No Match Found
As electric vehicle adoption in the US rises, so, too, will the need for an expanded public charging infrastructure to support that adoption. Indeed, a recent PwC analysis estimates that there will be 27 million electric vehicles (EVs) on the road in the US by 2030 (up from about three million currently, or about 1% of registered vehicles), with the number of charge points climbing to 35 million from about four million over the same period (including public, semi-private, private fleet, private residential and private mobile cable chargers). While the $7.5 billion allocated for EV charging in the 2021 Infrastructure Investment and Jobs Act could double the number of public chargers to more than 220,000, according to a PwC analysis, the bulk of a national charging network will likely be developed through private investment and supported by additional municipal and state public sector incentives.
The verdict, however, is still out on precisely what a national public EV-charging rollout could look like and how it will mature over the next decade and beyond. What could be the most viable business models? Who could be the dominant players? Which partnerships could be forged?
While the need for a charging network is abundantly clear, it is important that all players entering, or planning to enter, the space will need to create a carefully considered and robust strategy. This is especially true given the numerous operational challenges: for instance, identifying the right charging integration requirements (i.e., hardware, utility/grid, original equipment manufacturers (OEM) partnerships, as well as integration of grid, driver, IT/network and the cloud) that best align with a given EV-charging business model. There are also challenging economics which must be considered: which value pools, for example, are being tapped to yield the highest potential for profitability and return on investment?
PwC estimates that the EV supply equipment (EVSE) market will hit $100 billion by 2040. CPOs – public EV fast-charging networks such as EVgo, Electrify America, Tesla, Rivian and GM Energy that install, operate or maintain charging stations – are forecast to account for 65% of that market, followed by hardware makers (20%), installation services (10%) and software-only developers (5%), as described in a recent PwC analysis. So, CPOs will likely be at the vanguard of rolling out a viable, coast-to-coast national charging network.
Some power utilities, too, are very well positioned to build out networks for their territories especially since, as producers of electricity, they are in the position to carry out a vertically integrated business model. However, the prospect of some utilities potentially dominating the market has attracted some controversy. At issue is whether it is in the public interest for public utilities to potentially control the charging market and thus compete head-to-head with private-sector entrants.
A mosaic of private and public players are already jockeying to enter the evolving EV-charging marketplace, with some players being particularly well-placed to put a stake in the ground.
Filling stations and rest stops along the nation’s most highly trafficked corridors (and in cities and suburbs), for instance, are prime candidates to offer EV charging alongside their gas and diesel pumps. With more than 145,000 fueling stations in the US, there is a turnkey opportunity for stations to accommodate both EVs and internal combustion vehicles. This opportunity is already bearing fruit, with owners of travel stops along interstate highways partnering with CPOs as well as automakers to install, maintain and operate fast-charging stations.
New bolt-on business that can generate revenue streams through EV charging, data partnerships, advertising and increased ancillary sales. Can also help to meet environmental, social and governance (ESG) and decarbonization targets as well as enhance customer loyalty.
Places where EV owners are likely to park for reasons other than simply charging up are also good candidates, including hotels/motels, office buildings, retailers, multi-unit residential buildings, malls, etc. We expect more residential and commercial real estate owners and developers to build EV charging into their properties.
Provides convenience for guests and patrons, and can generate new revenue streams through EV charging, data partnerships, advertising and increased ancillary sales. Can also help to meet ESG and decarbonization targets as well as enhance customer loyalty. Provides convenience for guests, adds revenue stream, improves environmental, social and governance (ESG)-driven brand.
Public and private fleets (such as the US Postal Service and private logistics and delivery companies), too, are building out charging infrastructure to power their increasingly alternative-fuel fleets. For example, UPS now has 1,000 electric and plug-in electric vehicles (and has committed to buy 10,000 more) as part of a plan to have alternative fuel account for 40% of its ground operations by 2025.1 The company also recently unveiled a plan to power its electric fleet with off-grid, solar-powered charging stations.2 Amazon announced it has ordered 100,000 electric Rivian trucks, but it is unclear whether the entirety of that order will be fulfilled by the end of the decade.3 Meanwhile, the US Postal Service announced that 50% of 165,000 new delivery trucks would be electric.4
Helps fleet owners generate new revenue streams through EV charging, data partnerships and advertising and also help to meet ESG and decarbonization targets as well as enhance customer loyalty.
Surely, there’s no one path to establish a foothold or expand in the fledgling EV charging sector. And, looking ahead, we expect to see more types of entrants – and more business models – emerge. As previously mentioned, the biggest opportunities lie in the CPO segment.
Here are three business models to consider for those businesses best positioned to follow them (i.e., owners of businesses and land that could be prime locations for charging up).
Position your business to achieve speed-to-market in the following areas:
1. “Electrifying our futures”, UPS company website, May 23, 2022.
2. “UPS and PD World delivering world firsts”, UPS company website, October 4, 2021.
3. “Amazon wants 100,000 electric vans. Can Rivian deliver?” newyorktimes.com, July 21, 2022.
4. “Postal service will make half of its new mail trucks electric,” caranddriver.com, July 21, 2022.
Principal, Strategy& US
Director, PwC US