A brand-new solution has emerged to power the computing capacity for AI: by utilizing electric vehicle charging stations. This is precisely the concept that charging station startup Xeal is working on, with the company planning to raise approximately $2 billion in debt financing over the next 18 months to support the implementation of this project.
Headquartered in New York, Xeal operates a network of thousands of charging stations, with most of the sites located in high-end apartments, luxury retail malls, and office buildings in about 500 cities across the United States and Canada.
Xeal CEO Neeraj Baladwagi stated that although the contracts signed with power companies allow charging stations to charge electric vehicles around the clock, the average utilization rate of their charging stations is less than 10%. This means that Xeal possesses a vast amount of idle power resources, which is sufficient to continuously supply electricity to approximately 130,000 households or 110,000 NVIDIA AI chips.
To this end, the company has launched a new business: supplying idle electricity to AI chips. In December of this year, Xeal will deploy NVIDIA AI server racks next to charging piles in parking lots in Chicago, Houston, and Dallas; these racks are placed within custom protective metal containers, each the size of a parking space. The power supply lines associated with the charging piles can directly power the racks, and each container contains approximately 48 NVIDIA AI chips.
Baladwagi stated that Xeal has already received orders from 100 customers for such computing power containers, but refused to disclose the names of the customers. He mentioned that in the next 18 months, the company aims to raise about $2 billion to produce and deploy 1,000 containers; each container will house a set of GPU racks, which together can provide approximately 50,000 GPU, with a total power supply capacity of 60 megawatts.
Xeal has previously completed two rounds of equity financing, raising a total of 54 million US dollars. The most recent round was the Series B financing in 2022, which amounted to 40 million US dollars. Baladwagi mentioned that Xeal plans to apply for low-interest asset-backed loans and project financing, totaling 2 billion US dollars, to support business expansion. He believes the company is qualified to obtain this funding: with just 54 million US dollars from venture capital, they have already established a large network of charging stations.
The plans of Xeal reflect that even companies in industries far from AI are making every effort to seize the huge power demand benefits brought about by the explosion in AI data centers.
However, as reported by our colleagues in this publication, the financing difficulties for some current AI project developers are on the rise. Even if the first batch of GPU containers operate smoothly, it is not certain that Xeal will be able to secure the desired financing.
The core advantage of Xeal lies in its ready-made access to the power grid. AI Data center developers often have to wait for several years to complete the connection to the power grid, and many companies then consider using gas turbines or nuclear power as alternatives. However, these solutions also face long approval and construction cycles. Batteries can only serve as a backup power source and are not capable of supporting the continuous operation of a data center for an extended period; they need to be recharged after just a few hours of use.
Baladwagi said, "We only need a few weeks to launch our inference and computing power services, rather than waiting for several years. Funds act as a catalyst, helping us to build a sustainable computing infrastructure."
In 2019, Baladwagi co-founded Xeal. The company sells charging piles to property owners; if electric vehicles are used frequently, owners can usually recoup their investment in about 5 years.
However, due to various factors (including the cost of purchasing a car), electric vehicle sales in the United States have fallen short of expectations, resulting in an average idle rate of Xeal charging stations as high as 92%. As a result, many property owners are reluctant to install additional charging stations. Baladwagi stated, "There has always been a dilemma of whether the chicken comes before the egg or the egg comes before the chicken. Real estate clients will say: I don't know if there are any electric vehicle owners in the community, so I'm not sure whether I need to install more charging stations."
The craze for computing power has changed the calculations. Baladwagi will contact the building owners who use Xeal charging stations to pay them rent for the space and obtain permission to place a GPU container in the garage. He explained to the owners, “Originally, it would take 5 years to recoup the investment, but now it only takes 2 and a half years; you don’t need to incur any capital expenses or bear operating costs, as we will cover all the electricity costs.”
He stated that the demand for computing power is extremely high, sufficient to support the installation of additional charging piles. Xeal The current total power capacity of the existing sites is 200 megawatts, and they are being expanded at a rate of 10 megawatts per quarter.
"Now we can advance charging station projects across the United States without the need for federal subsidies or incentive policies from power companies. Relying on the existing infrastructure, the computing power business can generate revenue, and the entire industry can become self-sufficient."
