Navigate the Charge: Analysing the EV Infrastructure Market

As the world tries to reduce carbon emissions, many citizens are looking to do their part by turning to electric vehicles. Sales have increased drastically in the last years. In 2022 alone, more than 10 million EVs were sold, making the EV market grow by 35 % and to share 14 % of the total car industry sales. But as more and more EVs hit the road, there are challenges many countries are facing which is the lack and sometimes inefficiency of the charging infrastructure. So there's infrastructure that needs built and rolled out so that people can access charging and that's important and that's related to their willingness to go with an electric model if they are in any doubt that they can access charging stations. It's reasonably priced that the charging infrastructure actually works that's not out of use. or that there's not seven people standing in front of them to charge. These are all interrelated issues. So we have to look at building out the infrastructure and building demand for buying. And that's an important element. We've also got some other trends towards what used to be called low emission zones. And now we're going to ultra low emission zones, which are sort of a pushing. In the EU, there is a lot of pressure coming from policymakers both to turn to electrification and to create infrastructure. The bloc recently approved the Fit for 55 package in which they ruled that Europe's main roads will have to have fast charging stations every 60km, which is set to ease driver concerns about where to recharge and make it more reliable, like petrol stations. There is, however, still the issue of urban settings being able to charge anywhere by booking a space. So, with the challenges, the question is, who will deploy the infrastructure? Public entities like cities are taking an important role in the rollout, but one key player is and will be leading the way. We have the massive investment that we're doing across the European Union, but we're yet to see the fruits of that. You know, the money's been allocated, it's been approved, you know, the commission, it's money, and we'll see the fruits of that coming in the next two years. But large petroleum providers, they've been diversifying. away. And that's a sign when you've got people whose bread and butter income, their dividends come from oil and petroleum, going after and snapping up small companies with great potential and pumping serious amounts of money into them. In the UK, for example, we've seen BP buying out many EV charging companies in these last years, like Chargemaster, which was at the time the country's largest EV charging company. Their electric charge... Business charging business BP Pulse along with the EV network recently opened the UK's biggest public charging hub in Birmingham with a capacity to charge 180 EV simultaneously. Shell bought this year charging company Volta in the US for $169 million and in the past also acquired Ubertricity in the UK to increase its EV charging capabilities. In Spain we've seen energy giants cyberdrola and then they say and oil company Repsol account for most of the EV charging infrastructure. These kinds of companies, oil and energy, are dominating the market and the trend of them buying startups for their tech and software is what is driving it and there is a reason for that. So there's a heavy cost of entry, legislative, regulatory, standards and that means that we might have innovators around but I think the bulk of the heavy lifting is going to be done by large utility companies that know how to invest, that know how to work the system and have a heavy competence level to work with bureaucracy, funding, minimum price levels. It's not an easy environment. So while we do have innovators that are coming to contribute and are being bought or it's sort of a build buyer. partner approach that we're seeing from many of the large companies, both utilities and then from hydrocarbons. It's built by our partner. It's hard for the public sector and startups to compete with these companies who have $6 billion budgets for innovation each year. For example, EIT Urban Mobility, set by the European Commission and Union to drive innovation in Europe and bridge the gap between research, innovation and commercial success has affected us. 15 million euro budget. It can be difficult for cities to be able to invest in infrastructure as the return on investment when it comes to charges can be very low when we consider the money that has to be poured into it initially. A level 2 charging station is about $6 ,000 per port and that's if the electrical infrastructure doesn't require any adjustments. It can cost anywhere between $12 ,000 to $15 ,000 to upgrade the electrical conduits. There are however ground from the EU to encourage the rollout like the project we covered in Valencia where the city have deployed chargers on streetlights thanks to EU funds if we look at the US to make it affordable and push cities to deploy chargers they developed at the National Electric Vehicle Infrastructure or NEVI a five billion dollar program created by the bipartisan infrastructure law to help states build out EV charging sites they also allocated 100 million dollars to repair and replace existing but not operational EV charging infrastructure. Grants were how the city of Joliet was able to recently deploy their first city -owned chargers. But really I think the driving force has been for us and I think many municipalities has been really incentives and the return on investment equation with that. So, the state and other organizations are making it. sort of practical and financially feasible for municipalities to install electrical vehicle charging stations via grants for the main portion. So our first two were installed through a 50 -50 grant program. We installed two for approximately $25 ,000. The match was up to $10 ,000 and the city gave $15 ,000. And so that's kind of what started it off. We then got comfortable about expanding the program and so when another grant came on we are now in the process of installing six more electrical vehicle charging stations throughout our city. In the U .S. many private companies like Target have deployed chargers as a way to attract customers so that they get the benefits from the customer spending money at their shops as they charge their EVs. Just like private companies did, Joe Yed had to look for ways for the chargers to make economics. But if you do, let's say, 100 percent grant, there's no cost to the city and your return on investment is phenomenal because every revenue you get is over zero cost of investment. That's why if we didn't have the grants, then I don't think that this would be very financially feasible. And I would agree that there is not much of a return on investment. We have the option of owning them or. working with a third party and having them own operate maintain them and here's really the big exciting thing about it we can get a residual income uh from that charging station and we don't have to own it manage it um operate it all we have to do is make sure that we are a pastor organization and what we're giving and what we're putting into the pot is we're giving access to the eighty percent subsidy to the practice Joliet has calculated that they'll only get a net benefit of $500 a year per charger so it will only be affordable and sort of profitable thanks to grants which is why the NEVI program was necessary to fill the gaps of private companies who will only invest heavily if profitable leaving many EV drivers in smaller cities without an infrastructure which is when the public sector needs to get involved as Gareth said though despite public entities part in the creation of EV infrastructure and many startups investing in it, it seems like the heavy lifting is set to be done by big oil and energy companies who can invest the money in buying out smaller tech companies and also in deploying the charges, making the safest bet for startups to look for partnerships with these companies.