Navigant Research Blog

Fast EV Chargers: Still Seeking a Market

— January 16, 2015

DC charging stations provide a significant benefit to electric vehicle (EV) drivers by allowing them to recharge in 30-60 minutes.  But while the market for DC chargers is growing, it is doing so at a relatively slow pace, thanks to the cost and complexity of deploying the chargers. A new report by North Carolina-based firm Advanced Energy on its DC fast charging deployment coordination project describes how the company found five hosts to deploy DC fast charging stations, provided for free of charge by Advanced Energy.  The report serves as a useful primer on EV charger installation generally and fast charging specifically.  It also gives a sense of how the public charging infrastructure market, while continuing to grow in key markets, is still in an early adopter phase that requires infrastructure companies to spend significant resources educating potential customers and guiding them through the planning and installation of EV charging.

Advanced Energy launched this initiative to deploy up to 10 DC fast charging stations for public use in North Carolina in March 2013.  Sixteen host sites applied for the equipment, with five ultimately installing it.  The site selection process highlights the practical considerations that must be taken into account by businesses interested in offering DC charging.  In this program, host sites are responsible for both installation and operational costs.  With installation costs expected to range from $20,000 – $60,000, a free charger becomes much more expensive.  Not surprisingly, these costs were two of the top factors that prevented some applicants from deploying stations.

The Cost of Power

Installation is also a barrier for Level 2 commercial charging, as the cost of trenching or boring from the charger site to the electrical breaker box are significant for any type of charger, Level 2 or DC.  Limiting the distance from the circuit breaker to the charger is essential to minimize installation costs, but it’s not the only consideration.  The site also has to be one where a DC charger, with its large footprint, can fit without reducing the parking space.  The report also recommends that the chargers be placed away from other infrastructure and nearby trees.  And of course the spot must be readily accessible by drivers.

In addition, the DC charger’s power requirement is a major cost factor.  The chargers use three-phase 240V or 480V input; if the site is not already equipped for this, it is a significant added expense.  Then there is the issue of ongoing power demand.  Thirty-kilowatt (kW) and 40 kW DC chargers run the risk of triggering demand charges for customers if they exceed a certain level under their utility rate agreement.

Successful But Unprofitable

The good news is, the sites that installed chargers are seeing rapidly increased utilization.  Two spots — a large retail outlet and a municipal center – reported around 500 sessions combined in the third quarter of 2014, up from 350 over the previous two quarters.  Energy demand per session has also risen.  Note that the stations are currently free to use; nevertheless, given that this is very early in the deployment of these stations, and there are fewer than 3,100 PEVs in all of North Carolina.  The success of these DC chargers provides evidence that, if you install them, drivers will come.

This conclusion is also supported by the experience of the first fast charger deployed on the Chargepoint network. The 25 kW Fuji fast charger, operated by charging services company Evoasis, was installed at a Marriott in San Juan Capistrano, roughly halfway between San Diego and Los Angeles. After 18 months, Chargepoint reported that the station had delivered 2,900 charging sessions.  While the station was free for the first few months, Evoasis began charging $10-15/hour in early 2013. Usage remained steady and Chargepoint reports that the station generated $10,000 in revenue over its first 18 months.

However, the 250 sessions a quarter reported for the North Carolina stations is less likely to make DC charging adoption look like a profitable enterprise for the near-term, given the expected cost of $30,000-$60,000 to purchase and install.  At this stage of the EV market, DC charging will likely require either innovative financing options – perhaps leasing to own or financing with no interest; offsetting incentives, either from government or programs such as this; or alternative revenue models like advertising.

