EV chargers and the race for pole position
In December 2021, 25% of all cars sold in Sweden were plug-in hybrids and 36% were fully electric. That means 61% of sold cars need charging. In December 2019, that proportion was only 10% - a huge difference in just two years.
Today, there are quite a few electric vehicles (EVs) offering a driving range of up to 400km on a single charge, which is convincing a lot of customers to try them. For most, this represents a new lifestyle of transport. It’s quiet, environmentally friendly and high tech. But for those without a charging place at home or work, it’s annoying that the habit of making a short stop at the petrol station is now a much longer stop at a charging station.
The opportunity to capture the charging market
For businesses, though, this is an opportunity and a new market. With a significant proportion of the cars on the roads being EVs, the race to charge them is much more interesting to a wider range of businesses. Who will take pole position when the qualification race for public fast chargers is over?
The premium car vendors were slow in entering the charging space, with the exception of Tesla. But now, Audi, VW, BMW, Mercedes and their shared company Ionity have picked up the pace. Ionity is rare in that it’s building fast chargers in many countries at the same time, enabling drivers to cross borders with their electric cars.
Energy companies, like Vattenfall, E.ON and Fortum have, for a number of years, built fast chargers. No, they’re shifting focus and increasing pace. It’s no longer a PR project but a commercial business.
Petrol station chains like OKQ8 are following suit. If neither gasoline or diesel is on top of the car sales statistics, their business as a retailer of food, beverages, car wash and other supplies is at risk. And new retailers have entered the scene, locating chargers closer to a more diverse shopping experience for customers waiting for batteries to charge. A fast charger isn’t a cheap investment, so it’s the big supermarkets and retailers that have the financial muscles to move early.
Customers aren’t happy with the current landscape
Given the number of businesses investing in fast chargers, you’d expect EV drivers to be pleased.
But it takes time to roll out fast chargers. It’s not the manufacturing that’s the issue but the grid connections. The chargers need a lot of power and grid companies aren’t famous for their speed, neither in handling the applications or the actual constructions necessary.
Too be fair, it can be a lot more work for the grid company than just laying the last cable out to the charger. The grid can need reinforcements behind the scenes and charging station owners are often surprised by the costs of building new grid. When a charge station owner says the grid isn’t strong enough or doesn’t exist, it usually means it’ll take too long or be too expensive to build. For a grid company with investment cycles of up to 20 years, three to five years isn’t that long. But for a public charging company, it feels like an eternity.
While the number of charges is one frustration, the experience of using them is another. To find chargers, you need to look across separate mobile apps for different operators. And price differences are huge, not only between providers but also between locations. Sometimes you pay per minute and sometimes per kWh. In addition, very few accept card payments without first having registered your profile in a mobile app. The small average transaction value, historically low usage and high card fees has made it hard to include card payments without such registration. This isn’t ideal for customers who would find it a lot easier if the owners of the charging points could agree on a single interface and pricing model.
Learning from the market leader Tesla is the industry leader in EV chargers and have two major advantages. Firstly, they have an integrated solution and are in control as producer of both the car and the charger.
With one credit card accepted by the car, you can charge the battery without connecting to any other payment solution just by docking the charging cable to the car. Secondly the pricing model for Tesla´s charging stations are difficult to compete with as they don’t have to make profit on the chargers alone.
So far, Tesla’s business model has been based on providing a network of charging stations exclusive to their own brand, which enables them to sell more cars. But Tesla has started making the chargers available to other premium brands in some markets. So, their model of not maximizing the return on investment on chargers is likely about to change.
How will the market evolve?
Where does all that leave us in terms of competition? There are several actors out there. Each has its strategy to compete in the race, and customers have their demands and expectations. The market still has room for someone to connect all these actors smoothly – like an Uber for fast charging. The alternative is that the competitive, but fragmented, market we see today consolidates to a few businesses.