My name is Chris Pierce. I'm with the Needham research team. It's my pleasure to welcome ChargePoint CFO, Rex Jackson. Rex, welcome.
Nice to meet you, brother.
Dramatic entrance. I like it. Through the side door like that.
Sorry about that.
Why don't we just give us 30 seconds on the company, and kinda then we'll get into some fireside Q&A.
You bet.
we'll leave the last 5-10 minutes for any investor questions.
Sure. Rex Jackson, CFO of ChargePoint. We are driving the electrification of transportation or mobility across all verticals. We do residential, we do commercial, and we do fleet. We are a technology solutions provider, we don't make money on power, we don't own assets, we don't try to monetize drivers. What we're trying to do is get the network up and properly supported. If you look at the size of the company, we did $140, $145, $245 this year. If we can hit our guidance, we'll be roughly a double. $480 would be midpoint of guidance. Fast growing, doing a good job, I think, and sequentially improving our gross margins.
Doing a good job also in terms of managing our OpEx, and trying to turn cash flow positive in 2024.
Great.
that's the company.
All right. As investors think about EV adoption rates in the United States, you know, you had 2022, fluctuations in 2023, high single digits, is that something that you think about or your customers pay attention to, or is that the wrong question? It's about the longer term, the next three to five years as EV adoption kinda takes hold.
I'd say a couple of things. I think one thing I would readily say, and we say this all the time, that we are completely dependent, you know, in a good way or in a bad way, on the adoption of EVs or the arrival rates of EVs. That's both in the passenger space, which drives residential and commercial, and also in the fleet space, where they're trying to get trucks and buses and yard tractors and that sort of thing. We're very dependent on how that rolls out because if you look at our numbers historically, what you'll see is we correlate really closely to that data. We went, "Well, if there's a way to build a model, we'll build it that way," 'cause that's the best external piece of information that we could see.
Asking about that question is super important. I do think we've reached an inflection, certainly in terms of the thought process, both the passenger vehicle drivers, so individuals like us, and in terms of fleet operators. I think people have really turned the corner to go, EVs gonna happen. It's the right thing to have happen, the total cost of ownership, the joy of owning the vehicle if you're a, you know, passenger vehicle owner, the, you know, the cleanliness of it. I like mine 'cause it's fast, it's quiet. You know, all those things coming together are gonna lead to, you know, an onset of a lot of additional vehicles. The auto OEM seem to have turned the corner.
I know you know, if you watch television, you'll see ads all the time about the latest electric vehicle offering from, you know, name brand. That's important. Obviously, the governments have now gotten behind it, everything from incentives to internal combustion engine CARB, you know, sunset dates, et cetera. You know, how things happen and how quickly things come off the production line over the next two, three, four, five quarters, obviously that will affect everything. I think the, the momentum in terms of the thought process and the commitment of the, of the various players in the ecosystem is uninterrupted.
Okay. How should investors think about the moat that you have in terms of being far and away the leader in installed chargers in the U.S.?
Mm-hmm.
Versus your customers out there? You know, that current position you have now.
Right.
What does that mean for the shift to DC? What does that mean for three to five years from now? I'm just kind of curious how you position that moat.
Sure. I think, obviously Our best moat is intellectual property, right? The fact that we have, you know, multi-years of investment in our software infrastructure. Obviously we had a couple of big hardware platform introductions this year, one on the AC side and then our Express Plus which is a modular architecture. You can sort of pick your power as you go up the DC fast charge ramp in terms of total output. The stuff that we've been doing and now have released, it's, A, it's hard, B, design and reliability and serviceability and, you know, functionality are all super important.
I think we understand the software side of it and the importance of the network for everything from the driver experience to the functionality to payments to remote monitoring, remote repair, and that sort of thing. I mean, we just, we understand that I think better than anyone else. Then the other good thing is because we've been around for 12- 15 years, we have the benefit of thinking this through and then having 12 years of investment in order to build these platforms. When you say where are we relative to what we currently have and can sell into the market, we're just, we're just far and away, we think in front of other competitors.
