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Comment by JumpCrisscross | Hacker News Reader

“[California] chose not to require that charger companies meet performance standards as it doled out $1 billion in subsidies, grants and other assistance to charger companies, with billions more on the way…no financial penalties for poor reliability were included in its subsidy and grant contracts, and no mechanisms for enforcement were set up.

…

Another big problem: A lack of comprehensive data…The government can’t even agree how many chargers there are in California.

…

Pasquale Romano left his job last fall as chief executive at ChargePoint, the nation’s largest charger company measured by total installations. ChargePoint’s board paid him more than $31 million over the last three years, plus stock options that vest this month valued at $44.8 million.“

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It's insane that you still see things like this in procurement / grants.

Assume bad faith and put as many checks as you can efficiently include.

In this case, centralized registration and random operation auditing seems a minor expense, relative to the amount of money spent.

Build a broken incentive structure, shame on you when the outcomes aren't as desired... :(

> a broken incentive structure, shame on you when the outcomes aren't as desired

What’s surprising is the lack of course correction. The California Energy Commission should threaten to sue, to claw back funds for non-performing chargers. Instead, they haven’t even changed the way they distribute new funds.

Then compliance costs spiral out of control.

This is why this kind of stuff should be done with state capacity. Make it a normal employer employee relationship.

Anecdotally, I was traveling in Maryland and struck up a conversation with a fella that worked for the state weights and measurements. He was going around checking gas pump accuracy. He said years go between when pumps are checked.

Balancing efficiency in auditing is fascinating to me.

It always seems to boil down to "likelihood of auditing" vs "penalties for failing audit."

In single-business industries (e.g. selling gas), I'd imagine penalties are highly effective. A gas station banned from selling gas because they were caught mis-measuring amounts isn't much of a gas station!

> always seems to boil down to "likelihood of auditing" vs "penalties for failing audit."

California can’t even figure out how many chargers have been built. They know some aren’t working, they just can’t or won’t do anything about it. There doesn’t seem to be a downside to taking that money and putting up kaput chargers.

One figures that wanting to make money would be a sufficient motivation for companies to maintain their equipment. With anything even remotely resembling competent leadership, having the government pay for you to setup infrastructure that provides you with reoccurring revenue is a dream position to be in.

Yet somehow.... here we are.

Right now fast chargers are very expensive to build and install, and the return on investment just from selling electricity isn't great unless it's actually used many times per day.

I think a lot of these charging providers make most of their money by installing the charger when it's paid for by grants, businesses, etc. rather than from the ongoing business of charging cars.

Tesla reduces up front costs with vertical integration instead of buying chargers from third party suppliers like other charging companies do. They also have their own fleet of cars and data on where chargers are needed, so most of their chargers get decent utilization.

That said I think part of why Tesla is doing deals to get more cars on their network is to increase that utilization even farther at more remote chargers that might currently be losing money on their books.

> Right now fast chargers are very expensive to build and install, and the return on investment just from selling electricity isn't great unless it's actually used many times per day.

It is funny, I have a friend running a fast charger business in another country, and he is making plenty of money w/o needing any government grants to get started.

They are vertically integrated from doing HW design, software (they tried outsourcing that, it went badly), to managing physical locations.

They are also expanding slowly and only doing installations where it makes financial sense.

Sounds like they are doing things right. Do they also provide any other amenities that might drive revenue like vending, coffee, etc?

> Do they also provide any other amenities that might drive revenue like vending, coffee, etc?

Full meals. :-D IIRC they sublease land to small restaurants to open food stalls.

So they have incentive to keep the chargers and site in good shape because it impacts their charging business as well as the food sales.

A lot of chargers in the US are just dropped in the back of a parking lot somewhere. Once the provider has gotten the installation check then they don't have much ongoing incentive to keep it working well. Or even if they want to, keeping the hardware and software working well is tougher when they aren't vertically integrated.

Sure, but it also requires the decision makers to be rational.

I worked for a publisher that I had built a social platform for that encompassed a number of different things, but their main money maker was their classified ads system since they were in a state that allowed classified ads for gun sales (a big hunting and fishing site).

So this required a two tiered approach because we were not allowed to display third party network ads on pages that specifically featured firearm categories. Later, some bug got into the ear of the new company President about just converting everything over to a different platform and putting the classifieds system behind the same paywall they use for magazine subscriptions.

After telling her that we had already gone over the economics of the decision and why we stuck with what we had, she decided to switch over anyway. In her mind, it was unfathomable that people wouldn't pay her money to post ads on her site. Her husband went so far as to accuse me of not wanting to change because it would mean the elimination of my retainer.

So what used to be a section of the site that generated about $45K a month in ad revenue now receives about 80 classified ads per month, and a family that has spent a generation leeching off of the work of their parents is about to erase a legacy before the old man even dies.

> Sure, but it also requires the decision makers to be rational.

This is true, and I wasn't taking into account that short term misaligned incentives are super easy to create even in companies that are trying to be rational.

Something as simple as quarterly sales bonuses are a common enough cause of this. (Sell sell sell, fail to meet delivery times, lose all customer trust)

It is astonishing how much money has been doled out to executives at these charging companies, while the company fundamentals have been extremely weak. It is hard to justify compensation packages like that.

If we pay them more, it's clearly wasteful. If we pay them less, do we expect better results?

In the most recent quarter, Chargepoint had $367M in cash and cash equivalents. These large compensation packages suck a surprising amount of working capital out of businesses that already do not have huge runways. I'd expect better results if they focused on saving cash and building the business in a lower cost manner.

They are early stage businesses and losses are expected, but they need to focus on the long term and long term compensation plans.

Higher profits is better results, so I guess yes?

> If we pay them less, do we expect better results?

Sometimes, yes.

Not speaking about the charging field specifically, but in general there seems to be a compensation level past which you begin to attract less desirable candidates.

To some extent, we've developed a system that rewards people for being able to pump the stock. It isn't always a bad thing, but it seems to be going pretty badly for most SPACs.

If you don't pay them that much money, then you'll only be able to attract low-quality talent who won't be good at their job. /s

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