- Automotive & Transport
- Building Technologies
- Business Process Solutions
- Communications & Wireless
- Computer & Office Equipment
- Consumer Electronics
- Financial & ID Technologies
- Industrial Automation
- Intelligent Video
- Lighting & LEDs
- Medical (InMedica)
- Power & Energy
- Security & Fire
Electric Vehicle Charging Market at Risk When Government Money is Unplugged
Date: 16 January 2013
Significant capital resources are needed to deploy both AC and DC electric vehicle (EV) charging. At the same time, uncertainty is mounting over the scale of future EV sales, with a recent report from IMS Research (now part of IHS Inc. (NYSE:IHS)) highlighting that just 3 percent of all light vehicles produced in 2022 will be plug-in hybrids or battery electric vehicles.
Many public and private entities are reluctant to invest heavily in EV charging, seeing it as both risky and unnecessary. With much of the charging infrastructure in place today having being funded in part or whole by government funds, concern should be mounting for the future health of the EV charging industry, particularly when the government money is switched off.
Alastair Hayfield, associate director with IHS comments, “The solution for the EV charging industry is to identify future business opportunities now, laying a framework of education, awareness, and push marketing. This will help build momentum before public funds decline.”
Large fleet operators are, arguably, first amongst early adopters of electric vehicles. The U.S. Department of Defense recently announced plans to spend $20 million on 500 electric vehicles. This follows announcements from DHL, Pacific Gas & Electric and TNT about plans to extend the electrification of their respective fleets. Whilst fleet education is still an issue, fleet operators typically have a better appreciation of return on investment and lifetime costs than average consumers do when it comes to EVs. Furthermore, they have access to the capital needed to buy the more expensive electric vehicle option.
Parking garages also represent a prime opportunity for the EV charging industry. Indeed, much of the first wave of charging stations has been deployed in parking garages or at ‘on street’ parking sites. Offering vehicle charging is a way of developing value beyond simply providing a safe location, particularly in urban locations where domestic charging may not always be possible.
Other opportunities will be slower to develop, but can be identified by following the maxim “where are people taking their cars?”
Realistically, most vehicle charging will occur at home or at a place of work, as these represent the places where cars spend most of their time. Office buildings or commercial complexes therefore represent a substantial potential market, particularly if EV sales develop quicker than expected.
Companies with large offices and commercial property firms will need to develop charging infrastructure now and in the future. However, identifying where the budget will come from for this investment is difficult. If a company doesn’t own its office building, the decision to fund the investment may reside with the property management firm or the building’s actual owner. In this instance, the decision to invest will be based more on whether the firm managing the office building thinks EV charging facilities will attract or retain tenants, rather than a large number of tenants requiring charging.
Even if a company does own its own office building, funds for EV charging infrastructure may not be accounted for in the facilities budget. If that is the case, the budget may come from the company’s corporate social responsibility (CSR) or ‘green’ program. The EV charging industry would be wise to target those companies with well-established CSR programs, particularly those with sizeable corporate vehicle fleets or significant numbers of commuting employees.
Beyond home and work place charging, the EV charging station industry would be smart to concentrate on transport nodes – train stations, airports, etc. Major airports, like Heathrow and Gatwick in the U.K., have already deployed charging stations in short-term parking facilities. Travellers arriving by vehicle will require charging facilities, particularly if the vehicle is being left for some time or a lengthy journey is required on their return.
Finally, ‘attractions’ should be a focus of attention for the EV charging station industry. Attractions include malls, restaurants, theme parks, etc. – any location where drivers are likely to stay for several hours at a time. Statistics from the U.S. Travel Association indicate that beaches and fine dining were amongst the top five destinations for domestic U.S. travellers in 2011. Attractions will need to be persuaded as to the merits of offering charging, particularly if for free. However, attractions always face competition and EV charging facilities represent a clear way to differentiate.
Hayfield concludes, “No doubt the EV charging industry has plans to develop beyond the government lead initiatives seen at the moment. However, the major challenge will come in finding commercial funding and providing education to businesses. EV charging isn’t simply about providing plug points. Businesses need to understand the full cost of installation and operation, the correct business model for them, and the likely use cases at their facilities.”
Senior Manager, Editorial
Direct: + 1 408 654 1714
Mobile: + 408 921 3754
IHS Media Relations
Direct: +1 303 305 8021
About IHS Inc. (www.ihs.com)
IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 6,000 people in 31 countries around the world.
IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. Copyright © 2013 IHS Inc. All rights reserved.