The electric vehicle (EV) market is still in its infancy in the U.S., with plenty of room for small companies to stake a claim and establish themselves as key players. ChargePoint Holdings(NYSE: CHPT) is trying to do just that with its EV chargers, but it's been an uphill battle for the company amid lackluster sales and a precarious EV market.
Here are three reasons why ChargePoint stock isn't a buy right now.
Image source: Getty Images.
1. It's a growth company that's not really growing
Young companies competing to become major players in their respective markets should be growing their sales quickly. But ChargePoint's revenue is moving in the wrong direction.
Sales fell by 18% in fiscal 2025 to $417 million, and the company said revenue will be $100 million at the midpoint of guidance for the first quarter of fiscal 2026, a decline of 6.5% from the year-ago quarter.
The company's largest revenue segment, its networked charging system sales, declined by 35% last year. And the company's only growing sales segment, its subscriptions, increased by just 20% to $144 million.
While it's good to see subscription sales rising, they don't account for enough of ChargePoint's sales to be impressive, and a 20% increase is relatively modest for a growth company.
2. The EV industry is growing, but it's sluggish
The EV market is likely the future of the auto industry in the U.S., but it's been a longer road to success than many have anticipated. Rising costs because of supply chain constraints during the pandemic then led to rising inflation, both of which pushed EV prices out of many people's budgets.
For example, the average transaction cost for a new EV is about $59,200 right now, compared to $46,900 for a new gas-powered vehicle. Even more problematic is that the price disparity between EVs and gas-powered vehicles has actually increased lately and is at its highest level in two years, according to Cox Automotive.
The high costs have been exacerbated by the Trump administration's announcement of automotive tariffs. While some deals have been reached recently, many EV makers are expecting costs to rise, which could further hamper demand. Rivian has said tariffs are causing the costs to rise by a couple of thousand dollars per vehicle, and Lucid says gross margins will be hurt by 8% to 15%.
EV sales are rising, but at a slow pace. EVs made up 7.5% of all new vehicle sales in this year's Q1, up from just 7% in the year-ago quarter. For ChargePoint to succeed, Americans likely need to adopt electric vehicles at a faster pace.
3. The political climate isn't hospitable toward EVs
While long-term investors shouldn't base all of their investment decisions on what politicians are doing right now, our political leaders do have the power to shift resources toward or away from certain markets.
EV buyers can still receive a federal tax credit of up to $7,500 when buying a new, qualifying EV. But some members of Congress have proposed bills that would end the credit, and President Trump has indicated that he's open to ending it.
ChargePoint CEO Rick Wilmer said on the company's most recent earnings call that he believes "free market forces will drive organic EV adoption in the absence of subsidies." That may be true, but the loss of the tax credit would hurt EV demand in the near term.
What's more, the Trump administration has withheld federal funds that were supposed to go to states to build national EV-charging infrastructure. A handful of states are suing the administration to receive their funding, which is up to $5 billion over five years for some states.
Moves like this aren't great for the EV industry, and they're especially bad for ChargePoint. Wilmer has admitted that, "Charging infrastructure has lagged behind EV adoption and it needs to catch up."
It's best to avoid ChargePoint stock right now
With so many unknowns in the EV market and ChargePoint's sales dropping, it's best not to buy the company's stock right now. Investors will get a clearer picture of how the company is doing when ChargePoint reports its Q1 results, likely in early June.
But there isn't much that's appealing about ChargePoint at present, and until the company gets its sales back on track, there's no reason to expect its stock to outperform the market any time soon.
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Chris Neiger has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