 

For-Fee EV Charging Meets Motorist Resistance

— January 13, 2015

Plug-in electric vehicle (PEV) drivers are increasingly being asked to pay for the use of public charging stations.  At the same time, charging network operators continue to explore ways to make public charging profitable – although this is not happening without some controversy.  And a few network operators are using innovative schemes to try to maintain free access to public charging.  Meanwhile, automakers are taking matters into their own hands and inserting themselves further into the charging market.  It all makes for an unpredictable market, with no clear business model having yet emerged as the most viable.  These trends are explored in Navigant Research’s upcoming report, Electric Vehicle Charging Services.  This blog examines the issue of “charging for charging.”

Free No More  

Many public charging stations began life as a free service – often after having been supported by government funding.  This was the case with many of the chargers deployed on the Blink network through the U.S.  Department of Energy’s EV Project, for example.  This model would appear to be unsustainable given the cost of maintenance and upkeep, networking fees, and electricity.  And certainly, as charging stations are deployed without government support, businesses need to recoup the cost of the equipment – probably between $3,000 and $6,000 per station – and the installation, which can easily double the upfront cost to the site host.

However, the switch to for-fee charging is coming as an unpleasant surprise to some PEV drivers.  For example, in the United Kingdom, EV charger company Chargemaster sparked a backlash when it launched a new tariff scheme for its POLAR network of public stations in April 2014.   Network subscribers have two options, each of which entails paying a set membership fee and additional fees based on usage.  The usage fees are based on time, not kilowatt-hours (kWh) used, as is typical for markets where regulations prevent EV networks from charging for electricity.  PEV drivers in the United Kingdom protested that the fees were too much, too soon for the nascent U.K. PEV market.  They also complained that charging based on time spent charging, rather than electricity, was unfair given that different PEVs receive different levels of charge.

Fair’s Fair, Maybe

In the United States, moving to a per-kWh charge has also created controversy.  U.S. EV charging company Car Charging Group has switched some stations on its Blink network to a per-kWh fee in states that have passed regulations permitting charging companies to bill for electricity consumed.  Some PEV drivers have complained that these new fees represent a significant price increase.  Car Charging Group has noted that the per-kWh scheme is fairer than charging on the basis of time spent charging.

These two examples show the challenges that public charging continues to face as it strives to become a revenue-generating business.  Some of this is temporary; over time, the market will adjust to the norm of fee-based charging services.  But PEV drivers continue to have a low threshold for what they’re willing to pay for Level 2 charging (fast charging is a different story).  The outcome of this struggle could help determine the future of the electric vehicle market.

 

New Momentum for Fuel Cell Vehicles

— December 15, 2014

Somewhat unexpectedly, fuel cell cars were in the spotlight in November, with Toyota and Honda each unveiling their fuel cell vehicles (FCVs) in Tokyo and several FCVs displayed at the Los Angeles Auto Show.   The media responses ranged from skeptical interest to disbelief that FCVs will ever become a reality.  So let’s look at what happened and what it says about where FCVs are going.

The biggest announcement was Toyota’s presentation of the Mirai, a four-seat fuel cell coupe that will be available to Japanese consumers in early 2015 and later in the year in the United States.  Although Hyundai is first to market with a production fuel cell car, Toyota generates the most excitement, mainly because the company is assigned almost magical powers to create a market for new clean technology thanks to its launch of, and continued dominance of, the hybrid vehicle market.  Toyota is clearly swimming against the tide on zero emissions technology by going with fuel cells instead of batteries, and the company’s moves attract attention.

5 Minutes or Less

Toyota’s announcements were the most positive of the recent announcements.  I’ve said before that two remaining hurdles for the fuel cell car market come down to cost (of the car) and infrastructure, as the technology has largely been proven.  Toyota demonstrated this with the Mirai, which will have a 300-mile range and will refuel in under 5 minutes.  While Audi has said it is going the plug-in hybrid fuel cell route because a pure fuel cell car would be underpowered at just 130 horsepower (hp), the Mirai will have 153 hp, in line with Toyota’s conventional vehicle lineup.  Toyota announced that the sticker price for the Mirai in the United States will be around $57,000.  When tax credits are added in, the price will drop below $50,000.  That’s still a high-priced car, but at this price point, it’s at least competitive with the high end of battery vehicles.

