Electric Vehicle – The business case of charging stations

Charging stations are popping out everywhere so people can charge up their electric vehicle. The idea behind this is based on a chicken/egg story; which was (needed) first? People argued that there would not be people to buy an electric vehicle if there was no infrastructure available, while others argue there would be no company willing to invest in charging infrastructure if there would be no clients (with electric vehicles) to use it.

The chicken or the egg?

To me this seems a bit strange, as many households and buildings have the very basic requirements to facilitate in charging an electric vehicle: a wall outlet. True, it is only good for slow charging (see also this post made earlier). But some basic charging infrastructure has always been around.

Some argue that fast charging is what is needed to get a wider acceptance for the electric vehicle; if people would have to wait for hours on end they would still pick the conventional cars as fueling up is so much quicker there. I've heard of a case in Hong Kong which showed that initially people were reluctant to purchase an EV as there was no infrastructure. When fast charging stations were introduced, people did indeed buy the EVs, but most just charged at home. The fast chargers were not used as frequently as expected, as for most people the range of the current EVs is already enough for the majority of our mobility needs. So if fast charging stations are here mostly for the psychological effect, to battle range anxiety, what is the business case?

Many have argued that the business case for a charging station is the power it sells. If you take a quick look at the costs of a charging station and the price people pay for electricity that case soon evaporates; rates for electricity are (too?) cheap and it takes many years before a company providing this service is actually making profit from a charger. Many have argued that there needs to be another business incentive to place the charger; for example at parking lots near restaurants, where people have dinner and charge their vehicle for free. The price of the electricity is relatively small compared to a meal. This would potentially attract more customers to a shop, similar to the free Wifi services found at similar locations. All holds well, but for fast charging there is another case; people want to get somewhere in a timely manner and are willing to pay a premium for the fast charge.

The main business cases possible with EV charging infrastructure then are as follows;

  1. Normal charging (L1/L2) – Offered as a free service, similar to Free Wifi at locations across the country. Will attract more/different customers, which will make it worthwhile.
  2. Fast charging (L3) – Is a special service, also there are higher installation costs involved to begin with. A driver will pay a premium for this service, which is higher than the actual electricity bill. Discussions here in the Netherlands are about a price of about 10-15 Euros for a fast charge (versus 6 Euros for a full 24kWh charge at 0.25 euro per kWh).