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May 6, 2022
Gaby Herculano and Chris Searle
Credit: Photo by Kindel Media from Pexels
The need to decarbonise transport is prompting a revolution in the industry. Several countries have committed to electrifying their passenger vehicle fleets, which requires promoting the adoption of Electric Vehicles (EVs). At the same time, the price of EVs has been rapidly falling, driven by decreases in the cost of their key components, lithium-ion batteries. By contrast, the increasing cost of gasoline and diesel is prompting a separate demand destruction for Internal Combustion Engine (ICE) models. Catalysing the convergence of these two trends has been the rapid growth of players like Tesla, who have launched EVs with very high UX – low maintenance being a popular feature. As these elements come together, major automakers are scrambling to launch their own EV products.
According to EVGo, a leading fast charging network provider, nearly 20 automakers will together be launching around 40 EV models in 2022. As examples, General Motors have announced plans to phase out ICE vehicle sales by 2035; Ford are working towards 40-50% of its global vehicle production to be electric by 2030, while Mercedes-Benz and Volvo are both promising to be all electric by 2030. EVGo also points out that 5.8 million EVs are projected to be on American roads by 2025, that figure rising to 25 million by 2030 before reaching 114 million by 2040, which would account for more than 40% of all automobiles in the US, according to the US Department of Transportation (US DoT) and Bloomberg New Energy Finance (BNEF).
EVs are, then, a headline solution in the race to decarbonise our economy. The charging infrastructure on which they depend may be less glamorous, but it is no less important. Many, in fact, have highlighted its potential to either obstruct or to catalyse the widespread adoption of electric vehicles. A question often asked here is whether charging infrastructure must lead electric vehicle uptake, or vice versa – effectively a classic chicken and egg problem. How do we encourage people to buy electric cars when there is insufficient charging infrastructure, but how do we persuade companies to invest in that charging infrastructure when there aren’t enough electric vehicles on the roads? The solution is inevitably time and context dependent.
The National Renewable Energy Laboratory (NREL) calculates that around 27,500 DC Fast Charging and 601,000 Level 2 EVSE ports (definitions below) would be needed across the US to support a scenario in which 15 million light-duty EVs are on the road. The Biden administration wants to promote the development of a national public charging network of 500,000 EV Supply Equipment (EVSE) single port charging by 2030. In the same report, the NREL points out that by the end of 3Q21 there were 23 network EV charging players in the US market, with 19,985 public and workplace DC Fast Charging EVSE ports and 97,673 public and workplace fast charging (classified as Level 2) EVSE ports in operation.
It is also important to emphasize that EV charging networks can play a crucial role in achieving grid stability. Research has shown that most EV owners currently charge their cars at the end of the working day, just when electricity demand is at its peak. This spike in demand as the adoption of EVs increases is worrisome, as the draw on the grid of a single EV can be equivalent to that of an entire house. Historically, grid operators would meet such an increase in peak demand with additional power plant capacity. Instead, enter “Smart Charging”. There is capacity for EVs to be leveraged to produce a Demand Side Response (DSR) to control their impact on the grid. Here, EV users are remunerated for shifting their charging habits to the benefit of the grid.
All those cars with all those batteries must be charged somewhere. What is more, people are used to the rhythm of gas station refuelling, and new systems must win not just technical but also psychological approval from consumers around the world.
As a bit of background, global electricity grids are run on alternating current (AC). Lamps and similar appliances can be charged directly from this, but batteries store direct current (DC), so portable devices such as phones, laptops and, you guessed it, electric vehicles, must convert this mains AC power into DC. Doing this requires an inverter, which can be found in the plug body of the charger for things like iPhones and laptops. EVs by contrast, have an onboard inverter, which means they can connect directly to mains AC power. The speed with which they can do this is, however, limited by the wattage, and therefore physical size of the inverter. According to equipment provider Pod Point, it takes roughly 7 hours to fully charge a standard electric car (60kWh battery) using a typical 7kW charging point. To charge a car with a similar battery in around half an hour, as drivers reportedly expect, would require an inverter with a power rating of 120-250kW. This means both major size and major cost. Such inverters, necessary for rapid charging, are thus ‘off-boarded’ into a stationary charging unit.
