Navigant Research Blog

Leasing EV Chargers and Profiting

— 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.

 

Tesla’s Patent Giveaway Paves the EV Freeway

— June 26, 2014

Tesla’s move to open up its patent portfolio is undoubtedly risky, and it could erode Tesla’s competitive advantage.  But the potential rewards outweigh the risks.  The thinking behind Elon Musk’s move is that by allowing the major automakers to use Tesla’s technology, it will help lead to Tesla’s ultimate goal: a comprehensive network of cars, batteries, suppliers, components, and charging stations that utilizes electricity for transportation.  In other words, since Tesla is one of the top electric vehicle (EV) players currently in the market, the company stands to benefit from a vastly expanded network of EV infrastructure based on Tesla’s technology.  The more people that are connected to a network of vehicles relying on electricity, the better it is for Tesla.

Rivals and Collaborators

BMW and Nissan have already expressed interest in collaborating with Tesla on their supercharger technology to potentially create global vehicle charging standards.  BMW has also reportedly considered lending its expertise in carbon fiber technology in exchange for powertrain development and supporting infrastructure.  A partnership between BMW and Tesla could prove to be very powerful, bringing together the highly successful Model S with BMW’s electric city car, the i3, and its soon to be released i8 plug-in hybrid supercar.  Currently, Tesla, BMW, and Nissan account for roughly 80% of the world’s plug-in electric vehicle (PEV) sales.

Car charging companies are also looking to benefit from the technology transfer, with Car Charging Group, Inc. announcing its intention to integrate Tesla’s EV charging technology into its Blink EV charging stations.  Car Charging Group is one of the largest owners, operators, and providers of EV charging services in the United States and is also the owner of the Blink Network, one of the most extensive EV charging networks.

On the Sidelines

While the patent release by Tesla will surely increase collaboration with the major car manufacturers already producing EVs, it’s much less clear that open patents will move the dial on the major automakers that have largely steered clear of EVs in the past.  Toyota, GM, and several other major players are hedging their bets on EVs, and Tesla’s patent release is unlikely to change their position.

Navigant Research’s report, Electric Vehicle Charging Equipment forecasts that cumulative global sales of electric vehicle supply equipment (EVSE) will reach 25 million units by 2022.  Increased collaboration between the major EV players could lead to this figure being achieved ahead of schedule.

Cumulative EVSE Unit Sales by Region, World Markets: 2013-2022

(Source: Navigant Research)

 

Workers of the World Unite for EV Charging

— June 18, 2014

One of the keys to growing sales of plug-in electric vehicles (PEVs) is enabling more people to charge their cars at work.  Workplace charging gives employees a consistent location away from home that effectively doubles their electric driving range for commuting while encouraging employees to buy EVs.

“Workplace charging sells vehicles,” said Mark Duvall, director of Electric Transportation and Energy Storage at the Electric Power Research Institute (EPRI), in a recent phone interview.  Duvall said EPRI’s office in Palo Alto, California offers eight workplace chargers, and he often plugs in his Nissan LEAF there.

Companies such as Google, Coca-Cola, General Motors (GM), and others understand the benefits of offering workplace charging and are participating in the U.S. Department of Energy’s Workplace Charging Challenge, a program in which companies pledge to make charging available for their employees.  In May, GM said that the company has installed 401 chargers for their employees, and GM dealerships now have nearly 6,000 EV chargers in place.

Split the Charges

According to Navigant Research’s Electric Vehicle Charging Equipment report, more than 12,000 workplace chargers will be sold in the United States this year.  By the end of the decade, annual sales will surpass 63,000.

Workplace charging helps companies attract and retain employees who value corporate sustainability.  However, minimizing the cost to the employers while maximizing the utility of the charging stations has its challenges.

The employees who arrive earliest get to plug in first, and since in most cases charging can be completed in a few hours, companies need to establish policies that encourage employees to move their cars to enable others to be able to charge later in the day.  Another alternative is buying charging stations with two plugs, offered by some companies, including Eaton and ChargePoint.  Able to service two parking spots simultaneously, these systems can intelligently divide the available power between EVs.  EPRI is studying ways to increase the load factor (utilization) of chargers on a single circuit, which Duvall says in many cases could serve between four to six PEVs at work per day.