There are a lot of things that people don't think about when they start to look at, well, hey, for example, do I wanna go buy a charging station? Do I wanna put this in my parking lot? Do I wanna put it in my parking structure? Do I wanna put it in my house? Do I wanna put it in my depot? They don't think about the whole service and support and reliability side of it. You know, it's one thing to sell something, it's another thing to have it work and be reliable and be visible and be manageable. I just think, you know, reproducing all the pieces of that, you know, building a channel, building a direct sales force, all of those things are hard to do.
They're expensive and, but we're, you know, we're well along and so now, Now our biggest challenge as a company is scaling, whereas other people are still in the, in the development release, you know, cannot support it kind of mode.
Okay. What do you tell investors who worry about, you know, who focus on 70% of the charging market right now being at-home charging? Is that too short-sighted, or kinda how do you kinda push back against that?
The first thing I would say is you're right? 'Cause it is true. It's, it may even be a little bit higher than that. The way we look at the market is, first of all, you wanna charge your car using the right infrastructure because home chargers are $700, fast chargers can be more than $30,000. Which solution you choose is based on the dwell time of the vehicle. Where are passenger vehicles? They sit at home, or they sit at work, or they sit at a retail center or whatever. You wanna charge your car while you're doing something else. We think it's absolutely natural and absolutely right that people are gonna charge at home. You leave your house fully charged.
You charge at work and top it off if you need to. The only time you access the very high power, very expensive DC infrastructure is when you're on the road going beyond your battery range. 90% of charges are gonna be on some form of AC architecture, and 10% are gonna be on DC fast. We do both. We just think in terms of providing the customer what the customer actually needs, that's gonna be the breakdown.
Okay. You talked about, you know, the partnerships and the sales channels that you have. Can you talk about the competitive process as you kind of win charger installs out there, how you kind of retain or kind of new customer adds and customer retention?
Yeah. I, you know, by vertical, you know, we're, you know, a B2C company when it comes to selling our residential home charger stuff, so there just needs to look better, be better, and be priced appropriately. From a commercial standpoint, which is both AC and DC, and that's, you know, whether it's workplace or a hotel or whatever, you know, I'm speaking mostly about North America right now.
There's not a lot of head-to-head competition that happens there. I think it's because this is a burgeoning market. You don't have a lot of companies out there. We're the biggest, but we're not the only. There's some places where a deal will happen that we never see. I think head-to-head, we very rarely lose when it comes to commercial deals. I think our customer growth, which is extraordinary, shows that. On the fleet side, the fleet guys aren't stupid, so what they do is they almost always run it through procurement, always do an RFP process. There's a good bit more competition there.
And I think the main reason for that is, A, procurement, and B, they're willing to be the integrator of the solution. They'll look at saying, "Okay. Well, I wanna do an RFP to 10 people who might supply software and 10 people who might supply hardware, and I'll just pick and choose." What they don't realize is that you don't wanna be the integrator. If you wanna get the right solution into your application, you're better off to do it with somebody like us who has a unified stack from software all the way down to hardware.
We do really, really well in the fleet RFP space, but that's the one place I think we, you know, we do bump into some of the players who only do one thing.
Okay. Are you seeing these fleet or commercial customers kinda not necessarily a pause but kinda put a little more thought process into things as the economy, the macro slows down, as EV sales kinda The pace of growth slows considering the pace we saw in the last couple years?
Would you push back against that?
No. Short answer I'd say was no, because what's been happening thus far is there's an enormous amount of RFP activity, and essentially what the major players are doing is they're getting ready. The go signal for the players in the fleet space is vehicles, right? You know, not totally not, you know. Totally disregarding what's going on in the economic environment would be silly. Who would do that? There's always that impact. Frankly, there are so few electric vehicles in the fleet space right now that if, and the people who are motivated to get them out are still motivated irrespective of the economic environment, and when they get them out, they will be purchased. I don't think that's gonna slow down a lot. I really don't.