We end up, then, with a variety of charging systems and devices. The major types can be delineated as follows (note: different sources use different terminology, being particularly flexible between fast, rapid, ultra-fast and ultra-rapid, but the delineations here are fairly standard regardless of verbiage. Note also, batteries charge far slower past roughly 80%, so charging time is measured up to this point):
o Power: 1-22kW
o Primary use: Home, work, on-street. Standard electric outlet or specialised charging apparatus.
o Primarily AC
o Power: 22-149kW
o Primary use: workplace, opportunity/points of interest (shops, restaurants etc), on-street
o AC or DC
o Power: 150kW+
o 15-60 minutes to charge to 80%
o Primary use: travel corridors for long distance travel
o DC
The US Department of Energy's Alternative Fuels Data Center explains that the charging infrastructure industry has adopted a common standard named the “Open Charge Point Interface” (OCPI). This is a protocol with an order for charging stations as follows: location, Electric Vehicle Supply Equipment (EVSE) port, and connector. These are the key definitions:
· Station Location: A place with one or more EVSE ports, for example a parking garage or a supermarket parking lot.
· EVSE Port: The structure that provides power to charge only one EV at a time (even if it has many connectors).
· Connector: The device that is plugged into an EV to charge it. Different connectors and connector types (such as CHAdeMO and CCS; more below) may be available on one EVSE port, even if only one EV is to be charged at a time. Connectors may also be called plugs.
Source: Alternative Fuels Data Centre
As mentioned above, charging equipment for EVs is classified in three levels as a function of the rate at which the batteries are charged. Consumers care a great deal about the overall charging times and often compare that time with the ease of filling up an ICE car with gasoline or diesel. The total amount of time to charge a BEV of course depends on how depleted the battery is to begin with, the size of the battery (how much energy it holds), the type of battery, and the type of charging equipment. Below is a summary of the key connectors:
DC Fast Charging (DCFC) ranges between 200 and 1000V DC and supplies at least 50kW. DCFCs are predominantly available at public places or at commercial locations. Newer equipment can add a range of 100 miles in 5 to 10 minutes, the constraint being the actual charge rate which is often capped by the charging capabilities of the particular EV’s charging technology (older EV models require 30 minutes or more for equivalent range).
When talking about charging networks, figures exclude single family residential charging. Current charging infrastructure refers to i) public locations: a broad group including EV charging in publicly accessible locations or along highways, ii) workplace: charging intended to cater to EVs of employees during the workday, and iii) commercial & fleet: charging EV fleets, including municipal/private fleets, car sharing, and transportation network platforms.
Globally, the International Energy Agency (IEA) records that there are 9.5 million private chargers, accounting for 7 million in the home and 2.5 million at the workplace. Unfortunately, it does not offer the same breakdown for public chargers globally. Data can be hard to come by, and national charging markets are at vastly varying levels of development. Europe, for example, has double the number of rapid charging stations than the US, despite having a similar land area and volume of EVs. In November 2021, Congress took a step towards rectifying the situation, passing, and the President signing, the Infrastructure Investment and Jobs Act, also known as the bipartisan Infrastructure Law. Among other provisions, this legislation included up to $7.5 billion in funding for electric vehicle charging infrastructure through the Department of Transportation. The U.S. Federal Government offers a tax credit for qualifying plug-in EVs; the minimum credit is $2,500 and the maximum credit is $7,500, depending on vehicle weight and battery capacity. The UK is used here as a case study of a leading country where there is good data availability.
It is important to note that the uptake of EVs has thus far been driven by wealthier consumers with off-street parking space. While EV sales are closely tracked by the number of domestic chargers, the number of public chargers has fallen behind; since 2019, the number of electric vehicles on the UK’s roads rose by 600%, while the number of public chargers rose a comparably minor (but still impressive) 82%. This will be an important disparity to note when we come to assess the barriers to EV uptake, and the facilitating or obstructing role that charging infrastructure might play. The UKs SMMT, for example, has been vocal over the need for more public chargers, citing the latter disparity, but many argue that the importance of this public infrastructure is overstated. In general, countries with the highest EV penetration have the lowest ratio of public charge points to EVs.
As of February 2022, the UK has 49,988 public charging connectors in 29,665 devices at 18,587 locations. Of these public charging devices, 7575 are slow, 16,683 fast and 5406 rapid. This supports a fleet of 760,000 plug in vehicles, made up of 410,000 BEVs and 355,000 PHEVs.
While the availability of public charging point garners headlines and captures much of the attention of prospective EV owners, home charging currently accounts for the overwhelming majority of charging events. According to one study, the split was found to be 50-80% of events at home, 15-25% at work and less than 10% at public slow charging locations and fast charging points along long-distance travel corridors.
A number of trends are evident in the UK’s charging landscape. Despite differing framework conditions, such as the number of houses with driveways, the frequency of long journeys, environmental awareness and regulatory structures, many of these trends are representative of other countries, particularly those in Europe. The most obvious trend within the UK is the inconsistency in coverage.