Toyota also said that it will support infrastructure investment in the northeastern United States.  The company is already investing in hydrogen station deployment in California through California hydrogen infrastructure startup FirstElement.  While this move can be seen as simply supporting the introduction of zero emissions vehicles (ZEVs) in the Northeast states that have adopted the ZEV mandate, it’s the first sign of real progress on U.S. infrastructure buildout outside of California.

Full Speed Ahead, Slowly

Honda’s news was more mixed.  Honda unveiled a five-seater fuel cell concept car – a positive step in showing that FCVs won’t have to start small like battery vehicles did.  In addition, Honda joined Toyota in supporting FirstElement in California through a letter of intent to invest $13.8 million.  But the company took a step back by announcing that it would not release its first commercial FCV offering until 2016.  Moreover, Honda’s president, Takanobu Ito, said that his vision was of FCVs in significant numbers on the road in 30 years.

At the Los Angeles Auto Show, other OEMs that have largely stayed out of the fuel cell development path had concept vehicles on display.  The Volkswagen Group showed a hydrogen Golf and a plug-in A7 e-tron for Audi; both are still concepts, so this looks more like hedging against future need for a FCV once Toyota, Honda, and Hyundai have tested the waters.

So progress continues on the two major challenges for FCVs, but it continues to be slow.  The price points are the most positive development, and may leave hydrogen infrastructure as the final obstacle for fuel cell cars.

 

Utilities Could Accelerate the E-Truck Market

— December 9, 2014

In November, a group of 70 U.S. utilities announced a major commitment to buying plug-in vehicles (PEVs), an initiative that could have a major impact on the plug-in truck market in the United States.  At a White House ceremony, a group of investor-owned utility executives committed to spending 5% of their annual fleet budgets on PEVs.  This reportedly will total around $50 million annually spent on PEVs.

It’s no surprise that utilities support the use of PEVs in their fleets, since it allows them to shift fuel budgets from petroleum to their own power.  But the reality of utility adoption of PEVs is that, while a handful of very forward-looking utilities, such as Pacific Gas & Electric and Florida Power & Light, have been fairly aggressive about integrating PEVs into their fleets, many others have tried one or two or have been looking to see the results of trials from the first movers.

Trucks, Not Cars

With this joint commitment, utilities can have a much bigger impact on the U.S. market for PEVs. But the best way to spend the money to really move the market for PEVs forward will be to spend it on trucks, not on passenger cars.  Passenger cars offer more bang for the buck, and create fewer headaches since passenger car PEVs have already been proven in the consumer market.  But for that reason, there is considerably less need for utility purchases to push the market.  $50 million would buy around 1,700 Nissan LEAFs, for example.  That is less than 2.0% of the total PEVs that Navigant Research projects to be sold in the United States in 2014 in its report, Electric Vehicle Market Forecasts.

If utilities invest in electric trucks, they could have a much bigger impact.  Plug-in trucks are still in the pilot, demonstration or very early commercial stage, as discussed in Navigant Research’s report, Hybrid and Electric Trucks.  This market suffers from low overall volumes and a splintered market, with many small niches to fill, including urban delivery vans, bucket trucks, service vehicles, and suburban or long-distance delivery.  One reason so many e-truck companies come and go is the challenge of achieving sufficient volume to bring down costs through economies of scale.  If utilities team up to place larger orders for plug-in trucks, they can have a real impact on the market.

Market Maker

For example, $50 million could buy around 250 plug-in bucket trucks with electric power takeoff, one of the more promising applications for plug-in trucks.  While that number may seem small, companies targeting this space are currently seeing orders in the tens – and these are still largely supported by government funding.  Whatever the application, a combined effort to place larger orders for plug-in trucks could have a major impact on this still-struggling market – and  could pay off for utilities that will benefit from using more fuel efficient trucks should this market succeed.

 

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