Okay. You talked about, you know, deals might happen that you might not see. You might, you know, you tend to win deals.
As the market leader, does that lead to rational pricing in the space then? Is that something where... Are the pricing conversations?
Did you say rational or irrational?
Rational.
Rational pricing in the space.
From competitors.
You know, it's funny, because we don't go head-to-head very much.
That's what I'm asking.
Yeah.
So.
I mean, we Our pricing has been fairly consistent over the years, you know, discounting is not great, meaning we don't do a lot of it. We do have the ability to support channel by providing appropriate compensation to partners and distributors. We were able to put in a price increase, in fact, two price increases last year, taking into account all factors like supply chain issues and inflation. We've been had very resilient pricing and improving ASPs. Because we don't go head-to-head with a lot of people, honestly don't know what they're doing.
Okay.
Yeah. That's what we're doing.
Okay. Just kinda how do you talk, you know, people might be very enthusiastic about the future of DC charging.
You guys are the leader in AC. I don't know. Is that an advantage, a disadvantage, or you think DC is sort of...? You talked about the right charger for the right person.
Exactly.
A.C. serving most people's needs. Is D.C. sort of a shiny thing that is kinda getting too much hype? I'm just curious how you would think about that.
Well, I like the way you asked that question. I think what a lot of people don't think about is the difference in cost between a port of AC and a port of DC. A port of AC from us, call it somewhere around $3,000. Also, you have to spend $3,000 in terms of an electric a contractor to actually put it, the stuff in the ground that you need and behind it. Let's call that $6,000 all in. If you buy a DC charger, you're north of $30,000. Again, you gotta pay the same amount to put it in, so now you're looking at $60,000-$75,000 of putting in DC. What we tell customers is DC is wonderful, right?
Feeds and speeds, wonderful, but you wanna put it in where you need it. You also have the other issue, which is when you pay for power, you pay it based on the fastest you pulled it the entire month. All of your power is fundamentally at that rate. It's expensive from every angle, right? What you do is you put in DC where you really need it, and that can be anywhere from corridor charging. If I'm driving from L.A. to San Francisco or New York to Boston, and I wanna stop in between, pull off the freeway, boom, there's DC. There's some behind the fence applications for, you know, meaning depot type charging, where you have, you know, big vehicles that are...
that come in and out like a UPS. Then, you know, you might have a valet service or something where you just go, "Hey, I got people coming in a parking lot, and they're only gonna be here for 20 minutes. I can give them a jolt." I think it is absolutely awesome where it's needed, and it's also the thing I think because it's point to point, it's gonna fill in sooner. That's where the government's focused, for example. You gotta get DC in 'cause we wanna knit. This is U.S.
We wanna knit the country together from a DC perspective. All of the infill and all of the around town stuff, almost all of that's gonna be AC.
Okay.
Yeah. We do both, so we just, you know. Right solution, right place, right time.
Can you touch on NEVI then? That will be... If we're talking about every 50 miles DC kinda network the company on a DC basis, how does ChargePoint play there? Is ChargePoint benefited or like, since you don't wanna sell power, you just wanna get these charging stations up, or how does that all play together?
I would expect it definitely to be a benefit to the company. There's an analog to NEVI. I don't know if people remember the whole Dieselgate thing where Volkswagen got themselves in trouble, and there was a settlement and dollars allocated to the states. There's a process by which those dollars get spent on charging infrastructure, NEVI is gonna go very much the same path. It's gonna look like that in the, in the same, you know, Departments of Transportation in the states are gonna get that money and administer it. That process has started. We've mapped the country from our perspective in terms of where we think the best sites are along all the routes in all 50 states.
We're ready to go, and we have relationships to start banging on, because the process is you have to win the money based on your ability to obviously have sites and build them out and provide the infrastructure. Because we never own equipment. The money will go to the site host or the person who owns the piece of real estate where the chargers live, and obviously, they'll use that money to buy the stuff from us, so they'll just be our customer.
Okay.