While a recent UK government report shows that you are never more than 25 miles from a public charging station on an A road or motorway, there is otherwise a clear postcode lottery, with roughly 5,700 out of 6,700 on street chargers located in London. This report, produced by the Competition and Markets Authority, argues that charging at home and work is developing sufficiently, but there have been greater challenges in rolling out charging along motorways, in remote locations and for on-street slow charging. In these latter locations the investment case can be weak for private companies, with immediate returns on investment relatively low.
This is an incredibly difficult question to answer. While the EU recommends a charging ratio of 10 EVs to one charger, the need in reality will be highly context dependent. Framework conditions, briefly mentioned above, refer to specific socio-geographic characteristics of an environment and are a vital, if often overlooked, component of this issue. Further influential examples include, but are not limited to:
o Apartment dwellers will often need on-street charging, while detached houses with driveways or garages can more easily support private home charging, with a spectrum of setups in between.
o Renters are significantly less likely to invest in private charging infrastructure, and in some cases landlords will obstruct such a move anyway. Cities with high rates of renting will therefore face different obstacles to those with high rates of ownership.
o Public transport infrastructure (or a lack of it) can displace demand for electric vehicles and/or reconfigure usage habits and the need for certain arrays of charging coverage.
o For a variety of reasons, including other framework conditions mentioned here, people’s driving and parking habits can vary significantly between cities. Longer journeys can be more or less common, as can the frequency of driving and parking in urban centres. Charging ecosystems must be tailored appropriately.
o As we transition to full battery electric vehicles (BEVs), plug in hybrids (PHEVs) will play a role in many settings. These require charging, but far less of it, so the ratio of BEVs to PHEVs within a fleet will impact charging needs.
o As we shall see, while overall grid capacities should be able to cope with the extra load of electric vehicles, some parts might need upgrading. Additionally, some regulatory environments may be more conducive to charger installation than others.
o Electric vehicles in general remain costlier than their ICE counterparts, and a thriving second hand market is yet to be established. What is more, while EVs are cheaper to run, the upfront cost of charger installation can be prohibitive for lower income families.
o While electric vehicles have many benefits, from increased efficiency to integration, a major driver of adoption will, at least initially, remain environmental concern.
Within the UK context, the government suggests that 280-480,000 public charge-points will be needed by 2030. At an EU scale, EY predict 9 million will be needed by 2035. While such a figure can be useful as a market signal, it is less important to dig into here. The primary concern for us is how we will begin to accelerate towards this final figure, whatever it might exactly be in different contexts. This next section will outline some of the major barriers to this vision.
Drivers of ICE cars get all their fuel from retail fuelling stations, of which there are over 150,000 in the US. For EV charging this will be a very different dynamic, as charging at home or at the office will be the predominant way to “fuel” the cars with electricity. EV charging stations will, however, be needed to support distance driving, but only in line with biological needs (the “bladder range”) that prompt drivers to stop along highways even if not to pump petrol into an ICE. A degree of on street and ‘convenience’ (at shops, restaurants etc) charging will also be needed in many areas. The specific technical requirements of different charging arrays vary greatly. For example, fast charging stations ( DC) in strategic locations or along highways need to provide up to 100 KWh in 10 minutes, meaning energy costs would be high, particularly as multiple vehicles may need to be charged at once.. A very different offering, low power chargers in car parks can provide grid services through the aggregation of EV battery capacities. Finally, convenience or community charging can be a way for retail locations to attract and keep customers. It will come as no surprise, therefore, that a variety of different business models are emerging for this digital and distributed infrastructure.
As digitalization, 5G, the IoT and EVs converge, more optimization solutions will be adopted. Grid operators are likely to offer different rates for EV charging with low overnight off peak energy tariffs as well as low solar-linked tariffs during the day, and higher tariffs in the late afternoon and early evening to discourage peak hours charging. Price sensitive customers would likely change habits, while high tech users would use smartphones and other electronic solutions to manage load. In parallel with this process, the EV charging companies already leading in the space work on additional business models that seem to move away from a pure tariff per charge which ties profitability to utilization rate, to more subscription based models for the peace of mind of being part of a larger network of fast charging locations. Some are also working on providing ancillary grid services with the aggregation of lower voltage charging ports. Here are some key players in the space:
EvGo (EVGO) is the operator of the largest public fast charging network in the US, and was the first to be powered 100% from renewable energy. The company reported 2021 annual results with revenue up 52% over the 2020 fiscal year, reaching $22.2 million. EvGo ended the year with 850 locations, 1,900 stalls in operation and a pipeline of over 3,100 stalls. It serves over 3 million users across 30 states. Last year the company was chosen by General Motors to be its preferred charging provider, an example of EVGo’s strategy to partner with fleet owners at the corporate level. It does this while promoting a subscription model, moving away from a single charge fee.
