Broken Business Model of Public Charging Hinders EV Adoption

Broken Business Model of Public Charging Hinders EV Adoption

The successful transition to electric vehicles (EVs) hinges on resolving the dysfunctional public charging infrastructure, argues David Fickling for Bloomberg Opinion. Despite the rapid shift towards battery-powered fleets, recent setbacks, such as Volvo’s reduced commitment to full-electric vehicles and job cuts at ChargePoint Holdings, highlight underlying challenges.

China’s Charging Infrastructure Leads the Way

China’s dominance in the global EV market, with 70% of the world’s public charging stations and 60% of EV sales, underscores the significance of a robust charging network. The popularity of plug-in hybrid vehicles (PHEVs), which retain gasoline engines alongside batteries, indicates consumer demand for electrified transport with a gasoline backup. However, to eliminate this concern, the broken business model of public charging must be addressed.

High Costs of DC Fast Chargers

DC fast chargers, capable of recharging EVs within an hour, are essential for the viability of a service-station-like electric refueling model. However, these chargers are substantially more expensive and intricate than home or workplace chargers. Their high power output necessitates cooling systems, cable trenching, transformer installations, and costly surveys. In California, a 350-kilowatt DC fast charger can cost nearly US$700,000.

Government Underestimates Investment Needs

Governments have significantly underestimated the financial burden associated with deploying a comprehensive fast charging network. A study estimated that rolling out 500,000 stations under the US Inflation Reduction Act would require US$74 billion in DC chargers, far exceeding the allocated funding. Operators face further challenges in competing against cheaper electricity from workplace and home chargers.

Convenience Stores and Loss-Leadership

The existing fuel retail industry provides a roadmap for the future of fast charging. To entice customers, retailers have been actively setting up charging stations, with Carrefour planning 5,000 and Walmart targeting 10,000 by 2030. The most sustainable model is likely to involve using fast charging as a loss-leader to attract shoppers and generate revenue from other merchandise.

Seeking Profitability

While none of the listed charging networks are currently profitable, operators are experimenting with various models. The oil and gas industry serves as an example, having built its US$4.2 trillion enterprise on the principle of loss-leading fuel sales to generate profits from other products. The challenge lies in finding the right balance between attracting EV owners and offering profitable services.

Pathways to Success

Despite the challenges, the world has successfully addressed fuel retail issues in the past. Governments and businesses can collaborate to create a comprehensive and sustainable charging network. Rebates and incentives can support the development of the infrastructure, while partnerships with retailers can offer additional revenue streams.

Resolving the Charging Challenge

A reliable public charging network is essential for widespread EV adoption. By addressing the broken business model and leveraging the experience of the fuel retail industry, governments and businesses can pave the way for the successful transition to electrified transportation.