Aboveground Option

The lowest-cost options for employers are to either purchase a non-networked charger and absorb the expense of the equipment and electricity as a cost of doing business, or let an EV charging network operating company maintain the stations and collect the fees to eliminate ongoing costs, according to Duvall.

EV charging station installation can be a considerable expense if additional power has to be brought onsite or if trenching is required to bring power to the parking lot.  One alternative is Envision Solar’s EV ARC solar-powered charging station, which produces all of its energy and stores it in a battery pack, thereby eliminating the need for employers to break ground.  Google has reportedly added the EV ARC to its growing stable of workplace EV chargers.

Duvall will be discussing EPRI’s research into reducing the cost of workplace charging when EV industry participants gather to share their plans for increasing EV adoption at the Plug-In 2014 conference in San Jose, California from July 28 to July 30.

 

DC Fast Charging Gains Momentum

— June 17, 2014

While still in some ways the forgotten child of the charging family, direct current (DC) fast charging is starting to take on some momentum.  At the Electric Drive Transportation Association Annual Meeting in May, BMW and Nissan joined ABB and Fuji Electric on a panel to discuss their experiences in the United States with fast charging and what they see as the main barrier to further development of the market.

The panel addressed three technical questions that continue to hang over the DC charging market.  The first question was whether the industry would ever resolve the dueling standards issue and officially adopt either the CHAdeMO standard prevalent in Japan or the SAE’s combo standard being adopted by European automakers and deployed in the United States.  The clear answer from the panel was that both are here to stay.  As a proponent of the CHAdeMO standard, Nissan has a head start over the combo charger supporters, having deployed over 100 CHAdeMO stations in the United States at Nissan dealerships in addition to its widespread deployments in Japan.  Navigant Research’s view is that, over time, the combo charger will start to edge out CHAdeMO – simply because more automakers will adopt it.  But a few markets, most notably Japan, will stick with the CHAdeMO standard, having made significant investments in deploying it.

Fast Is Better

The second question was on whether battery degradation is a concern.  The consensus was that it is not.  Cliff Fietzek, manager of Connected E-Mobility at BMW and David Peterson, EV Regional Manager at Nissan North America, asserted that no one is more concerned about protecting the battery than they are, and they are comfortable with the use of DC charging for their electric vehicles (EVs).

The final technical question is still open for debate: whether fast charging is more optimal at 50 kW or 20 kW to 25 kW.  ABB is offering both 20 kW and 50 kW units, while Fuji has focused exclusively on the 25 kW size.  Larry Butkovich, general manager of EV Systems at Fuji Electric Corporation of America, made the case for the 25 kW charger, available on the ChargePoint network in California for over a year.  According to Butkovich, the average driver stops for 20 to 30 minutes and gets around a half a charge, with an average output of 18 kW.  The typical fee paid is $6 to $8.  Butkovich noted that usage dropped once the fees were instituted but quickly bounced back, and the company thinks a business case can be made for fast charging.

Distance versus Speed

The case for lower-power fast charging centers on the time it takes to bring a battery to 80% state of charge (SOC).  BMW’s Fietzek noted that a 50 kW unit will get a 20 kWh battery to 80% SOC in 20 minutes, while a 25 kW charger takes 35 minutes.  Fuji’s experience suggests that a driver will be satisfied with a 20- to 30-minute charge that doesn’t quite reach 80% SOC.

Given that the panelists cited cost as one of the biggest barriers to this market, downsizing to a less expensive 20 kW or 25 kW fast charger will make sense in applications where the charger is not expected to enable long-distance trips.  The lower-power units are also less likely to trigger costly demand charges, which are another major barrier to securing more fast charging locations.  These units are poised to capture more market share in the United States ‑ especially for operators not involved in deployments supported by the Department of Energy or the big automakers.

 

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