ChargePoint (CHPT) recently announced results for the fiscal year that ended in January 2022, with revenue at $242.3 million, 65% above 2020 sales, reiterating guidance of revenue for the current fiscal year of between $450 and $500 million. The California based player also operates in Europe, with over 140,000 places to charge on the company’s network. ChargePoint’s customers are the ones that own the charging sites or stations, translating into a more capital light business model and a revenue model predicated on hardware sales bundled with high-margin, recurring software subscription and services.
Blink Charging Co (BLNK) is an owner, operator and provider of EV equipment and services. The Miami based company focuses on vertically integrating the offering, unlike competitors that they believe are either equipment sellers or network operators. With an owner operator model, Blink benefits from the ongoing utilization of their assets. Their revenues are derived from charging service revenues, network fees, and ride sharing services. In fiscal year 2021 revenues reached $20.9 million, more than a threefold increase over 2020. The company is executing an international expansion, with offices in Europe, Israel and India.
The short answer is a cohesive strategy. Norway and China have shown the benefits of this, and the EU is getting itself together now, while the US remains behind. Most countries have a future ICE ban in place, but they lack a similar policy for charging infrastructure. While the ICE ban provides a broad market signal, more is needed.
Here, we identify six key measures that could help to ensure an efficient rollout of EV charging infrastructure. As discussed, strategies will vary by region, so an attempt to account and explain for situational intricacies is offered.
Support local operating bodies
Not the most eye-catching recommendation but, it turns out, an absolute imperative. Local authorities play a crucial part in the rollout of public EV charging networks, holding much of the required land and offering (or not) permits for its use. Local authorities, often understaffed and underfunded, currently lack dedicated teams with sufficient knowledge to adequately perform this crucial gatekeeping role. This can result in lengthy permitting times, poor regulatory structures and a lack of understanding of maintenance requirements.
Similarly important is the role of distribution network operators (DSOs) who control the delivery of power to end users. Like many parts of local government, DSOs often lack specific teams and skills. The role of the DSO becomes doubly important as renewable energy assets are permitted to feed excess energy back into the grid to support stability and provide extra income for communities, as was made possible in the UK by the National Grid’s recent update to the GB Grid Code.
It is crucial that both of these bodies receive the support they need, in terms of finances, people and training. This will unlock what are relatively unnecessary but very real barriers to rollout.
Focus on interoperability
The current lack of interoperability in EV charging is well documented. Perhaps the most frustrating barrier to EV uptake, turning up to find an incompatible charging system appears to be an only too common tale told by drivers. A 2021 report by consulting firm BCG blamed the phenomenon on the ‘early stage open market chaos’ induced by governments chasing rapid EV adoption without the necessary policy measures to ensure an accompanying roll out of charging infrastructure. As a result of this, we find ourselves in a situation with upwards of five different connector types and few attempts to produce widely available adaptors.
Connector types are not the only interoperability concern. In 2020, 63% of EV drivers in the EU needed multiple charging membership cards in order to comfortably refuel their vehicle. This incompatibility of payment systems places yet another obstacle in front of your well-meaning EV convert. To make matters worse, there is a notable lack of transparency over which stations support which payment methods and which connectors. Governments must put regulation in place, as the EU has now done, to improve the interoperability of systems. Multiple siloed and individually insufficient networks will lead to sub-optimal outcomes for all stakeholders, including the charging companies themselves.
Control the financial logic in the early stages
It is clear that there is a financing gap in the early stages of rollout, when concerns over scale create a chicken and egg style deadlock. It is vital, therefore, that governments can manipulate the financial logic in order to move forward. There are a number of options available to policymakers, from tariffs to subsidies and mandates to standards, but they must be used carefully.
An important example here is deciding who pays for localised grid upgrades, which will be needed to support charging capacity in some areas. There is a risk that first movers will bear this cost burden. In China, the government employs strict cost sharing policies which can rope in local authorities, utility operators and charging companies to surmount the issue.
