Dude, Where’s My Charge?

Read on for what’s next in electric vehicle charging

By: Emily Fritze and Nick Albanese

Accelerated EV Adoption Puts Focus on Charging

The electric vehicle revolution was not a foregone conclusion when our firm invested in Tesla back in 2009. Today, thanks to Elon’s bold vision and the rapidly declining cost of lithium-ion batteries, EVs are inevitable. Virtually every automaker has committed to go all-electric in the next decade. Even in the U.S., analysts now project EVs will exceed 50% of all new passenger vehicle sales by 2030, up from just 5% today. That will equate to a 16x increase in the number of EVs on the road.

Fleets are also — finally — going electric. McKinsey, for example, expects that electric commercial and passenger fleets in the U.S. will grow from 5,000 in 2018 to eight million in 2030. Of course, sales could easily beat these projections — past EV outlooks have consistently underpredicted near-term adoption of passenger EVs.

One of the jump balls to accelerating EV adoption is charging accessibility and experience. Nearly half of consumers say that battery or charging issues are top concerns. Range anxiety is real, but the facts on the ground are nuanced. The majority of passenger EV charging happens — and will continue to happen — at home or the workplace, but consumers will expect easy, reliable access to public charging before EV adoption fully takes off.

In order to make the leap to an EV, customers will want the psychological safety of feeling confident that they can access charging when and if they want to. This means that we’ll need a widely accessible, Level 2 and fast charging network, not just on highways and in urban areas where charging is becoming more available, but in remote areas too. The good news is that global EV charging installations grew 35% last year, and while most public charging is Level 2 charging, fast charging installations are starting to outpace Level 2 installs. In the U.S., the federal government has taken steps to supercharge growth — approving $7.5B in funding (including $5B in formula funding & $2.5B in grants) to boost the number of public charge points from 115,000 to 500,000 by 2030. That will give improved confidence to current and prospective EV owners and make the economics easier for charging operators, regardless of how often the chargers get used.

Charging Challenges & Opportunities

Perhaps just as importantly, Tesla appears primed to provide non-Tesla EV drivers with access to its best-in-class supercharging network, which spans 1,600 Supercharger stations and 16,000 charging ports in the United States. And GM plans to do the same in partnership with EVGo. The question remains whether charging operators (besides Tesla) can provide a positive charging experience and guarantee uptime. Some studies estimate that charger uptime sits at a miserable 70 percent. Most charging operators will tell you that charger uptime is primarily an IT issue, the result of many systems trying to speak with one another. Do a quick Google search and you’ll read stories of highway trips gone awry due to broken chargers, payment issues, and even pieces of gum stuck in charging ports.

Commercial EV fleets will have unique charging needs including higher power density, optimized site selection for more predictable routes, on-site generation, and coordinated/optimized control of charging. A number of software companies, project developers, and automakers are offering end-to-end management of these services, but most have onboarded just a few hundred or thousand vehicles, not hundreds of thousands or millions. The question remains whether software alone can handle the integrations and scale of commercial EV fleets without the same IT issues that have plagued passenger EV charging. All of this is to say that there are remaining challenges and opportunities around the values and services of charging to improve access, provide a better experience, and develop next-generation capabilities & features.

First Movers & New Entrants

First-mover companies like ChargePoint, EVGo, Tritium, Wallbox, Volta & more led the way alongside large companies like ABB, and many went public over the past 18 months. But nearly all of these pure-play EV charging stocks have significantly underperformed the market.

More recently, new entrants are pioneering the next generation of charging. As charging hardware becomes commoditized, startups are focused on building technologies across fast charging, vehicle-to-everything (V2X), transformers & electrical equipment, or business model innovation including better use cases around payments, energy services, and project development models to handle the end-to-end electric transition of fleets & drayage.

We’re tracking 250+ EV charging startups across these various sub-sectors. Notably, they’ve raised over $8B in VC/PE investment since 2010, making EV charging one of the hottest sectors in climate tech investing.

Our Areas of Interest

At The Westly Group, we’re evaluating startups shaping the future of charging. Here are a few areas that we’re interested in:

• Multifamily charging — 31% percent of Americans rent or reside in multifamily housing where charging requires selling to a property management company, managing unique installation and power requirements for multiple chargers, and providing a payment experience oriented towards a shared tenant asset.
• Electrical upgrade avoidance — Installing charging infrastructure at home or for a commercial facility requires expensive and complex electrical upgrades and a whole lot of electricians who know how to make it work. Smart charging software & on-site battery storage systems can help mitigate upgrades in addition to more transformers and faster permitting and processing. That’s why we invested in Founders Apoorv and John at WeaveGrid, a leading company that is helping utilities manage EV charging and avoid grid constraints.
• Commercial fleet management — The market for EV fleet energy management services could reach $4.4B by 2030 in the U.S. alone. Whether it’s planning the transition of ICE vehicles to EVs, energy management, charging optimization, scheduling, or route planning, the value-added services for EV fleets are significant. Moreover, the window for M&A is still open following the acquisitions of Electriphi, Amply, EIQMobility, Viriciti, and more, as automakers, oil and gas majors, utilities, and energy management companies all look to make a play and often lack the software talent they need.
• V2X/H — There has long been a vision for bi-directional charging or the ability to use your vehicle’s battery safely as backup power. While Tesla does not (yet?) offer V2G-capable EVs, its rivals Nissan, VW, Ford, Volvo, GM, and Hyundai-Kia are all building V2G/H-enabled vehicles, opening up the possibilities for residential and commercial applications.

We’re charged up ;) about EV charging opportunities. Please reach out if you’re building something in the space or want to discuss more.