Small number, large investment, difficult operation, the dilemma of electric vehicle scale charging

Wen 丨 lai coffee think tank, compilation 丨 doudou, editor 丨 Gong Yan

Editor's Note:

The number of existing public charging stations – 1.3 million – simply isn't enough to meet the needs of the world's burgeoning electric vehicle army. According to estimates by forecasting agency the International Energy Agency, 40 million public charging points will be needed by the end of 2020, and $90 billion should be invested annually by 2030.

If we want to achieve the net zero emissions target, the world needs to be five times the size by 2050.

More and more people are buying electric vehicles. As battery costs fall, so do car prices. Compared to cars with internal combustion engines, which are troublesome to drive and maintain, electric cars are the dream of thrill-seeking car drivers. But the popularity of electric cars is not just due to the driving pleasure they provide. Transport accounts for about a quarter of the world's carbon emissions, and road transport accounts for three-quarters of the carbon emissions from transport. If the world is still likely to achieve net zero emissions by 2050, electric vehicles must take over as soon as possible.

This year, 6 million pioneers chose electric vehicles, accounting for only 8% of all car purchases. The ratio must rise to two-thirds by 2030 and 100% by 2050. Stock market operations by many investors suggest that they believe the shift will be as smooth as Tesla's acceleration. Elon Musk's trillion-dollar tesla company, Rivian, a latecomer who makes electric pickup trucks, and China's luxury electric car companies, all show confidence breaks through the sky. Battery manufacturers also have excellent performance.

However, if we can see through the high-tech cars that carry the charm of the electric revolution, a cruel and ruthless bottleneck will be revealed. Even those who are opting for new electric vehicles are not fully aware of this bottleneck, and the government is only just waking up to the problem. Simply put: How do you charge all these electric cars?

The number of existing public charging stations – 1.3 million – simply isn't enough to meet the needs of the world's burgeoning electric vehicle army. According to estimates by forecasting agency the International Energy Agency, 40 million public charging points will be needed by the end of 2020, and $90 billion should be invested annually by 2030. If we want to achieve the net zero emissions target, the world needs to be five times the size by 2050.

In fact, the government's current commitment to ban fuel cars and switch to electric vehicles is not entirely in line with the net zero emissions target. Even if cars on the road are electrified more slowly than they are actually needed, the total amount of money that needs to be spent on charging infrastructure around the world is still staggering. According to a slow scenario predicted by BloombergNEF, even as battery prices fall and electric vehicle sales continue to grow, sales will account for less than one-third of sales by 2030 and $600 billion will still need to be invested by 2040. The amount of charging piles that the money can purchase will be less than the IEA's projection (24 million public charging points by 2040, for a total of 309 million). If it wants to achieve its net-zero emissions target by 2050, BloombergNEF expects the cumulative amount of charging investment required to reach a staggering $1.6 trillion.

In addition to the small number of public charging piles, the operating record of the charging industry is also poor. The official figures now exceed the amount that some regulators believe are needed. For example, the European Commission believes that every ten vehicles need to be equipped with a public charging pile. According to the Boston Consulting Group, the European Union and China have one charging point for every five vehicles, while the United States has one charging point for every nine vehicles.

This is only theoretical. In fact, according to Volkswagen's survey of charging piles in China, many charging piles are unavailable or intentionally or unintentionally blocked by fuel vehicles. Of the one million public charging points in China, only 30%-40% are readily available. There is certainly a problem of being equally unavailable in the EU and the US. This summer, Volkswagen boss Herbert Diess complained on the social network LinkedIn that his vacation was not going well because Ionity, a European charging network, offered too few charging points at the Brenner Pass between Austria and Italy. "It's not a high-end charging experience at all," Mr. Diess writes. Volkswagen is one of Ionity's shareholders, which makes the criticism all the more ironic.

Motorists can anticipate the aforementioned troubles. Range-of-motion anxiety and the availability of public charging are big issues. According to a recent questionnaire survey by consultancy AlixPartners, among the seven countries that account for 85% of global electric vehicle sales, excessive price is only the third of the top five reasons not to change electric vehicles, and the remaining four reasons are related to the anxiety involved in charging.

To assess the magnitude of the challenge, let's start with the basics.

One of the advantages of electric vehicles is the ability to charge at home or at work, provided that the employer installs a charging pile. In the U.S., 70 percent of households have non-street parking spaces capable of installing charging piles, but the number is lower in Europe and China. The Boston Consulting Group estimates that in 2020, electric vehicles in the United States will account for nearly three-quarters of the total in home and work charging, seven-tenths in Europe and three-fifths in China.

Now, the batteries of electric vehicles are generally able to support a range of 400 kilometers, some more than 650 kilometers. According to Bank of America, the average American drives 50 kilometers a day, and Europeans and Chinese drive less. There are two types of charging piles that are enough to fill or recharge a vehicle, whether it's at home overnight or on weekdays. Even the slowest charging pile that can only replenish 8 kilometers per hour is enough, and the "secondary" charging pile that can replenish 16-32 kilometers per hour is even less problematic. Drivers can use a dedicated interface worth hundreds of dollars, which often has government subsidies to choose the cheapest charging rate.

