The US electric vehicle charging market could grow nearly tenfold by 2030: How will we get there?
The race for electric vehicle (EV) adoption is heating up, backed by the tailwinds of consumer interest, massive buy-in by automakers and ramped-up government funding. Electric transportation got a jolt of support from the 2021 Infrastructure Investment and Jobs Act — which funds $7.5 billion in EV charging infrastructure. Most recently, the Inflation Reduction Act provided tax credits for both new and used electric passenger vehicles as well as for commercial vehicles, and California announced it will ban the sale of new internal combustion engine-powered vehicles by 2035.
The momentous push behind electrification of transportation begs crucial questions. How can the charging infrastructure be built at a pace to sufficiently support an expected acceleration of EV adoption? And, if it can, how — and where — will America juice up? And, what are the best entry points and strategies for businesses to enter the EV charging market to forge a winning strategy?
According to a PwC analysis, the EV charging market could — and will need to — grow nearly tenfold to satisfy the charging needs of an estimated 27 million EVs on the road by 2030. While building such a national charging network can be challenging and require numerous stakeholders and investments, it will be a necessary step to shape — and determine — the viability of a future of all-electric vehicular transport in the US.
Some highlights of our analysis include:
- The number of charge points in the US is poised to grow from about 4 million today to an estimated 35 million in 2030.
- The electric vehicle supply equipment (EVSE) market could grow from $7 billion today to $100 billion by 2040 at a 15% compound annual growth rate.
- The number of EVs in the US is estimated to hit 27 million by 2030 and 92 million by 2040, according to PwC’s analysis.
- The at-work and on-the-go EV charging segments are potentially the fastest growing through 2030.
Electric vehicle supply equipment: a $100 billion market by 2040, led by charge point operators, according to a PwC analysis
The four main value pools of the EVSE market include hardware, software, installers and charge point operators (CPOs). Of these, according to our analysis, CPOs (which build, operate and maintain EV charging stations) are estimated to account for the bulk of the market’s value from roughly half currently to 65% in 2040 (for revenues of about $65 billion). Meanwhile, hardware providers’ share of the sector’s total value pool is estimated to diminish over time, from 46% now to 35% in 2030 and 20% in 2040.
Key takeaways:
- EV infrastructure market is projected to grow to ~$100B by 2040
- Charge Point Operators (CPO) will generate most of the revenue among EVSE players through integrated turn-key solutions
- Bi-directional charging and advanced home energy systems will require advanced hardware solutions that will drive ~20B in hardware revenue
- Software is an enabler for CPO solutions, but software-only revenue will be a small portion of the market
Number of EV charge points poised to grow nearly tenfold through 2030…
The number of charge points in the US is forecast to rise from about 4 million currently to 35 million in 2030, according to a PwC analysis. We forecast that single-unit and multi-unit residential segments will account for about 80% of all charge points (22 million and 6 million, respectively) by 2030.
…to support a similar spike in EVs over that period
The accelerated expansion of the charging infrastructure will be needed to serve the needs of a new generation of EV owners. We forecast that the number of EVs in the US will climb a steep hockey-stick trajectory to 27 million by 2030 and 92 million by 2040. This compares to about 3 million EVs in 2022 (3% of all new car sales, or about 1% of car parc).
The EVSE market is coming of age
The proliferation of EVSE startups and the growth of the sector is signaling that we’re entering a period of a rapid maturation of the industry.
A few trends supporting this include:
- More than 20 EV charging startups in the EU and US have been acquired since 2021, several by major energy companies.
- Blink Charging has acquired four startups since 2020, including two in 2022, SemaConnect and Electric Blue, better known as EB Charging.
- At least five EV companies have gone public via special purpose acquisition companies (SPACs) since 2020, including ChargePoint. Larger cash coffers from initial public offerings (IPOs) give players dry powder to go after M&A targets.
Shifting segments: A shift from residential to work and on-the-go charging?