I see that rolling out to our benefit, maybe a little bit this year, and then it's gonna pick up steam next year, but it's a multiyear. You know, it's probably a five-year program, I believe. It's not something we count on. I view it as a, you know, icing on the, our fundamental cake of the business that we're doing today. It'll be good for us, but it's not. We're not dependent on it.
Okay. On the last earnings call, ChargePoint, you spoke about bookings north of $1 million. What kind of entities are driving these bookings? Is that 100 chargers and above type orders? Like, is it a commercial real estate, like a mall that has multiple properties in multiple states? Like, who's-
Yeah.
like, who's driving those size orders?
Well, it depends, excuse me, it depends on the application, but it would be large returning commercial clients, and principally that and fleet. Mostly fleet I would expect.
Okay.
When, you k now, I think we've said this in prior calls. When you think about our business today, it's about 12%-15% residential, 60%-70% commercial, and the balance is fleet. There's a little bit of other. We've said, you know, I wouldn't be surprised if fleet is 40% of our business two to three years from now. What that's gonna do is, because depots are big, that business is gonna be very, very chunky, and you're gonna get a lot of big deals like that. I mean, a $1 million in terms of the depot architecture necessary to drive a medium fleet size depot is gonna be way north of $1 million.
Okay.
Yeah.
Can you talk about the Mercedes-Benz announcement?
Yeah.
Like, why would an OEM feel the need to build their own charging network, co-branded?
Mm-hmm.
How that RFP went, considering you said you don't wanna bump up against competitors when you go out for these deals? Kind of just the genesis of it through what it might look like when it's installed.
Sure. First and foremost, what Mercedes wants to do is sell electric vehicles, right?
Yeah.
They're a premium brand, so they want you to have a premium charging experience. Excuse me. Unlike Tesla, not to bash Tesla, this is not a criticism. They don't feel the need to have a closed system. They're willing to have one that is an open system. Yes, if you're an EV driver driving a Mercedes, and you're registered as a Mercedes driver, you could get preferential treatment, like the ability to reserve it before you get there, preferential pricing, maybe depending on where the installation is, benefits or promotions from the site host. It could be a Starbucks. It could be, you know, anybody. So they view this as a way to provide a premium driver experience to their drivers but not have a closed system.
That's, that was their motivation. They're doing it in such a way that, you know, it's obviously gonna be corridor charging. They're thinking 400-ish sites, I believe is the number.
D.C.
Oh, it'll all be all D.C.
Okay.
Yeah. Because think of it as, I think we call it like the 30-minute retail economy. Think of it as you're putting power where someone would otherwise be there for 30 minutes anyway. It's not destination charging. You're not sitting there on your computer watching your car charge. You go there to do something as you're doing a point-to-point trip, right? It's very much a corridor highway fast charging kind of thing. They're not, To their credit, and actually I feel this way about asset ownership generally, in this space, they're not trying to make money on the drivers by charging them a lot of money for the power.
The host who actually owns the real estate is going, "Well, I'd love to have Mercedes-branded charger that looks great sitting in my parking lot, 'cause that's good for me, and they're attracting people to my site to come in and buy coffee or sandwiches or whatever else they're gonna do." It's, it's just, it's an ecosystem, you know, it kind of everybody wins kind of scenario from a Mercedes standpoint.
Kind of like a multifaceted way to drive.
Yeah
Range anxiety.
That's right. Right.
Okay. You touched on, you know, differences between Europe and the United States a little bit. Can you kinda go a little deeper? I think, you know, Europe infrastructure versus how you went over there, over here. I think you have maybe a third of your chargers there, but, you know, less than 20% of revenues. What drives that delta, if I have that math right?
You're right. Europe hangs out. It's been as low as 7%-9% a couple, three years ago. first quarter this year was about 20%, and it's been in the mid to high teens in Q2 and Q3 as well. When you factor that percentage against how fast we've grown this year, you go, "Whoa, Europe's really waking up for ChargePoint." The challenge that we have in Europe is actually two or threefold. The challenges are, one, we got there late, right? We only entered-- we started in the United States 15 years ago. In Europe, we only got there in 2018, I think we're there in earnest. We might have hired our first person in 2017.