However, the role of charging home and office space is limited. As EV owners expand from wealthy households to people like apartment dwellers who can't charge at home, public charging networks are critical. Demand for public charging is expected to grow in the United States, Europe and China. There are three types of public charging piles. It is common to realize curbside charging through street lamp modification or special points, where cars can stay overnight. There is also a kind of "destination" charging, which is becoming more common in parking lots such as shopping malls, restaurants, movie theaters and the like. Both are secondary charging, and the installation cost per point is generally between $2,000-10,000.

For drivers who travel long distances or urgent errands across cities, it is crucial to set up a fast charge on the main road section that can replenish the mileage of 100-130 kilometers every 20 minutes. Commercial vehicles such as taxis that require long-distance driving also need to be charged quickly. But because charging companies need to recycle the cost of fast charging piles of not less than $100,000, charging with such facilities will be more expensive. To understand the needs of customers, Tesla's mapping software will find the best route to its exclusive network of "superchargers" for customers who drive long distances. Some of the other new electric vehicles offer similar features.

Charging industry insiders pointed out that electric vehicle ownership and charging are new things, should be treated rationally, do not have to be based on just a few years of experience to produce pessimism. After all, on the roads of the world, there is only one electric car for every hundred cars. Pat Romano of ChargePoint, one of the world's largest charging companies, calls it the starting point of a "two-year process."

This makes sense. However, the future demand for scale charging remains unknown. Some argue that expansion will soon come. James West of Evercore ISI Believes that the business opportunity to charge the world's expanding electric car army with the power of an electric-obsessed government means that "amazing growth" is coming, but according to Bank of America, it is still an "open question" about how many public charging piles are needed for each electric car on the road. Scott Bishop, who works at Yunex Traffic, a Siemens subsidiary that makes charging hardware, hears many different answers when asking industry insiders what the ratio of slow and fast charging should be.

Another issue is the structure of the industry. Aakash Arora of the Boston Consulting Group's automotive business calls its complex hierarchy "the most entangled problem," slow to roll out because it requires multi-party coordination and licensing. First of all, there are companies that produce charging piles themselves. Then, there may be operators that own sites and make money from charging. Or they may also charge for maintaining charging piles for site owners. Site owners (typically businesses), other private landowners, or local regulators provide a place for charging piles and collect rent from the operator who owns the site. There are also service providers as intermediaries, through the APP or charging card to provide channels for charging sites and auxiliary payment, so that charging can be carried out successfully.

Three categories of companies are gradually dominating eviction charging sites. One category is vertically integrated auto giants. Tesla's network of "superchargers" already has 3,000 locations around the world, and while it has yet to disclose the cost of construction, it probably cost billions of dollars. Other car companies are following suit to some extent. BMW, Ford, Hyundai and Daimler-Benz are all Volkswagen's partners in Ionity. The company's fast-charging network is expected to expand from 1,500 points now to 7,000 by 2025. As part of an agreement with U.S. regulators over the emissions fraud scandal, Volkswagen set up Electrify America in the U.S. in 2016 and now has 2,200 fast charging piles. General Motors announced it will invest $750 million in charging facilities, the first of which will be to install 40,000 charging points at the vendor.

Companies specializing in charging are also expanding. In the past year, several have gone public. Although they are not yet profitable and now have less income, their market capitalization is growing. Among them, ChargePoint has the highest valuation (about $7 billion), the company controls 44% of the public charging market in the United States, and is also expanding its business in Europe. Dutch company EVBox has 300,000 charging points worldwide, including a quarter of Europe's secondary public charging piles and one-third of fast charging piles. EVgo accounts for half of the fast charging market in the U.S. (with the exception of Tesla). But BloombergNEF's Ryan Fisher noted that over the next decade, charging companies will have to find business models that will continue to be profitable even as the government cuts subsidies.

The third category is energy companies. Fearing losing the gas station's business, they are making ambitious plans. British-Dutch oil giant Royal Dutch Shell purchased Ubitricity, a major European road charging company, in February and announced in August that it plans to build 500,000 charging points around the world by 2025, including curbside charging and fast charging. BP Oil and Total Oil also acquired a number of charging companies. Power companies are also making efforts. Wallbox, a partial stake in Spain's Iberdrola power company, sells charging piles to homes and offices. The Power Highway Alliance of 17 U.S. power companies plans to install fast-charging piles in inter-city sections.

The government is also about to act. The new U.S. infrastructure bill sets aside $7.5 billion and will build 500,000 public charging points by 2030. The UK recently released a bill requiring charging points for new homes, offices and retail venues, adding 145,000 per year. Such a bill could become more common. One reason to be optimistic is that improvements in the battery will provide longer range, reducing the need for frequent charging. The new battery will also be charged faster, and the charging pile will also be able to provide current faster.

Doubts remain about the rate of expansion. The numbers remain small compared to the large-scale charging networks the world needs. In addition, more money is needed to upgrade the grid to deliver energy to new sources of electricity demand. The Boston Consulting Group predicts that the United States, Europe and China, which have the world's most electric vehicles, will have a total of 6.5 million public charge guns by 2030, not enough to meet the IEA's global target of 40 million. There will be more cars vying for charging guns. Drivers also need to be patient while enjoying driving pleasure.