Is a lack of chargers preventing electric vehicle sales?
The automotive industry is on the brink of an Electric Vehicle (“EV”) revolution. As battery technology has advanced, EVs have become viable alternatives to internal combustion engines due to their environmental, maintenance cost, and driving-dynamic benefits. While the percent of new EVs sold each year has grown dramatically since 2010 (around the time Tesla released the first Model S), one could wonder why more EVs haven’t been sold to date. We estimate that there are currently about 1.5 million EVs on the road in America today, based on historical sales data and an average vehicle lifespan of 11.5 years. With over 280 million cars registered in the United States, this represents less than 1% of all vehicles in the country. This is expected to change though, as EV sales in the US are projected to grow from 2% of new car sales in 2019 to 20% of new car sales in 2025.
Because EVs need to be charged with electricity instead of filled with fuel, the infrastructure required to charge EVs will be critical to their future adoption. The majority of charging today is done at home today with Level 1 and Level 2 chargers. The Level indicates the range of power (or kilowatts) available from the charging unit. In order for EVs to become usable for everyone in the country, most experts believe a network of Level 3 fast chargers (that can charge an EV in ~30 min) will need to be built out. This will allow consumers to abate range anxiety or the fear of running out of charge while driving. This network has already begun to have been built as there are currently 3,422 Level 3 chargers with a capacity of 12,264 charging outlets in the United States and Canada:
But is this network sufficient for the number of EVs on the road today?
Using a simple model we were able to project the hypothetical number of public Level 3 chargers that would be required to maintain the national fleet of EVs. In this model we assumed that 80% of EV owners are able to charge at home or work (data from California states that 83% of EV owners live in a detached house). This is higher than the 63% of Americans who own their own home, since EVs are expensive and owners are likely to be wealthier than average. For these EV owners we assume they need to charge 5% of their annual miles on a public network. For the remaining 20% of EV owners, we assume they need to charge 100% of their miles on a public network. Using the US average of approximately 13,000 miles driven per year, and the assumption that 1 hour of charging results in 250 miles of range, we can calculate the hours per year the average EV relies on the public charging network. Then multiplying by the average charger utilization rate of 15% found in EVgo’s California network, we can calculate the number of EVs one charger can support (102) and can thus extrapolate the number of Level 3 chargers required for the size of the fleet.
Reassuringly, our model aligns very closely to the actual historical numbers of Level 3 charges according to the US Department of Energy dataset:
This very strong correlation could be interpreted one of two ways:
- The EV charging market as a whole is very good at understanding demand for chargers, and has scaled the network as EV sales have increased
- Consumers recognize the bottleneck a lack of chargers presents and have only demanded EVs at the same pace that charging has grown
While the first explanation may seem more obvious to some, we wanted to explore the second explanation. When consumers are asked why they have not considered an EV for their next vehicle, many cite the lack of charging infrastructure as the primary reason. In fact, one survey found that 50% of those surveyed cited “There are not enough charging stations” as a disadvantage of an EV purchase. Other popular reasons included “I can’t use them for long journeys” (42%) and “They take too long to charge” (36%), both of which could be solved by a larger network of fast Level 3 EV chargers.
The results of that survey are not unique. Another poll found “running out of of power” and “low availability of charging stations” as the two most popular barriers for purchasing an EV.
While it is nearly impossible to know if a lack of EV chargers is hindering EV sales, or if a lack of more EV sales is preventing new chargers from being built, we were intrigued by the rate of growth of EV chargers. In our next blog post we’ll examine four headwinds to building EV chargers and propose potential solutions.
