“Range anxiety” is one of the scariest things about driving an electric vehicle (EV), and it’s also one of the biggest barriers to its adoption.

A Consumer Report survey showed that 61% of people see charger availability holding them back from buying an EV, and the recently passed Inflation Reduction Act aims to tackle this problem head-on.

What comes first? The EV or the charging station?

It’s the classic chicken-and-egg problem.

• Chicken: Consumers are reluctant to buy EVs without chargers.
• Egg: Commercial property owners don’t want to build chargers without EVs.

While home chargers are abundant with cheaper costs (~$600-1,000), public chargers are still lacking. Fast chargers — which can cost up to $150,000 each — are even rarer.

The U.S. has 124,000 chargers, and Biden is targeting 500,000 by 2030, but global management consulting firm McKinsey says at least 1.2M is needed.

To incentivize usage, the Inflation Reduction Act will increase tax credits for building charging stations from $30,000 per site to $100,000 per charger.

Tax credits might not save the industry’s problems…

Nearly everything clean energy has gone up in recent weeks — including some of the largest charging companies like ChargePoint (NASDAQ:CHPT) and Blink Charging (NASDAQ:BLNK) — both up nearly 50% in the past month.

But long-term, charging stocks might not be the home-run clean energy investment everyone is looking for. Here’s why…

1/ Initial costs for public chargers are high. It’s uncertain how profitable they can be and whether people are willing to pay — especially when it’s estimated that 80% of EVs are charged at home.

2/ Charging companies have no business model yet. Many are still testing different models (i.e., charge per use, selling chargers and offering support).

Growth > profits: “Right now, this is a land grab,” and “we’ll deal with profitability later,” — says Blink Charging’s CEO, who lost $70M on $35M in sales over the last 12 months.

Investors: “Did we hear government incentives?”

The abundance of government funding and growth potential has attracted competition of all sizes.

• Oil giant Shell is aiming for 500,000 charge points by 2025 with plans to put fast chargers in its gas stations.
• Major utility companies like Xcel Energy (NASDAQ:XEL) recently announced plans to build out a network of fast charging stations.

Ignoring profitability can only go so far, and it likely won’t go very far in a sector with little differentiation and much competition.