A similar example is utility rates, which can be prohibitive for early-stage charging providers. To again use China as an example, the government reformed utility tariffs to allow charging companies to pay industrial rather than commercial rates. Similarly, they capped service provider fees so that charging never became prohibitively expensive for drivers. Whilst these specific solutions may not work or be desired in all national contexts, they show the sort of action needed to overcome early barriers.
Low hanging fruit can foster scale
Scale is needed in order to break through barriers of cost. Given this, some commentators have argued that it is worth focusing on easy wins first, driving prices down for more complex or expensive installations such as rural high-speed chargers. A perfect example is company fleets, which in the UK make up 60% of car sales. If fleet owners can be encouraged to electrify their vehicles, they will a) be incentivised to install their own charging network and b) create a customer base to encourage charging infrastructure companies to commit capital to installation.
Some studies have highlighted the potential for EV ownership to grow based just off home and work charging. Indeed, early movers are usually those with more disposable income and capacity to employ home charging. Incentivising them to use this capacity will in turn encourage public charging operators and pave the way for less advantaged households to smoothly adopt the technology.
Workplace charging could be crucial, as companies are more likely to have the financial capacity to install underutilised early-stage chargers than charging start-ups, local authorities or individuals. A crucial issue here, and one that is to be addressed, is the looming spectre of range anxiety. While a focus on home and work charging might seem rational in theory, individuals often have outsized concerns about being stranded, and these can be a major obstruction in practice.
Produce a detailed and wide-reaching strategy
This is perhaps the key recommendation, and one that supports all the rest. While the private sector will be vital in delivering the capital, the technology and the efficiency required for a sufficiently quick charger rollout, this is one sphere where top-down coordination from national governments is simply essential. There are a variety of stakeholders involved, which in the US utility market alone ranges from investor-owned utilities through public utility commissions, municipal entities and rural electric co-ops. The full number of stakeholders in an EV charging network is vast, from service station owners to data providers. In order to overcome the barriers outlined, the time, place and scale at which each plays their part must be calculated and communicated, ideally in a comprehensive charging roadmap.
Coordination is key
This detailed strategy or roadmap must form the basis of a concerted effort to coordinate the various different stakeholders. This must be done in a transparent and accountable way that allows for a dynamic response to unexpected events. There has been a debate in the UK after the SMMT called for a watchdog type regulator which it termed ‘Ofcharge’ to monitor and coordinate progress. The boss of UK charging specialist Pod Point reacted negatively to the suggestion, arguing that the private sector could keep up with charging demand alone.
Leaving aside the fact that the majority of evidence would suggest that this is a misleading claim, the debate in fact simply demonstrates in itself why some form of coordination is needed, whether that is in the form of a new ‘Ofcharge’ style body or simply greater government oversight. The majority of commentators suggest that public-private partnerships are needed, and discourse between the two parties is thus a vital ingredient of a successful rollout. Forums to facilitate this will be crucial.
The answer, frustratingly, is that it depends. The suggestions above are broad themes, but their specific form will vary greatly between contexts. While in some areas, an EV market evolution might be possible without any investment in public charging infrastructure, in other more densely populated areas, public charging becomes essential. In the former scenario, which one study argued was the case for much of Germany, chargers are not a significant barrier to EV uptake, as installing home or work charging is often relatively affordable for the population and therefore makes economic sense for the home or workplace owner. In the latter, public charging infrastructure is the overwhelming barrier.
Similarly, it is worth considering the different temporal stages of the charging infrastructure rollout. In the early stages, research finds that range anxiety, effectively the fear of being stranded, plays an outsized role in the minds of prospective EV adopters (the extent of this will of course vary between socio-geographic contexts). This means that coverage is especially important at first. Once sufficient coverage is reached, then building capacity in strategic locations can become the focus. Charging infrastructure arguably holds back EV rollout more during the coverage stage than it does during the capacity stage.
The crucial point throughout this debate is that strong leadership is required; leadership which takes into detailed account the specific circumstances under scrutiny, and the needs and capabilities of the myriad stakeholders involved in those circumstances. This leadership can come from private companies with some public sector coordination, but it is most likely, and most effectively, going to come from a coordinated government plan. Countries are increasingly waking up to the reality that they have potentially tried to subsidise the cart before the horse (EVs without charging infrastructure), and recent rhetoric from both President Biden and leaders of the EU suggests that they might soon be following China and Norway’s lead in this department. We will leave you with this very handy schematic from BCG which outlines how the process might look going forward. As Biden looks to salvage the climate aspects of his Build Back Better bill and the EU accelerates its transition to renewable energy, we might very soon have forgotten all about chickens and eggs.
BCG – The Four Stages of EV Charging Market Development
