Addressing the elephant in the room for vehicle electrification: EV charging infrastructure
It is well known amongst those in the industry that Norway is the global pioneer in vehicle electrification. We explain why and how in-depth in our Norway Vehicle Electrification Study but let’s touch on one of their successes here: EV charging infrastructure.
Of all the challenges in the vehicle electrification process, the elephant in the room would be the lack of reliable and sufficient EV charging infrastructure. But how was it possible for Norwegians to overcome this obstacle?
Let’s step back and look at the big picture.
The big question is “Is the EV charging business model profitable NOW?” The answer is a clear no. But why? Because there aren’t enough EVs on the road currently. But here is the catch, if you are in it for the long haul, that could be the jackpot. How do you think Tesla became the largest EV charging provider in US and Europe? Why is Tesla renowned as the leader in EV charging infrastructure? Regardless of the brand marketing, it’s because they believed in this in 2012 and were quite sure that the market would explode.
That is the reason why Tesla chargers are almost assumed as a standard in many countries. So the EV charging business is all about getting on board at the right time. And now is the time, given it is the fastest growing market currently in the mobility space. The shift to EVs is inevitable and the winners in this market will be the ones who see that early and invest accordingly.
Of course, entering this space is not as simple as that. Let’s look at the biggest challenges for an EV charging service station provider.
- High capital cost of developing an electric grid, especially in rural areas
- Optimising the number of charging points at a charging station
- Finding the right places to set up this infrastructure
- Developing an EV charging platform with software, billing, smartphone application, and payment solutions
- Competitive charging price to profit ratio (subscription, pay per use models)
- Maintenance of the charging infrastructure
- Customer experience
- Ability to offer a realistic and acceptable charging speed (AC vs DC)
But how did Norwegians battle this?
Firstly, 85% of Norwegians EV owners charge their EVs mostly as home. Secondly, Norway has 10 times more charging station than most EU countries.
Tesla is the largest and the most successful EV charging solution provider in Norway. They are the early adopters in this space. They have deployed by far the biggest super-fast network with the most charging points per station. As well, Tesla is now opening its charging infrastructure to non-Tesla vehicles. Today, Tesla has also engaged in crowdsourcing of its supercharger network development through customer voting. All EV owners, even non-Tesla ones who have a Tesla account, are asked to vote on the top 5 locations they believe will need superchargers. Tesla takes takes these into account when determining the locations for setting up new superchargers.
A detailed comparison between the offerings and capability of Tesla supercharging network and IONITY can be viewed on our Norway Electrification report. As mentioned earlier, the early adopters have the biggest advantage as they get the best locations.
Energy companies have the biggest advantage to expand here. The largest investment is for setting up the charging infrastructure and connecting the charging points to the grid. Given the capital & industrial capacity and technical know-how, they have the most easiest move towards EV charging. Total Energies has already set up 300 stations across Western Europe.
EV charging platform is the most crucial aspect of the market and is experiencing a rapid growth. So as you set up the infrastructure, the next main thing would be the software platform that integrates with the hardware. The software will manage the infrastructure enable billing and payments, integrate with a smartphone application and so on. Several startups have started to provide white-label services to fill this need.
The most important thing to consider when choosing the platform would be the customer service. Tesla has a Net Promoter Score of 97. The CEO, Elon Musk himself, responds to tweets on customer complaints. One such incident where a consumer tweeted, mentioning Musk, about people parking cars in the charging stations for hours even after the car is fully charged. Tesla responded with an idle fee policy for such vehicles, just days after the tweet. Given the influx of new players and the new market, customers tend to stick to players that offer superior service.
Payment options also need to be interoperable. In Norway, almost 65% of the payment is done through an RFID tag while 80% of the consumers still want a credit card payment option.
Fixing a competitive price at the station would be the most gruesome task to any service provider. The price per 1KWH should take into consideration the cost of electricity, infrastructure maintenance costs, supplier costs, competitor costs and so on. This is why a subscription model works best to ensure retention of the customers. With the current energy crisis, offering a competitive price is the biggest challenge to a service provider.
Amidst all this, there is one thing that will exponentially boost up the business: offering a top class customer experience. It’s pretty clear that a charging session can take from 30 minutes to 2 hours. How do you engage your customer during this period? It’s by offering a premium customer experience. This is offered through lounge, terrace, fitness, shopping, food and through other engagements. Audi’s Nuremberg pilot charging hub already offers this. With an overwhelmingly positive response, Audi is now expanding the charging hub to Zurich, Salzburg, and Berlin.Aside from the benefit to the user this can also increase revenues. The higher the charging time, the more the possibility to generate revenue through the non-charging operations.
Vehicle electrification whether you like it or not it’s happening. Period. There is a lot of hidden potential in this and to repeat an earlier statement, the early adopters are ones who ensure quick break even, customer retention and profitability.
Our Norway Vehicle Electrification Study provides insights into the often poorly understood successes and failures from the global car electrification leader – Norway. It shows how countries can use car taxation rather than wasteful subsidies and a mostly market-led approach to build the world’s best public EV charging infrastructure. The 120 page analysis provides
- 10 recommendations to automotive OEMs
- 15 recommendations to governments
- 10 recommendations to charging point operators