The fastest-growing charging segment is expected to be the at-work segment, set to grow from nearly zero percent of the entire market to about 17% (or about 6 million charge points) in 2030, according to our study. Apartment buildings (multi-unit residential) are forecast to be another fast-growing segment, rising from nearly nil currently to about 15% of all the market in 2025 and 17% in 2030. Such growth will likely hold important implications for companies as well as engineering and construction firms, which will likely be expected to build charging points into the design of new buildings (e.g., in parking lots or garages) — or retrofit that infrastructure in existing buildings.
Charging segments with various product requirements will meet personalized needs
The needs and hence product requirements vary significantly for each segment
Segment |
Needs |
Product requirement |
|---|---|---|
Residential single-unit |
Home charging (6-8 hours), connectivity features |
Level 2 (wall box, mobile cable charger) |
Residential multi-unit |
Intuitive to use, quick customer service, back-end charger management |
Level 2 (wall box, or pedestal hardwired charger, or 240V outlet for mobile cable charger) |
Workplace/Office |
Reliable and easy to use for employees |
Pedestal hardwired Level 2 charger (up to 9.6kW) |
Fleet |
Long outdoor life, robust back-end management with reasonable upfront costs or financing option, swift repair/maintenance |
Pedestal hardwired Level 2 charger (9.6kW or faster) |
Destination |
Direct use with integrated payments and reliable output |
Pedestal hardwired Level 2 charger (9.6kW or faster) |
Public parking |
Visible to customers, easy to access via app, and inexpensive to install |
Pedestal hardwired Level 2 or 3 charger (up to 50kW) |
On-the-go |
Consistent charging output, easy to pay, tidy cable management, and back-end charger management |
Pedestal hardwired Level 3 or 4 charger (150kW or faster) |
EV sellers, resellers to control single-home residential segment; installers to dominate all other segments
While we forecast that, by 2030, 70% of residential chargers (typically for single-family homes) will be sold (or bundled with a new car purchase) by EV sellers (i.e., original equipment manufacturer, dealership franchises), installers/integrators can be the most important channel building out charging infrastructure in all other segments. This is particularly the case in the on-the-go segment—installers/integrators are forecast to serve 80% of that market segment—followed by public parking and multi unit residential, with that channel controlling 45% of both market segments.
Support for EVs and charging gains traction
The 2021 Infrastructure Investment and Jobs Act funded $7.5 billion to support the buildout of a national public electric vehicle (EV) charging network, particularly along interstate highways. This funding was crucial to support President Joe Biden’s ambition of having EVs account for half of all car and truck sales by 2030. Building on that legislation, the $370 billion Inflation Reduction Act includes tax credits on selected EVs assembled in North America.
Meanwhile, numerous state and municipal governments are either investing directly in or subsidizing EV charging infrastructure development within their jurisdictions. Consider, for example, New York’s $21 million Central Hudson EV Make-Ready program, or California’s $7 million Bay Area Quality Management District’s Charge! Program which offset the costs of installing publicly available chargers for commercial EV vehicles. In many cases, though, these charging infrastructure networks are Level 2 roadside or parking lot solutions. Utilities, too, are moving into the EV charging space. PSE&G in New Jersey, for example, is one of many utilities offering credit to customers to offset charging station installation or upgrades.
Consumer sentiment surrounding EVs seems to be at a tipping point as well. More viable and convenient charging solutions will likely serve to allay the “range anxiety” many consumers now wrestle with. Despite their concerns over the ease of charging, especially on long trips, consumers are opening up to the prospect of purchasing EVs. A recent PwC survey found that roughly one in two car buyers considered buying an EV for their last car purchase, while just 5% did so, with charging being cited as one of their top concerns.
Challenges exist for all charging segments
Clearly, there exist challenges for each EV charging segment, many of which hinge on the economics of EV charging.
Here are some challenges for specific EV charging segments that will need to be addressed to remove barriers to full-fledged adoption of charging.
Residential single-unit
Possible challenges
Awareness. Not all homeowners fully understand what charging products and features are available and which is best for their needs and preferences.
