While electric vehicles have been around for over a century and still serve the purpose of getting passengers from A to B, the value and role of EVs in the context of a broader contribution to more sustainable living and the energy transition is unprecedented.
Even though 2020 was the year that electric car sales peaked, automakers and consumers need to accelerate the adoption of electric cars if we want to curb climate change. Currently, road transport is responsible for 13 percent of global carbon emissions, so reducing it is a critical contribution to overall success in meeting climate goals.
To understand the depth of the challenge, consider that the pace of technological development in mobility is already quite fast. The cost of EV batteries, for example, is now only about $100 per kilowatt-hour, down from $1,200 in 2010, and investment in EV-related technologies and equipment has nearly doubled in 2020. 18 out of 20 automakers have committed to expanding their portfolio of light BEVs or switching entirely to electric vehicles to increase their share and meet stricter regulatory requirements.
And yet, this progress alone is not enough to ensure we will meet the 1.5°C climate targets. While there are other key players along the value chain that would need to play their part, the transition to ZEV accounts for the largest share of the sector’s emissions.
To meet the IEA Sustainable Development Scenario targets, 230 million e-vehicles need to be on the road by 2030.
Putting the Breaks on Climate Change
While most charging takes place at home and at work, the adoption of public access charging stations is still ongoing. Public access chargers reached 1.3 million units in 2020, of which 30% DC chargers. Installation of public access chargers increased by 45%, a slower pace than 2019, due to the pandemic. China leads the world in the availability of both slow and fast public chargers, accounting for more than half of the world’s chargers.
Europe is second with around 250,000 AC charging stations, with installations increasing by 30% in 2020. The Netherlands leads Europe with more than 63,000 AC charging stations, followed by Sweden, Finland and Iceland. DC charging stations are being rolled out at a higher rate than slow charging stations. There are now more than 38,000 DC chargers, with a 55% increase in 2020. European countries are still mostly missing the public charger targets per connexion recommended by Alternative Fuel Infrastructure Directive.
The average ratio of EVs per connector ratio was 11 EVs per connector at the end of 2020, just below the recommendation of 10EV per plug, but there are strong differences between countries. The Netherlands and Italy are above target (at 5 EVs per EVSE and 7.5 EVs per EVSE respectively), while countries with the highest EV penetration such as Norway (30/1), Iceland (30/1) and Denmark (20/1) tend to have the lowest ratios.
The EU Green Deal has raised the bar with a target of 1 million publicly available chargers installed by 2025 (for an EV fleet of 40 million vehicles) and set out a roadmap of key actions to achieve this target. With Fit 55 Legislative train in place, calls are already being made to revise the ratio of 1 plug per 10 electric cars, to give EU citizens the right to demand the installation of charging points (“right to plug”), regardless of location, and to include provisions for Heavy Duty Vehicles.
EU member states are implementing the revised European Energy Performance of Buildings Directive (EPBD III), which sets requirements for residential and non-residential buildings to improve access to charging points. The Recovery and Resilience Facility, fund also includes support for the installation of charging station.
The Services for Evolving the EV Market
The forecast of revenue pools in the EV charging market for 2030, according to Arthur DLittle, management consulting, offers a high-level picture of the possibilities with the respective “job to be done” highlighting each pool. While currently the number of new charging points installed per year is almost as high as the existing charging infrastructure, these numbers will diverge each year going forward. Services that provide recurring revenue will slowly replace one-time revenue, rising from a 20% share today to more than 50% in 2030, according to the forecast. But even in 2030, hardware and related fulfilment services will still account for nearly 50% of the market potential.
In terms of margins, ADL observes a very mixed picture with the highest margins in technical operations, energy management and asset ownership (over 40%), the average margin levels in electricity supply and mobility services are significantly lower. The hardware business currently lies between these two poles.
So What is the Winning Business Model of Tomorrow?
While hardware sales and asset ownership offer the opportunity for rapid market entry, they require large upfront investments and carry potential risk from changing regulations. Full-service delivery is the best option to participate in today’s market growth, but Charging-as-a-Service has been identified as the highest-rated businessBro model for future-proofing a business that appeals to the most lucrative segment of commercial fleet customers.
The evolving business models require different skill sets and additional capabilities for the team to better plan and maneuver the new mobility era.
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