HEVO is raising capital via a SAFE with a pre-money valuation of $50 million and a 15% discount. Although it is normal for a hardware company to have a higher valuation on average, HEVO is still in the pre-revenue stage. The company has not commercialized its products yet and is still only in discussions with its potential customers. The current valuation cap is quite high for the stage that the company is currently in, which could limit returns for potential investors.

The global electric vehicle (EV) charging infrastructure market was worth $19.51 billion in 2021 and is growing at 34.5% annually. The US market has a market share of around 38% of the total market. Even so, the EV charging infrastructure market is large, and it is expanding at a stellar rate. 

Governments across numerous countries have set goals to adopt a certain percentage of EVs. As an example, the president of the US issued an order pledging that 50% of American vehicles will be electric by 2030. Not only that, these government bodies have also tightened the policies around EVs to accelerate the market adoption. As adoption increases, businesses are racing to bring the best innovation to the market. The market for both EVs and EV charging infrastructure is far from mature. Hence, there is plenty of room for improvement, and businesses that come up with a solution first might have a higher chance to dominate the market. It’s no surprise that investors think EVs are the next big thing, and the amount of capital invested in the space reflects that. These trends demonstrate how massive the market potential is. HEVO could be in the right place at the right time to capitalize on these positive and lucrative trends.

HEVO is led by founder and CEO Jeremy McCool. McCool got his bachelor’s degree in corporate communications from University of Central Oklahoma and his master’s degree in urban policy from Columbia University’s School of International and Public Affairs. He was a captain in the US army and an adjunct professor at New York University prior to founding HEVO. While McCool has been building the company for 10 years, his background doesn’t seem to defend his ability to lead it to success. He does not have prior experience working in the electric vehicles industry nor operating a business. 

McCool is, however, accompanied by COO Sameer Rashid who has a very strong background. Rashid co-founded an organic waste recycling firm called Think 21 that was acquired by Harvest Power in 2009. He was the chief strategist in that company, and this experience advocates for his strong skills in operating a successful business. Rashid also has prior background in the clean technology industry as a partner in Pure Energy Partners. This experience serves as the foundation for his knowledge of the EV industry as well as a network in it. His capability should greatly benefit HEVO in pursuing its goals. 

While the business operation of the company is in good hands, the technology side is arguably more crucial. HEVO’s tech team is led by CTO Umer Anwer. While he certainly has the credentials to build a high quality product for HEVO, he is not dedicated to the company. He is currently a full-time employee in Urban Electric Power as the vice president of systems engineering. 

Overall, the team is strong on the business side, but it is lacking in terms of industry experience. It is important for the company to expand its tech team by hiring dedicated experts to accelerate both its commercialization and product development. Speeding this process up would also result in a higher potential for HEVO to become a market leader. 

HEVO’s strongest attributes lie in its core products, which consist of a hardware solution and software solution. Both of these solutions are interoperable with any hardware on any electric vehicles (EVs) since they follow international standards set by the Society of Automotive Engineers (SAE) and UL. According to the founder, getting certified and reaching commercialization have been the focus of the company over the past 10 years. As a result, HEVO claims to be the only company in the market that fulfills both SAE and UL requirements for its products. Its software serves many purposes, including route planning, charging reservations, payment, and charging analytics. The hardware solution is a static EV charger called Rezonant E8. The Rezonant E8 is ready for a scaled commercialization. 

Now, the true game changer is the company’s technology on dynamic charging, which is currently still at alpha stage (moving to beta soon). According to the founder, this is a 200 kilowatt dynamic charging roadway technology that would go under three inches of asphalt. The technology has the capability to provide eight to 10 miles of extended range for every mile driven at highway speed – effectively charging EVs as they drive. Currently, HEVO is testing this technology at speeds of 20 miles per hour at its lab site. The technology will be deployed to the state of Michigan in the second half of this year to be tested and validated at highway speed with multiple EV platforms. This next testing phase is going to be in a real-world environment and will represent a mature sample of the product. Although it is still in its research and development phase, the chances of HEVO’s dynamic charging tech successfully reaching the market are encouraging. If it does, it will disrupt the whole EV charging ecosystem. 

