Navigant Research Blog

Leasing EV Chargers and Profiting

John Gartner — July 10, 2014

There are about as many business models for operating electric vehicle (EV) charging stations as there are flavors of Baskin-Robbins ice cream, but so far, none of them have been clearly profitable.  While worldwide sales of plug-in electric vehicles (PEVs) have grown to more than 12,000 monthly, in most locations today, there isn’t enough traffic for EV charging stations to directly pay back their cost within 3 years, which is a typical required return on investment.

Several hardware companies are trying to lower the cost of the equipment, which could reduce the payback period.  In the United Kingdom, electric vehicle supply equipment (EVSE) company POD Point is now leasing charging stations to lower the upfront cost.  For approximately £50 ($85) per month installed, POD Point will provide a commercial charger, which the company says requires just two charging sessions per day to be profitable.  Leasing can be a viable option for companies looking for an easy way to enter the market, and the leasing company has a vested interest in making sure that the stations remain operational.

Dig It

For companies that prefer to purchase the hardware outright, ClipperCreek recently began to offer a commercial charger for just $395 before installation costs.  A pay-by-mobile phone system from Liberty Access Technologies that manages up to 10 charging stations and enables fees to be collected can be added on.

The cost of installation, which can require trenching, running conduit curbside, and upgraded power delivery to the location, remains the Achilles’ heel of profitable EV charging, and unfortunately, there’s little leeway in reducing the contractor and cabling fees.

Automakers are getting involved to lower the cost and pain of EV charging.  Tesla bundles the costs of accessing its SuperCharger network with the vehicle purchase price, while Nissan is paying for the first 2 years of charging a LEAF with its recently announced No Charge to Charge program.  Nissan has teamed up with AeroVironment, NRG, and the Car Charging Group on the EZ-Charge program, which gives EV owners a single payment card for accessing chargers from these EVSE providers.  EV charging company ChargePoint was supposed to work with EZ-Charge too, but backed out of the agreement.

In Japan, Nissan has joined with Toyota, Honda, and Mitsubishi to form Nippon Charge Service, an EV charging company that will provide incentives for companies to offer commercial EV charging at retail outlets.

Lattes Not Included

As detailed in Navigant Research’s Electric Vehicle Charging Equipment report, to be profitable today, most commercial EV charging stations need to bundle the cost of charging with some other service or fee structure.  These include combining EV charging with conventional parking fees, valet service at a hotel, or offering subscription services that combine home and public charging (a la the NRG eVgo network).  Startup Volta in Hawaii and Juice Bar have taken another approach by using advertising revenue to reduce the cost of a charging station, a growing trend that is likely to increase in popularity.

There will come a day soon, however, when EV penetration will be sufficient in some regions to make pay-as-you-go EV charging services profitable.  Gas prices will likely continue to rise (gasoline in the United States  is up $0.16 from last year at this time, according to AAA) and EV charging service providers will have more flexibility in pricing, since electricity as a fuel will increasingly be a better deal ‑ making profitability easier to attain.

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