Residential multi-unit
Possible challenges
Resident experience. Multiresidential building owners will need to ensure that there are enough chargers for all EV owners, and the number of chargers will need to expand as residents’ needs do.
Workplace
Possible challenges
Investment. For some employers, there may be high upfront costs benefitting relatively few employees, making the calculus of initial investments difficult to justify.
Fleets
Possible challenges
Optimization and upkeep. Fleet management with EV chargers may require greater management (vs. gas and diesel fueling) to ensure charger availability, avoiding vehicle downtime and coordination with duty cycles.
Destination
Possible challenges
High cost, limited monetization. With high hardware and installation costs, destination charging may mean, for some owners, that monetization opportunities could be limited in the short term.
Public parking
Possible challenges
Low ROI in the short term. High hardware and installation costs and potentially low usage and uptake, as well as construction and installation issues, particularly in high-density areas.
On-the-go
Possible challenges
Chicken-and-egg conundrum. Charge points will not be attractive investments unless they are utilized at a certain scale; yet, EV adoption may be blunted if range anxiety is not allayed, which can only happen by achieving that scale.
Value propositions across the charging infrastructure value chain
As the EVSE market matures over the next two decades, we expect key players in the market to mature — and capture returns on their investments — at varying rates. Here are some of our main takeaways on the prospects surrounding the value propositions of the principal players in the EVSE value chain.
Hardware developers and manufacturers. Many EVSE product developers are facing high upfront expenditures for research and development and manufacturing. While we see such costs as necessary to stay competitive and grow in the short term, we believe hardware players stand to increasingly benefit in the long term from growing demand for EVSE products and service and as they ramp up economies of scale.
Software products and services. Software players now generating revenue streams in the EVSE space are typically doing so via specialized solutions such as custom back-end and customer-facing needs. Expect margins to improve as fleet management solutions and large-scale enterprise back-end solutions are implemented for on-the-go ecosystems.
Installation services. Currently a lower-margin business, we expect this channel will scale rapidly as public charging infrastructure expands, especially as the governmental funding disburses. Installation businesses should reach a tipping point as rates of new installs diminish and are eclipsed by a rising demand for retrofitting older built environments.
Charge point operators (CPOs) Once EV adoption rates approach mainstream (e.g. exceeding 25% of parc) integrated CPOs have the potential to greatly improve their top and bottom lines from bundled offerings including EVSE financing, operation, maintenance and utility charging (the latter from on-the-go and destination chargers). Many CPO businesses are in a long-game mode — and are thus burdened by heavy capital expenditures and low utilization rates. It will likely be a challenging business model to execute. However, for those that continue to manage to grow, the effort could pay strong dividends when EV adoption in the US becomes mainstream and charge points necessarily become as, or more, ubiquitous than today’s gas pumps.
Entering or expanding in the EVSE market: keep your eye on the prize
As the EVSE market becomes increasingly dynamic and competitive, companies should get the following right to develop a winning value proposition and business strategy.
- Gain a deeper understanding of current customer needs and products & services requirements and how they could change.
- Identify the most appropriate business model (e.g., target customer segments, value pools, strategic partnerships) that best aligns with your capabilities (and your right-to-win).
- Consider whether your company can leverage your existing technologies and capabilities to grow organically in the EVSE market – or forge partnerships with companies that possess the attributes your company needs.
- Depending on the business you are in (e.g., on-the-go stations, hotels, retailers), be mindful that losing control of the customer experience to partners can introduce long-term risks.
- Be realistic about the challenging economics of the EVSE market. Depending on your business model, significant investment will likely be required and returns could be long-term. Companies entering the market, therefore, need to have a tolerance for risk, patience and cash flow to play the long game.
- Be vigilant about spotting the right potential acquisition targets, because the market will likely continue to consolidate. Companies looking to acquire targets will need to have sufficient cash reserves — or leverage — as well as the right integration capabilities to become a market leader in the EVSE infrastructure market.
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