Competitors in the EV charging market are few. The only company that does dynamic charging is Electreon, a company from Israel. There are other companies in the space, such as Lumen Freedom, WiTricity, Momentum Dynamics, and Plugless Power. According to HEVO’s CFO JP Yorro, Plugless used legacy technology that is not going to meet SAE standards. Hence, Plugless will need to start over from scratch, and it might not be able to develop a new product if it fails to raise capital for itself. HEVO’s founder claims that it is the only company that does both static and dynamic charging. HEVO also offers these charging stations within the same vehicle package. Other companies usually offer their products in multiple vehicle packages, which drives up costs significantly. HEVO’s technology also has the highest power density per square meter than any of the companies in the world by 8x to 10x. Moreover, HEVO currently has nine issued patents and 14 pending patents that establish product defensibility. 

Aside from its products, HEVO’s unique business model makes a lot of sense. Instead of directly targeting end users, the company partners with original equipment manufacturers (OEMs) to develop a leasing program. After HEVO sells its chargers to OEMs, the OEMs will then offer EV buyers the option to have these chargers factory-installed as well as providing maintenance for them. This model could smooth out the market adoption, as EV buyers would not have to pay upfront costs to start using HEVO’s chargers. It could also be a great way to scale sales and distribution since these OEMs already have their own large customer bases. All in all, HEVO has many key advantages over competitors. With these factors, HEVO is well-positioned to be a huge winner in the market.

HEVO is still a pre-revenue company despite being incorporated since around 2010. The company just started producing products approved by the Society of Automotive Engineers and UL last quarter, and it’s been making deliveries ever since. These products have been shipped to three continents, although it’s not clear how many countries in total. The company is expecting to reach $1.6 million in revenue with 200 units deployed this year. That revenue could grow to reach the $10 million range with a few hundreds of thousands of units deployed, according to HEVO’s founder. The company just moved to a bigger manufacturing facility that can produce two to three thousand units per year. Currently, HEVO has a high burn rate, resulting in a net loss of more than $2.3 million in 2020. It also has a significant short-term debt of more than $1 million, which could prove unsustainable for a pre-revenue company. The company has fortunately proven its ability to raise capital, having raised $10.4 million from dilutive equity and grants.

HEVO has completed multiple pilots with multiple automakers. Although the company is only at an early assessment stage with its key customers, it’s engaging in discussions with potential suppliers and distributors. There are multiple distributors that have an execution agreement with HEVO. According to the founder, each of them have targets in the range of a thousand to tens of thousands of units over the course of the next five years. Additionally, at least one to three more automakers are expected to make announcements on their decision regarding the supplier agreement with HEVO this year. While the outcome is still unclear, these engagements prove HEVO’s strong early traction. Moreover, seven out of 10 OEMs that HEVO is engaged with are expected to collectively represent more than two million EVs that will have wireless charging by 2025 to 2026 and will grow to more than 10 million by 2030. HEVO is attracting the big players in the market, and it has a huge potential of scaling fast by mass producing to the market in the near future. 

HEVO currently has a partnership with Oak Ridge National Laboratory that greatly boosts its chance of becoming the market winner. HEVO is the licensee and commercialization partner for all wireless charging technology developed by Oak Ridge and funded by the Department of Energy. These technologies include high-power charging, vehicle-to-grid, and dynamic in-road charging. 

Although HEVO is still pre-revenue, the company looks primed to begin commercializing its products this year. The company has strong strategic partnerships in place, and it has developed relationships with major players in the EV market. Overall, the next year will be the true test of HEVO’s long development.

HEVO is a risky investment opportunity. Starting with its financial risk, HEVO is a pre-revenue company. While the company has successfully completed multiple pilot programs, none of them were paid. The company also has been burning quite a lot of money. Its net incomes for the last two years have been around a loss of more than $2 million. Not only that, it also had $1 million in short-term debt in 2020, a decrease from $3.8 million in 2019. The company did derisk from 2019 by cutting its short-term debt by $2 million, but having $1 million in debt is still a lot for a company with little cash on hand or revenue. 

