $10 million for severance and related expenses, and approximately $4 million for facility-related expenses. ChargePoint anticipates that the restructuring action will yield annual savings in operating expenses of about $33 million. As previously announced, other aspects of the strategic plan under the leadership of new President and Chief Executive Officer, Rick Wilmer, will be discussed during ChargePoint’s investor call for the fourth quarter of fiscal 2024, scheduled to take place in March.
“As part of a comprehensive business evaluation in my new position as CEO, today we have taken the difficult decision to reorganize our global workforce,” said Rick Wilmer, President and CEO of ChargePoint. “After a thorough review of our business strategy and product roadmap, we are heightening our focus on execution, operational excellence, and improved efficiencies while we continue with our industry-leading innovation.”
The release also says that ChargePoint maintains a strong financial position, with approximately $397 million in cash, cash equivalents, and restricted cash on the Company’s balance sheet as of the end of the third quarter of fiscal year 2024. On top of that, the Company has access to an additional $150 million through a revolving credit facility we covered last year, which the company’s executives say remains untapped.
It’s important to note that ChargePoint is a pretty different company compared to its competitors. Instead of operating company-owned charging stations, ChargePoint works with property owners to sell them a station. If they’re smart, they’ll buy a service plan from ChargePoint to keep the station running right. About 60% of stations are under contracts now. But if they’re not very smart, we’ve seen too many stations go belly up from lack of repair.
Two good long, long examples of dead stations include a Level 3 station owned by Rocky Mountain Power in Moab, Utah (thankfully relieved by Tesla Magic Dock and upcoming Electrify Commercial stations) and a dead Level 2 station at Petrified Forest National Park in Arizona that’s been down since at least 2019.
If the company can get all of these issues under control, it might survive with these structural cost-cutting changes. But, 2024 is going to be the toughest year yet.
Featured image by Jennifer Sensiba.
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