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.

 

Solar-Powered EV Charging Network Takes Shape in Jordan

— January 5, 2015

Jordan is now among the growing list of countries intent on encouraging electric vehicle (EV) usage to reduce emissions and increase domestic energy security.  Strategically located between Israel and Saudi Arabia, Jordan has waived the import tariffs on EVs (which otherwise could double the price of a vehicle) and is embarking on a $120 million project to install a national network of solar-powered EV charging stations.

The plan is for 3,000 charging stations and 30 MW of solar power to be installed, with the first 11 charging stations to be placed in the capital of Amman.  Jordan imports 95% of its energy, according to Said Al-Hallaj, the chairman and CEO of AllCell Technologies, which is leading the consortium that will build the charging network.  Other participants include Hyseo International of France, which will provide solar systems for the charging stations, and the U.S. subsidiary of French supplier DBT, which will provide the charging equipment.

Greening the Desert

The Jordanian government views EVs as cost-effective since electricity is approximately 25% of the cost of gasoline as a fuel in Jordan.  While the price of crude oil and gasoline in many regions were in free fall during the second half of 2014, the current low prices are likely temporary in nature.

Some of the charging stations will have solar canopies, while others will use energy from nearby solar farms.  Shopping malls, tourist destinations, and parking lots are likely locations for the first charging stations, Al-Hallaj told me in an interview.  In 2013, Jordan’s Ministry of the Environment first began evaluating the use of EVs for the public transit fleet, according to The Jordan Times.

Al-Hallaj, who is Jordanian and leads AllCell from its headquarters in Chicago, said funding for the project  will come from the USAID Jordan Competitiveness Program (JCP), which has the goal of creating jobs and increasing the country’s competitiveness in technology, healthcare, and energy.  He expects sales of EVs in the country to be around 10,000 annually.  AllCell will provide the battery packs that will be used to store the solar energy that would be used to power the charging network.

Since transportation is a major producer of greenhouse gases, “the EV is considered to be an integral part of [the Jordanian] Ministry’s drive to support and strengthen our national Green Economy,” said Raouf Dabbas, Jordan’s senior ministry of environment advisor, in an email.

 

E-Scooters Get Their Own Network

— January 5, 2015

A San Francisco-based startup with Asian roots called Gogoro announced on January 5 that it is launching a line of futuristic battery-powered electric scooters and an e-scooter charging network that, for a monthly fee, will provide unlimited battery swapping and cloud connectivity.  The concept of battery swapping for electric vehicles has been tried before – most notably with the epic failure of Israeli startup Better Place (and with a little bit more success by Tesla Motors).  But this venture might have a much happier ending.

To understand how Gogoro might succeed, let’s first examine why Better Place failed.  Although the company made a number of personnel and strategic missteps, the fundamental problem of the Better Place model was that the battery switching stations were too expensive and too complex.  Another major problem was that the financial projections didn’t pan out because battery costs were still too expensive at the time of the firm’s launch in 2012.

Swap It Out

Gogoro, which has engineering facilities in Taiwan and whose CEO, Horace Luke, was the design mastermind behind Taiwanese cell phone manufacturer HTC, solves the complexity issue with a smaller battery pack: the Gogoro Smartscooter uses two batteries, each about the size of a Kleenex box and containing about 1 kWh of energy.  The user merely takes the battery out by hand and inserts it into the vending machine-like switching station.  Six seconds later, a fully charged battery comes out of the machine and can easily be reinserted into the scooter.  A fully charged pair of batteries provides the user almost 60 miles of range in an urban driving environment.

To solve the battery cost problem, Gogoro has two aces up its sleeve.  The first is timing: we are in a period of dramatically shrinking lithium ion battery costs.  What would have cost more than $1,000 per kWh a few years ago can be had for as little as a third of that today.

Gogoro’s other advantage is its strategic partnership with Panasonic, one of the largest battery manufacturers in the world.  Gogoro will use the same battery cells, made by Panasonic, that are used by Tesla Motors for its Model S battery pack.  And if it can grow quickly enough, Gogoro will get Tesla-type volume discounts.  Navigant Research estimates that Tesla pays approximately $200 per kWh for its Panasonic cells today, and that price is expected to drop as low as $130 per kWh by 2020 once the recently announced Tesla/Panasonic Gigafactory is up to full capacity.

Cool and Clean

Gogoro has one more big advantage going for it: the world’s young people are begging for alternatives to car ownership.  They want clean, affordable, yet stylish transportation alternatives.  This trend is as true in scooter-crazy Asian cities as it is in North America.  Traditional scooters are too dirty, dorky, and noisy to provide an appealing car substitute for most young people.  But Gogoro’s scooter will be affordable enough (although pricing hasn’t been announced, it should be cheaper than most other e-scooter options because the battery isn’t part of the purchase price) and stylish enough (CEO Horace Luke is a renowned industrial designer whose accomplishments include the Xbox game console and the much lauded HTC smartphone lineup) to be attractive to young urban dwellers in many countries.

 

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