EV charging infrastructure: Redefining the road ahead

08 March, 2021

Akshay Singh
Partner at Strategy&, PwC US
Hugh Le
Director at Strategy&, PwC US

Vehicle economics, EV-charging infrastructure, consumer behavior and government incentives are key drivers for transport electrification in the US.

Over the years, the electric vehicle (EV) has emerged as a leading indicator of society’s pivot to a more sustainable future. We estimate that EV adoption could reach 10% to 15% of the US fleet by 2030, with greater adoption occurring worldwide, particularly in Europe and China. 

But to get there, we’ll need better vehicle economics and a more robust charging infrastructure. The driver’s mindset will also need to change from “fill it up” to “plug it in as you work, rest or play.”

Electrify drivers. While they can save consumers money through lower fuel and maintenance costs, most EVs remain up to 20% more expensive than gasoline-powered engines due to high battery costs. That cost, however, is rapidly declining. We estimate that total cost of ownership (TCO) parity of EVs with internal combustion engine (ICE) vehicles could be achieved in about four to six years. That’s also when the US could see EV adoption reach 6% to 9% of the new vehicle market share in the US by 2025 and up to 12% to 15% by 2030, according to a PwC analysis.

Regulatory policies and product availability could further spur EV adoption. To persuade drivers to make the switch, California’s governor signed an order banning sales of new ICE vehicles in California by 2035, earmarking $1.5 billion to help consumers and businesses purchase EVs. Meanwhile, US automakers have announced plans to introduce more than 70 EV nameplates over the next seven years, creating a more competitive EV market. Some OEMs clearly see an all-electric future.

The charging network will look — and feel — different. To meet 2025/2030 EV growth projections and help overcome drivers’ “range anxiety,” the US will require significant investment in a charging station network. While slower, residential charging (Levels 1 and 2) will likely continue to comprise roughly 80% of all EV charging, faster on-the-go charging (Levels 3 and 4) will be critical to accommodate longer range drivers (e.g., business and vacation travelers). Consumers will probably have to pay up to four times as much for outside-of-home charging (depending on the utilization) than they pay at home to charge the vehicle.

PwC assessed the future of on-the-go charging station infrastructure (chargers at hotels, big-box retailers, or even at gas stations) and found that the economics of the on-the-go market will probably support fewer fast charging stations compared to mega gas stations with, say, 20 gas pumps. Our analysis indicates a minimum efficient scale at four to six chargers per station across Levels 2 to 4 types, assuming a strong utilization rate. Thus, it’s more economical to have two locations with six chargers than to have one site with 12.

Intelligent placement of chargers. Given these economics, the commercial charging network will not look like today’s gas station network. Instead, chargers will likely either be placed at destinations (shopping centers, hotels, cinemas, even stadiums) or off main highways alongside their older gas-pump cousins. While it’s hard to tell exactly what the charging network will look like, it’s certain that their intelligent placement, based on EV owners’ habits and needs, will dictate their overall success. The key (and still open) question is: Where will EV chargers be needed to best accommodate EV drivers — both for short and long trips? Only more robust and accurate research surrounding such habits and needs will help us answer this and to achieve the most efficient placement of chargers.  

Skin in the game. To tap into the on-the-go market, a broad range of players (automakers, governments, fleet managers, power utilities, real estate developers and commercial charging firms) are investing, with various business models taking shape (i.e., public-private partnerships). Whether a standalone charging station, a workplace host offering charging as an employee perk or a retail host utilizing EV charging to boost foot traffic, we envision cross-industry partnerships serving EV drivers on shorter trips. Plugging in on longer trips will also likely involve planning a desired experience (e.g., dining, shopping at a mall) during a charge-up. In the long run, we expect the EV-charging market to settle into four segments, identical to the retail gasoline market: convenience, price, loyalty and quality.

Incentivizing the future of charging. President Joe Biden announced measures to accelerate adoption with a plan to deploy 500,000 new public charging stations by 2030. Exactly how this will play out isn’t clear. However, political will at the federal, state and municipal levels will be critical to support a national public charging infrastructure build-out which will, in turn, support greater adoption of EVs.  

Helping to reduce costs for the commercial charging infrastructure via incentives such as tax credits is one key way federal, state and local governments can take a lead in reducing costs for consumers on the path to support a national EV charging build-out. In January 2020, the Alternative Fuel Infrastructure Tax Credit was retroactively reinstated. It provides businesses a 30% (up to $30,000) tax credit for EV charging stations installed and in service from 2018 through the end of 2021. Some state and municipal governments as well as utilities also offer tax credits, rebates and grants (for both homeowners and businesses) to support the growth of EV-charging investments.

Such initiatives to develop commercial EV-charging infrastructure are a great start, and take a page out of the playbook used to support the growth of renewable energy over the last decade. Making EV charging a viable and attractive investment will also do much to grow the nation’s electrification of its transportation.

Expanding such investment incentives will likely become evermore important, as both public and private sectors strive to ensure that the EV charging infrastructure keeps pace with vehicle adoption. And perhaps the federal government can do even more by, for example, raising the tax credit for charging development beyond 30% or offering guaranteed loans. And, as price parity with ICE vehicles approaches, government investment in the charging infrastructure may well become a much more pressing issue than providing incentives to purchase EVs.