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Breakingviews – Moped charger gets trapped in electric-car traffic – Reuters.com

Instrument panel shows batteries residual quantity in a Gogoro's electric scooter in Taipei, Taiwan August 10, 2017. REUTERS/Tyrone Siu – RC125A76EED0
HONG KONG, April 7 (Reuters Breakingviews) – It’s hard to imagine Asia’s congested cities without the phut-phut of a thousand mopeds. Shares in Taiwan’s Gogoro (PPGH.O) have jumped 16% since their New York debut on Tuesday. Yet the valuation of the $2.6 billion company, which makes battery-swapping systems for electric two-wheelers, trails most car-charging outfits. There are risks, but Asia’s love of the zippy mode of transport means the gap deserves to narrow.
Chief Executive Horace Luke founded 11-year-old Gogoro after a career that included designing Microsoft’s (MSFT.O)original Xbox. At home, the company’s batteries power its own mopeds as well as those made by rivals like Yamaha Motor (7272.T). Its float, via a merger with blank-cheque firm Poema Global, netted it some $345 million in total with investments from partners such as India’s Hero Motocorp (HROM.NS) and GoTo, the Indonesian super-app. Singapore’s state fund Temasek, Al Gore’s Generation Investment Management and sustainability activist Engine No. 1 also took stakes.
At 2.8 times its own 2023 sales forecast, Gogoro sits toward the back of the car-charging parade including Tritium (DCFC.O) and Allego , both of which also went public recently after merging with special-purpose acquisition vehicles. The average multiple of six of them is a speedy 11 times revenue. At 18 times EBITDA, Gogoro’s enterprise value is more middle of the road but the company already reports positive numbers, which is more than most.
Gogoro’s selling point is the relative ease of building its charging networks in Asia’s dense cities. It’s eyeing urban India, Indonesia and China via joint ventures with partners including Hero, GoTo and two Chinese bike makers. Pollution-battling politicians like electric two-wheelers and Gogoro’s business model has appeal, too. Selling the scooter without the battery drops prices to roughly in line with petrol-powered peers while then renting the power source produces recurring revenue for Gogoro, as does licensing its technology to its JVs.
Luke is however not alone in figuring this out. In India, rivals already have manufacturing partners. Hero, the country’s bike-making behemoth, is only just getting into the electric game. Citywide rollouts carry risk too if demand doesn’t follow although Gogoro believes its monitoring system, covering battery charge, location and health, helps it deploy funds efficiently.
Two-wheelers are a modest form of transport, but the ability of electric mopeds to change the sound of city life is anything but.
Follow @JennHughes13 on Twitter
(This story has been amended in paragraph 2 to correct the amount raised from Gogoro’s float. The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
CONTEXT NEWS
– Taiwan-based Gogoro began trading on Nasdaq on April 5 after its $2.4 billion merger with Poema Global Holdings, a special-purpose acquisition company founded by a group of investment bankers and private equity executives.
– Gogoro is building a battery-swapping network that can be used both by its own scooters and those of other manufacturers which adopt its hardware.
– Investors in its New York float include Al Gore’s Generation Investment Management and sustainability activist Engine No. 1. Some of its joint-venture partners also took stakes: India’s Hero Motocorp, Taiwanese manufacturer Foxconn, and GoTo, the Indonesian super-app with which it has a deal to roll out electric bikes to its driver fleet. Singapore state investor Temasek has also backed the firm.
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