Navigant Research Blog

EV Charging Companies Going Global

— April 5, 2017

Commercial EV charging companies are starting to go truly global, supported by major investments coming from the energy sector and automakers. These investments will see companies enter new markets with the potential to ramp up in volume. Since plug-in vehicle (PEV) sales started in 2010, the commercial charging market has been geographically compartmentalized, with few companies based in North America and Europe expanding outside their home region. This was especially true once the large multinationals like Siemens and Schneider Electric pulled back from the market, leaving it to the smaller startup companies that needed to tend carefully to their cash flow. However, large companies are returning to the charging market in anticipation of it being on the verge of a high growth period, and they are announcing their intention to become global players.

Gearing Up

Last year, RWE spun off and rebranded its renewables business, including EV charging, to innogy. It announced innogy would target the United States for its charging market, one of the biggest PEV markets with significant growth potential for infrastructure.

Then in March, ENGIE acquired EV-Box, which has one of the world’s largest charging networks. EV-Box ranked as a leader in the Navigant Research Leaderboard Report: EV Charging Network Companies last year on the strength of its market share, its multiple capabilities as a manufacturer and a software developer, and its relationships throughout key European markets.

The Navigant Research Leaderboard Grid

(Source: Navigant Research)

EV-Box has recently entered the competitive North American charging market with its charger offerings. Entering the North America market seemed ambitious, as the company was a startup with plenty of market to play in throughout Europe without crossing the ocean to tackle North America. However, having a global energy giant like ENGIE behind it could provide EV-Box with the support it needs to pursue its expansion efforts.

Developing New Products and Relationships

It still won’t be easy. Getting a foothold in a new market requires not only developing new products, but more importantly, also establishing the web of relationships needed to secure customers and installation sites. This is a time consuming and therefore expensive process, which is one reason the large multinationals—or companies backed by large multinationals—will have an advantage in this market over the smaller players in the long run. Multinationals looking to come back to the market as growth finally ramps up may find that the startups that have established significant market share and have very large public charging networks will be an easy route to establishing a beachhead. Even companies that have smaller installation bases but dominant market share in a particular country or subregion in Europe or North America could be attractive targets.

ENGIE and innogy may be the thin edge of the wedge in terms of energy companies wading into the charging market, but they are not the only companies with big pockets that are seeking charging company partners. ChargePoint, the leader in the North American charging market, secured $82 million in a funding round led by Daimler in March. The funding will support a stronger push into the European market for ChargePoint.

Maintaining a Long-Term Perspective

While all this activity is encouraging as a sign of confidence in the charging market, success in this market will still require a long-term perspective. There is significant growth, but it will still be years before charging is a well-established and high volume market. It is also a market that is still overly dependent on financial support for deployments, whether from interested stakeholders like the car companies or from governments, and growth will not be even across all the market segments of public, workplace, and private chargers. These dynamics do still favor the companies with sufficient funding to stay the course.

 

Realistic Goals, Measurable Outcomes Lead to Columbus Smart City Challenge Win

— July 21, 2016

Bangkok SkylineOhio won its first major victory of the year when LeBron James led the Cleveland Cavaliers to the state’s first major sports title in over 50 years. Soon after, the City of Columbus, Ohio was officially announced as the winner of the U.S. Department of Transportation’s (DOT) Smart City Challenge. The city is set to receive a total of $140 million, with combined contributions from the DOT ($40 million), Seattle-based company Vulcan ($10 million), and a group of local businesses called the Columbus Partnership ($90 million).

One of the keys to Columbus winning the competition and beating out the better-known technology centers of San Francisco, Austin, and Denver was the city’s ability to demonstrate that its plan would result in increasing poor residents’ access to new transportation options. The city has proposed numerous solutions in this area. A few of the key proposals were:

  • An autonomous vehicle program that would transport residents from the Linden neighborhood—which has 3 times more unemployment compared to the city average—to a nearby employment center.
  • The creation of transit cards for low-income populations to use for ride-hailing or carsharing services, with or without having smartphones or bank accounts.
  • The building of smart corridors through wireless technology, which enables a new bus rapid transit (BRT) system that is more safe and efficient for high numbers of users (it’s important note that Columbus is also the largest city in the United States to not offer rail service).

Several of these transport initiatives are also expected to be integrated with improved access to healthcare services to help address the high infant mortality rates in many of Columbus’ poorer neighborhoods.

Other components of Columbus’ transport plan include an increase in electric vehicle (EV) charging stations throughout the city, enhancing smart grid technology by using EVs as distributed energy storage devices, expanding the municipal EV fleet, and securing 50 of the city’s CEOs to personally commit to buying and driving EVs, as well as installing charging stations for their employees.

Additional Funding Sources Also Crucial

While a focus on increasing poor neighborhood access to reliable and affordable transportation options was vital to the final awarding of the Smart City Challenge competition to Columbus, the $90 million pledged by the Columbus Partnership (if the city was to be selected) also played a major role. Financing the development of smart city projects continues to be the most significant challenge in the market, as outlined in Navigant Research’s recently published Smart Cities report. The guaranteed added investment by the Columbus Partnership made the city a highly realistic option for successful implementation and more likely to achieve the outcomes that were highlighted in its final proposal.

 

Colorado Moves to Increase EV Adoption

— December 2, 2015

When it comes to supporting and selling plug-in electric vehicles (PEVs), California exceeds expectations. The state is expected to represent 48% of all PEV sales in the United States in 2015, and has far outspent any other state in supporting electric vehicles (EVs) while also creating a highly favorable regulatory environment. The recently enacted Senate Bill 350 is a legislative U-turn for the state, which went from preventing utilities from owning EV charging stations to requiring them to participate in and support EV charging.