Getting there late means there are a lot of other people who are very busy sort of building their companies and doing their thing from a EV infrastructure standpoint. It's hard to enter a new market like this late successfully, so we really put an enormous amount of energy behind being successful in Europe. That's a problem that's unique to us. Secondly is everybody knows, you know, it's, it's balkanized. There's multiple countries, the language challenges, people who wanna buy local, they've got a favorite local provider, they think about things differently.
It's a challenge for us to go, "Okay, well, how do we map what is this fairly monolithic ChargePoint in North America to something that's the what you need to be in order to be successful in Europe?" I think we've made great strides at that. If you have a Pan-European customer, and you can be the Pan-European service provider who supports that customer, I think you have a major advantage. There are a lot of smaller players that we're gonna have to sort of, you know, jump over and outrun to be successful there. They have... This is also something that's not unique to us. To provide product to Europe, there are a lot of local requirements that you have to satisfy.
You know, to be in Germany, it doesn't bother a German supplier 'cause that's all they do. When you wanna be in Germany, and you wanna be in France, and you wanna be in, you know, the U.K., and they have different requirements in each place. To have a platform that can actually nimbly do that is really hard, but we released our AC platform for that this, what is it? 23 now. Mid last year, and then, our Express Plus super high power modular architecture's also available for, you know, moving across Europe. We've very much solved that problem. I feel really good about what's going in Europe. The only other thing I would mention is their pro-- because of how that industry started there without us, the...
I don't think the buyers in Europe understand yet the full value of what we do relative to somebody who says, "Yeah, I'll stick that in your parking lot," and then they leave, right? To have a partner who's got the right software, the right support, the right, you know, reliability and the other things that we bring to the table, you know, they should be willing to pay for that. Pricing in Europe is challenged.
Okay.
Yeah.
Okay. you know, bringing it back to the United States, specifically California, I think one of the California universities, the state universities who did that study about chargers out in the field... Kinda some of them necessarily weren't working every time someone pulled up to them. I'm not calling out ChargePoint chargers. They picked on a lot of people in the industry.
Sure
What do you kinda tell investors kinda when they kinda reference that study?
So I'm not gonna spend any time digging into how accurate I think that study was or how diligent it was, just because that's not productive. I will say that what that study is dead right on is that that's probably the number one issue for the EV charging industry, which is if it doesn't work, I mean, it doesn't do you any good if the driver pulls up and it doesn't work. We have an enormous amount of energy behind making sure that we have the most reliable infrastructure in the industry. The challenges there are. The two big challenges that are the hardest to deal with are communications, right? 'Cause we don't own the cellular infrastructure. We just have a location, and it's gotta talk or go through Wi-Fi.
Two is the human interface, where, if someone breaks a cable, retractor, for example, the thing's lying on the ground being driven over, there's no software way for us to see that other than to go, "Well, we haven't had a charge on there for one week, and you used to have a lot of charges on there." We can see that. That's how we know we have a problem.
The company that's got, first of all, the thought occurs to them, and they have the scale, the reliability when the stuff comes out of the box, and the other things necessary to make sure the infrastructure's always up, plus the software at our service and support org, and our partners everywhere who can hit the ground running in, you know, a number of hours to go fix something. The team that has that is gonna win, and I'm not aware of somebody else who actually has that.
Can you talk about purchase price variance a little bit and, you know, margins of it through the course of this year?
Sure. As everybody knows, you hear about supply chain every day. Short answer is we've been running four to five percentage points of lost margin because in order to provide assurance of supply, which is we've been very clear is our first priority, 'cause winning a customer means you're gonna grow with that customer. Winning the customers is really vital. We said, "Let's just make sure we maintain supply." Filling those gaps when a supplier says, "Sorry, I had a problem, I don't have any more of this, I sold out," or whatever, then you have to buy stuff in the spot market and then put it on an airplane, that drives your costs up.