HEVO’s static charger and dynamic charger are still in the research and development phase, which creates product and time risk. The company will need to fully validate its hardware and introduce it to the market. Manufacturing needs will also add time to the process. As a hardware company, HEVO will need ample time and capital to scale its production. The timeline for the company to begin generating revenue and receiving market acceptance is likely to be a long one. 

Lastly, HEVO is trying to disrupt the electric vehicle charging industry, and this creates some market risk. As one of the first movers in the industry, the company might face market adoption struggles. Moreover, the product is bound by strict market regulations. Aside from the commercialization requirements, there are utility regulations that will prevent the company from freely setting the charging price.

Overall, investing in HEVO poses high risk. The company’s products have not reached the market yet, and no revenue is currently being generated. These factors make HEVO’s current valuation quite high even for a hardware company. Nevertheless, the biggest risk still lies in its product. The quality of the static charger that will be commercialized this year is still unknown. The company’s dynamic charger – which will likely be a game changer – is still in research and development. There is huge uncertainty in the company’s future because what exists now is just a pipeline anticipated by the team. Lastly, HEVO is an early movers in the electric vehicle charging industry, which might require it to educate the market about its products. Market adoption could be slow, especially when HEVO directly targets big automakers that might have their own systems in place.

Even with all the risk, investing in HEVO could still be worth it. The company has strong potential to become the winner in the market. It has a tremendous differentiation factor by offering both static and dynamic chargers complemented with its software. Amazingly, HEVO is the only company to have all of its products follow the international standards for the Society of Automotive Engineers and UL. The company currently holds multiple patents, and there are more pending. These patents create defensibility around the products, especially when the market is relatively new. It is difficult to enter this market, as there are strict regulations and it is capital intensive. Hence, there are still few competitors. The company is also differentiated by its business model, which could as well be another key advantage. By directly targeting tier one automakers, who will then factory-install HEVO’s products into their electric vehicles (EVs), it could significantly smooth out the market adoption. Not only that, it would save the company a lot of time for scaling and reaching the mass market. All of these factors combine to give HEVO a strong, defensible market position.

HEVO is expecting to realize $1.6 million in revenue this year by deploying 200 units. HEVO has an agreement with multiple automakers that will adopt wireless charging for their EVs in 2025 or 2026. Its software product has also reached multiple original equipment manufacturers that will include it as a part of their EVs. HEVO’s  game-changing dynamic chargers are being deployed to the state of Michigan this year for testing in a real-world environment. The company will also demonstrate both its static and dynamic chargers to one of the big three automakers in Detroit this April. While none of this has yielded actual revenue, it still represents stellar early traction. 

Lastly, HEVO is the licensee and commercialization partner of Oak Ridge National Lab, which means it will commercialize all wireless charging technologies developed by Oak Ridge. This partnership further ensures the company’s ability to not only commercialize the products but also to make sure that these products fulfill the necessary regulatory requirements. 

All in all, HEVO has spent years developing high quality products that are soon to hit the market. If all goes according to plan, the company is in a prime position to become a major winner in the EV charging market.

HEVO is building a wireless electric vehicle charging network with a core product of integrated software and hardware. The hardware solution includes static chargers and dynamic chargers while the software offers features such as payment support and route planning. HEVO’s products have not yet reached the market, making the company a risky investment opportunity. Despite being around for more than a decade, HEVOs is still pre-revenue, and its valuation in this round is rather high.

Nonetheless, investing in HEVO could still be worthwhile. First of all, the market for electric vehicle charging is huge and growing very rapidly. There is ample room for multiple winners, especially as no company has yet become a major player. HEVO’s products have massive differentiation factors that could boost its potential to become the market leader. All of its products follow international standards, and many are protected by patents. In particular, HEVO’s dynamic charger could majorly disrupt the entire electric vehicle charging market by enabling vehicles to charge as they drive. HEVO has also shown amazing early traction. Multiple original equipment manufacturers have execution agreements with the company, and HEVO is predicted to reach $1.6 million in revenue this year. Taking all these factors into consideration, HEVO is a Deal to Watch. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to [email protected].

Analysis written by Inez Sanjaya, March 17, 2022.