Navigant Research Blog

What’s to Be Learned from ECOtality

Scott Shepard — September 26, 2013

In a move that had been expected since the U.S. Department of Energy (DOE) suspended funding of the ECOtality-administered EV Project in mid-August, ECOtality filed for bankruptcy early last week.  The company’s collapse will serve as yet another talking point that media outlets will use to question the wisdom of federal government support for clean and renewable energy technologies.  While that debate is important, there is much to be learned from the wealth of information that ECOtality provided through its role in the EV Project to the national and global electric vehicle supply equipment (EVSE) industry.  Primary among these lessons is the currently weak business case for Level 2 alternating current (AC) public charging, an area in which ECOtality was a major player.

ECOtality made and installed charging units for residential and commercial (publicly available, workplace, fleet) applications.  Other companies in the same business have had success by partnering with plug-in electric vehicle (PEV) manufacturers to bundle EVSE costs with PEV purchases.  The first failing of ECOtality was its inability to gain a partnership with a PEV maker in the above manner, thus becoming dependent on the EV Project.

Additionally, ECOtality developed and managed the Blink Network, made up of more than 4,000 charging stations, including 87 direct current (DC) fast charging stations, most of which were in place because of the EV Project.  While other companies are also invested in this space – AeroVironment, NRG, Tesla, ChargePoint, etc. – it is currently not considered a significant revenue-generating enterprise (Tesla gives it away for free!).

As the 2Q 2013 report from the EV Project indicates, publicly accessible AC charge points were connected to a vehicle on an average of 4% of the time they were available.  During the course of the 91-day quarter, this amounted to 20 charging events per Level 2 EVSE, with the average connection being 4.5 hours.  At the Blink membership rate of $1 per hour, this equates to roughly $361 of annual revenue per installed unit.  Assuming an even split of charge events occurring at Blink member rates and guest rates ($2 per hour) and subtracting the cost of electricity taken at the average commercial electricity rate per the United States in July ($0.108 per kWh), any Blink Network site host could expect $430 per unit annually.  That is, of course, without network management fees, maintenance costs, and any profit-sharing agreement with the EVSE manufacturer.

Total installation costs of public Level 2 installations vary widely, as they depend on a number of variables.  Estimates fall between $3,000 and $11,000.  With those costs, it takes 7 to 25 years to pay back the investment.  At the lowest estimated installation cost, chargers need to be used more than twice as often to net a return on investment in 3 years.  Therefore, outside of government programs that pay for the station’s installation, there is not a strong case for property owners to install publicly accessible Level 2 AC EVSE based on direct revenue – especially not with the low number of PEVs on the road in 2013.  Instead, property owners must justify EVSE installations through the benefits of attracting more business to their locations and differentiating from competitors to attract EV drivers.  Additional value-adds are emerging in the form of utilizing the installed EVSE space for advertising.

EVSE manufacturers survive by selling their EVSE to service providers, property owners, and/or PEV drivers.  The commercial market is growing, but in most cases, publicly accessible Level 2 stations are used too rarely to make them financially viable for most property owners.  Installations at workplaces and for fleets make more sense, as the EV Project data shows these stations are used more than twice as often as publicly accessible stations.  While this market is growing, it is still a small market, and ECOtality was just one of many players.  ECOtality’s troubles may be a harbinger of things to come in the larger EVSE industry as it continues to mature.  However, PEV sales are just starting to take off and increasing densities of EVs per public charge point may significantly improve the business case for publicly accessible AC charging infrastructure.

Plug in Electric Vehicle Sales, World Markets: 2013-2020

Untitled (Source: Navigant Research)

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