We've gone from a, you know, readily available just in time economy to, you know, we blew up the entire thing, and now we're sort of starting over from the supply chain standpoint. It's hit us, you know, four to five percentage points in gross margin each quarter this year. The whole logistical side of it where you're using planes, not boats, that's been pretty steady at a couple of points.
Okay. We've got about 10 minutes left.
All right.
If anyone from the audience has a question, fire away.
Yes, sir.
Do you see any opportunities in the M&A side?
For us, no. I, you know, I would never say never, but we did two deals year before last in Europe, which was, we thought, the right thing to do, and we've been very pleased with how it's turned out. As we look at the landscape today and the fact that our portfolio now is fundamentally complete, Well, there's nothing we need to do. We've grown nicely in terms of people, so, you know, don't need technology, don't need people. The only thing we might be interested in doing is picking up customers, but paying up for that is a hard thing to justify. I do expect there to be a lot of M&A activity in the space.
It just won't be us, 'cause, you know, there's capital constraints and stuff, and people in the space are gonna struggle a bit, and I think, putting themselves together is gonna happen.
What are some short-term KPIs for your business that you look at on a daily or monthly basis? Or in other words, some industry KPIs that you look at to kind of give you confidence in the longer term model?
You threw in the model thing, 'cause I was gonna start with the hottest topic in the company right now is customer experience. It's, you know, everything from how you quote it, how you know, price it, how you ship it, how you activate it, and then how you support it. We wanna be as perfect end-to-end as we could be, and we do measure that. When you get to the model, you know, obviously, you know, we've been in a situation this year where, of course, I look at, you know, bookings, billings, backlog, and revenue. That's behaved pretty well this year, so you know, it's not like we have to grind away on that just yet. Remains to be seen what's gonna happen in Q4.
No idea. We obviously look at that. I'd say we spend an enormous amount of time on anything affecting gross margin, because that's it's the first thing most investors ask us about, "What's your trajectory there? You know, we like your business model, but we gotta see that you can be profitable. How do you get there? What's that glide path look like?" You know, we spend a lot of time trying to grow up when it comes to OpEx. That's, you know, that's monitored, you know, daily almost by my MBA group. We have approval processes to be smart about that and make sure that, you know, we're putting our, we're putting our dollars where they need to be.
I know those sound very fundamental, but those are the big ones. The things that flow out of those, are the things you would expect in trying to run a successful company.
What investors do ask you about the trajectory of gross margins. You said they do ask. How do you answer that question?
Let's see, the last three quarters, 17%, 19%, 20%. In each quarter, we have flagged the fact that there's six to nine points of stuff, which is not a highly sophisticated financial term, but supply chain, logistics. Then we've had a couple of charges as we've made these big product transitions I mentioned earlier.
What we've said, we were guiding with a range on gross margin, more recently, but this quarter, what we did is we said, "Look, we expect it to sequentially improve." The only reason I didn't wanna put a number on it is because the range is really wide, and the reason it's wide is because it depends on what we can both book anew and build and ship and how we chip away at what is a fairly sizable backlog. The mix component could really bang things around. I just expect it to get continually better. Then I try to give people that thing I started with, which is, you know, we've got several points that are just lying on the ground, right?
If we can get through the supply chain issues. Logistics, I think, has eased a bit. If we can get through the PPV issues, you know, work better with our CMs, there's just a lot of things we can do, I think to bring that number up in a intelligent and sequential way. Yes, sir.
Yes, a long question, so I'll try to be brief.
I can give you a longer answer. No, I won't do that.
Given what's happening in the EV industry with the higher lithium prices, are we going to see when it comes to your industry that you are going to wait for a couple of years before expanding your network to see how that's going to play out? Or is that not an issue for your industry? I mean, clearly, if you look at the demand right now for EV, higher lithium prices are negatively impacting that. There's no question.
Sure.