Many states that want to clean their skies and reduce fuel imports envy California and are looking for ways to copy its success with EVs. Public and private sector organizations in northern Colorado are accelerating efforts to move the state from the middle of the pack toward becoming an EV leader.

In a recent study, the International Council on Clean Transportation (ICCT) evaluated 30 activities that states, cities, and utilities can do to support EVs. Denver is in the middle of the pack, ranking 13th out of the 25 cities evaluated by ICCT, while San Francisco ranked first. According to ICCT, Denver’s primary utility, Xcel Energy, is participating in two of the six recommended utility activities.

EV Promotion Actions

John Blog Chart - Nov 11(Source: International Council on Clean Transportation)

Denver ranks 11th among metropolitan statistical areas in Navigant Research’s PEV Index, which evaluates populations for the likelihood of purchasing PEVs according to a variety of demographic characteristics including age, education level, and economic factors. According to Navigant Research’s Electric Vehicle Geographic Forecasts report, nearly 45,000 PEVs will be in use in the Denver metro area by 2024, a tenfold increase from 2014. In addition, Colorado is expected to rank 13th among states in PEV sales as a percentage of new light duty vehicle sales in 2015, and PEVs are projected to reach 4% of new vehicle sales in 2024.

To make EV charging more readily available, non-profit Drive Electric Northern Colorado (DENC) has been encouraging organizations to join the U.S. Department of Energy’s Workplace Charging Challenge. According to Annie Freyschlag, deployment community associate at DENC, 17 employers have joined the Challenge initiative, adding that residents of northern Colorado are within 6 miles of an EV charging station at any given time.

Colorado has strong financial incentives to purchase PEVs and charging equipment that should help the state pass others in PEV adoption. The state offers up to $6,000 for a PEV purchase, which uniquely includes used PEVs brought in from other states, and the Charge Ahead Colorado program can reimburse up to 80% of the incremental cost of purchasing a PEV or EV charging equipment.

Groups within the state are currently lobbying the legislature to provide high-occupancy vehicle lane access to PEVs as a stress and time-reducing incentive. The Denver Metro Clean Cities Coalition, in partnership with the American Lung Association, also has several initiatives to encourage PEV adoption, including Project Fever.

To enable PEV owners to fill their batteries with clean power, Boulder, Adams, and Denver counties joined together in the fall of 2015 to facilitate discounts for rooftop solar and EV purchases. As reported by the Daily Camera, the Solar Benefits Colorado program offered homeowners an estimated 15% discount on solar rooftop systems and roughly $8,300 off the cost of a Nissan LEAF.

Freyschlag says the biggest barrier to EV adoption in Colorado continues to be lack of direct consumer experiences, as the majority of the public still have never driven a PEV. Also, most people do not think about the financial cost of owning and operating a vehicle over longer than a 3-5 year span.

 

Volkswagen Scandal Deflates Clean Diesel Image

— October 5, 2015

We finally have a more important scandal to discuss than air pressure in footballs. On September 18, the U.S. Environmental Protection Agency (EPA) laid out a case for a notice of violation against Volkswagen. The issue? Computer software within Volkswagen clean diesel vehicles that allows the cars to sense an emissions test and activate emissions controls. The vehicles then could easily pass stringent U.S. Tier 2, Bin 5 emissions standards. A Tier 2 vehicle must meet an average nitrogen oxide (NOx) emission slimit of 0.07 grams per mile. However, when the programmed vehicles were not under emissions testing, emissions controls were disabled and Volkswagen vehicles spewed up to 40 times that level of NOx emissions.

Immediate Impacts

In a matter of days, Volkswagen lost $17 billion in shareholder value as the company’s stock plummeted over 30%. Volkswagen recently became the largest car seller in the world, selling nearly 10 million vehicles globally in 2014. The automaker will face up to $18 billion in fines from the U.S. government and has also committed $7.3 billion toward recalling nearly 500,000 vehicles for the reprogramming necessary to comply with pollution standards. Volkswagen has also halted sales of affected 2015 models, and the EPA will not certify the company’s 2016 models.

While the U.S. market accounts for 6% of Volkswagen sales, the damage to the company’s environmentally responsible image is significant. Diesel vehicles account for over half of vehicle sales in Europe, and European government policies have made diesel fuels cheaper than gasoline. Emissions standards for diesels are also less strict in Europe compared to in the United States.

The U.S. Clean Diesel Market

Volkswagen TDIs represented nearly 30% of diesel sales in the U.S. market. Effective greenwashing campaigns by diesel automakers have created a reputation for diesel as a clean fuel source for our vehicles. Diesel has a higher energy density than fuel and diesel engines also operate more efficiently, so higher miles per gallon can be achieved. A clean image and a high fuel efficiency greatly increased the popularity of diesel models in the United States.

Whether arguing for or against diesel as a clean fuel source, it is important to discuss the emissions contents of diesel versus traditional fuel. Traditional fuel-burning vehicles give off higher yields of carbon monoxide and hydrocarbon emissions than diesel vehicles. These emissions are minimized by improved catalytic converter designs. Diesel vehicles emit more NOx, which in turn creates smog (ozone). The EPA is likely to take final action on stronger smog standards before the end of 2015. While diesel automakers utilize a variety of treatment systems to reduce NOx emissions, the Volkswagen scandal has significantly squashed the idea of diesel as a clean fuel source. How the public will respond to this breach of trust is yet to be seen.

Hybrid and Electric Vehicle Market growth

As the smog clears on the Volkswagen scandal, what opportunity is presented to hybrid and electric vehicles? As the image of clean diesel fades, the growing consumer base for fuel efficient and environmentally friendly vehicles is expected to turn toward hybrid and electric vehicles. With the disgrace of the country’s most popular diesel model and growing interest in electrification, the auto industry may soon see a significant restructuring.

 

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