I mean, when it comes to your industry, is that going to play out differently, or are you going to expand your network? Not just you, but the whole industry is going to expand their network irrespective of how the demand is going to play out say next three to five years in the industry.
I think that, I'll try to keep my answer short, actually. I think the auto industry, because of general economic conditions, inflation and all that other good stuff, not just battery prices, everybody would surmise that you were gonna sell less cars, right? However, EVs within that number, if you draw, if you draw two graphs, you'd have two lines, you'd go, "Well, auto is like this, but EV is like that," right? The percentage of whatever you sell represented by EVs and the actual raw number of EVs being sold per year is going to go up. We genuinely believe that in a meaningful way, notwithstanding prices on batteries. You know, there's incentives from the government that will help do some offset there.
You know, I think we have a long way to go before people will go, "You know what? I don't really wanna get a Ford Lightning. I'm just not that excited about it." There are a lot of people, "I wanna buy one," right? You know, every, we just think there's an enormous amount of momentum there to provide for a very, very strong EV auto industry, even despite some of the pricing issues. As a result of which, for some of the other tailwind factors I mentioned earlier, you know, we just see the preparation of this country and Europe and Canada to build out an EV infrastructure is gonna continue unabated.
I don't see people going, "Eh, well, this is serious." By the way, the automakers who are putting billions to work to become, you know, EV ready and get out EVs, they don't have a choice but to keep going, right? What are they gonna do, right? They just have no choice. I think you never say nothing in terms of the external impacts, but I think the underlying, you know, structural momentum is pretty strong.
Like, do you look at the industry in a certain way that if you assign a ChargePoint for this many cars, if you look at the demand for how many cars are going to get on the road.
Mm-hmm.
As opposed to how many charge points, how many points you need.
Is that a meaningful analysis to you?
That is precisely how we build our financial model, what you just said. What we do is we go, for every. Remember I mentioned a correlation earlier? That correlation of us to vehicles. If there's 100 vehicles that are hitting the street, you're gonna need 15 public chargers. Essentially. That number has been a little, historically, a little higher in Europe because they've been doing a lot more of let's get ready, let's get ready. They've been, you know, more chargers. Again, public chargers. Our, just to factor that to give you a sense, our market share for AC, for example, in the U.S., is north of 70%. We go, "Okay, well, there's 15 needed, and we're gonna get 70% of those.
Yee-haw." That becomes our model. On residential, there's a one-to-one correlation, and like one car, you need one charger, and almost everybody buys one, so it's a rounding error to those who don't. We factor that based on vehicle arrivals and what we think our share is. On fleet, our current estimate is fleets are gonna be, until further notice, roughly one-to-one as well. A fleet vehicle will need a dedicated charger. Again, that's not always true, but it's gonna be a rounding error sort of type being till it's not. That's how we build our financial model, and we think that holds regardless of who you are. It's a question of what portion of that demand you get, but that's how you figure out demand.
Can you discuss what would be the capacity utilization for the next two to three years, given what the demand is going to be?
On the install capacity of charging infrastructure?
Mm-hmm.
You know, that's gonna be all over the map, right? Residential, very high, right? You go home, you charge. Commercial, you know, it's probably pretty high, right? 'Cause people drive when people start going back to work. I know at ChargePoint, and we're not obviously the best case for this, but ours are almost always occupied during the day, right? At night, no, of course, because people aren't at work. Very, very high. I think utilization on corridor charging, which is the DC fast where you pull off a freeway and you charge, is gonna continue to be quite low, right? That's 10 or 15, maybe 20%, because that's just the nature of that beast, right? It's people aren't sitting there all day. Then fleet's gonna be based on the nature of the fleet operator.
If you're a U.S. Postal Service, you're gonna have a one-to-one correlation. They're gonna show up at night, charge, and leave the next day. Somebody like a UPS who cycles stuff a lot, you know, you're gonna have super high utilization.
Okay. Why don't we leave it there? Let everyone get to the next chat.
Great. Thanks, everybody.
Thank you, everybody.
Appreciate it.