Where are we in the EV Infrastructure deployment?

An unstoppable EV boom?

Recent years have seen the EV charging industry grow exponentially, in an upward curve that forecasters predict is likely to continue for the foreseeable future.

In 2023 alone, 18% of all road vehicles sold were electric. By 2030, the global electric vehicle stock should expand to a whopping 350 million vehicles representing 60% of all vehicles sold globally.

Global car manufacturers are expected to invest $1.2t into EV production and battery facilities by 2030 in order to catch up with Chinese BYD and Tesla, who are currently the two global leaders (with 20% market share each).

Source: BloombergNEF. Note: Europe includes the EU, the UK, and EFTA countries. EV includes BEVs and PHEVs.

This is very good news for the planet, as road transport contributes 24% of the world’s total emissions of CO2.

There are clear tailwinds at play

• Cost Reductions: Battery prices, accounting for around 40% of an EV’s cost, have plummeted by 5 times in the past decade, significantly lowering overall vehicle expenses due to technological advancements and economies of scale (a trend which goes beyond Tesla’s recent 20% price cut).
• Increased Subsidies: While EV costs have historically posed a barrier (with new EVs being 27% more expensive than Internal Combustion Engine (ICE) equivalents in Europe), the landscape is changing. Global subsidies, surpassing $30 billion by the end of 2021, aim to alleviate substantial upfront expenses, particularly for consumers. Moreover, EVs prove more cost-effective to operate and maintain throughout their lifespan compared to ICE vehicles.
• Extended Range: Technological advancements in battery density have led to a notable increase in the average range of globally launched EV models, reaching 337 Km in 2022 compared to 230 Km in 2018.
• Regulatory Certainty: The prevalence of ultra-low emissions zones in major cities, policies promoting network densification (e.g., fast chargers every 60 Km by 2030 in the EU), and impending bans on diesel sales (by 2035 in the EU) underscore a regulatory commitment to sustainable mobility. Notably, the EU aims to have 30 million EVs on the road by 2030, a significant rise from the current 1.4 million.
• Consumer Cost Savings: According to Consumer Reports, the cost of keeping an EV charged will almost always be hundreds of dollars less per year than fuelling a gas-powered vehicle.

But obvious obstacles need to be addressed

• Slow Charging: Despite advances in charging technology, it’s still slower to charge an EV than fueling a gas-powered vehicle. This may change in the years to come, but for now, EV charger owners need to be mindful of the different charging speeds to expect.
• Availability of Charging Facilities: EVs face problematic capabilities of public charging infrastructure causing “range anxiety.” In contrast, combustion vehicles operate offline with a quick 5-minute refuelling time, experiencing minimal price variations (a few per cent at most). EVs offer the advantage of automating processes through digital capabilities.
• Interoperability: The growing EV charging market needs streamlined communication. Improved protocols like OCPP and standards such as ISO 15118 boost the rise of software transversal solutions built on those common languages.
• Costs & Infrastructure Management: EV routes differ from ICE vehicles, making a copy-paste approach inefficient, resulting in underused infrastructure and high charging costs. Installing charging infrastructure involves complex processes. Managing transitions across daily fleet charging, vehicle replacement, and long-term planning uses the same core technology.
• Electrical Grid Challenges: Charging strains the electrical grid, potentially increasing peak demand by 25%. Integrating grid constraints into infrastructure design is crucial. Early-stage Vehicle-to-Grid (V2G) offers software monetization, allowing EV owners to sell excess power, enhancing energy resilience, and reducing costs for the power system, as we can expect a 10% cut in grid reinforcement costs thanks to Vehicle to grid technology (V2G).

These challenges led to slight hiccups in the EV market expansion. In recent months, we have seen the resale price of second-hand EV cars drop significantly. Although this price drop is greater for Tesla compared to other carmakers due to a price cut on the new models, there are questions about where the EV market is going. This price correction has already caused turmoil in the fleet management market. Hertz notably decided to get rid of more than 20k EV vehicles and shift back to gas powered cars.

So, where are we at regarding the deployment of the EV infrastructure market? Below, I will try to set out a comprehensive overview of the different players in the EV industry and share some perspectives on the market dynamics.

Who are the main actors of the EV revolution?

This extraordinary growth of the electric mobility industry is not only driven by regulatory tailwinds and technological innovation. The growth of the market is also due to an incredibly large demand side. From EV owners, fleet operators, charging network players, utility companies, carmakers, property managers and homeowners, there is a very large group of buyers of EV-related services.

Looking at the US charging services alone, it could amount to $15 billion per year by 2030.

Turning to the supply side, the development of this market relies on cooperation between numerous key players, from hardware providers to charging point operators (CPOs). The market is seeing the emergence of numerous digital solutions such as e-mobility service providers (EMSPs), solutions working on interoperability via API solutions, data, and other SaaS solutions providers. As charging hardware is becoming commoditized and dominated by large energy companies and OEMs, startups are focused on building innovative software solutions. These new technologies include fast charging, vehicle-to-everything (V2X), transformers and electrical equipment and fleet management.

Let’s look at them in turn.

Charging Infrastructure

Hardware specialist and installer: Charging Point Service Provider (CPSP)

CPSPs are players providing the charging hardware. They are equipment suppliers, involved in engineering and manufacturing charging hardware such as the pedestal, power receptacles, and charge cords. Installation services are often offered by these hardware manufacturers as well.

A few companies provide vertically integrated services with full turnkey solutions covering the value chain across charging infrastructure and enabling tools. These startups provide a comprehensive service that can include all steps from design, manufacturing, installation, operation, and maintenance to end-user management and integration. These services are also often provided by local electrical service providers or installers. However, turn-key service providers generally cater to residential owners wishing to install their own EV charging solution or commercial property managers looking to offer charging infrastructure.

Charging point owners (pure infrastructure players)

The charge point owner finances and oversees the charging infrastructure project, dictating branding, objectives, and contractors (the choice of CPOs and EMSPs, for example).

Whilst the charge point owner owns their charging stations, typically they will rely on the expertise of a charge point operator (CPO) to manage that site via a rolling contract.

Following the surge in the popularity of EVs over the last few years, giant players in the mobility industry such as Telsa and Ford who have built large charging networks. Adjacent industries like utilities such as Engie or Enel SpA, and big oil companies such as Shell, Total, and BP are all heavily investing in the transition into e-mobility and competing in building the charging networks.

Charging Point Operator (CPO)

CPO manages the procurement, installation, operation, and maintenance of the individual charging units or charge points. CPOs are businesses that serve the back end of the customer EV-charging experience. They specialise in the resale of electricity to EV drivers through public rapid-charging stations which they operate.

CPOs are competing to provide the latest charging technology. This can include AC chargers and DC Level 3 ultra-rapid chargers. Following the successful deployment of the charging stations, CPOs are then responsible for ensuring smooth, consistent, and quality charging for EV end-users.

CPOs rely on charging station management tools. Charging station management providers aim to provide an end-to-end offering. This requires a large stack of features, ranging from hardware integrations all the way to billing and dynamic load capabilities. Charge station management providers can be split into full-stack or white-label solutions.

Enabling tools

eMobility Service Provider (eMSP)

The rapidly developing EV market led to an equally burgeoning EV software space, which is reported to reach a value of $9bn by 2032.

The most notable software solutions are described as eMobility Service Providers (EMSP). EMSP connects customers to a wide pool of charge points operated by a range of CPOs and facilitates payment via a user-friendly subscription service and/or smartphone app.

EMSPs are concerned primarily with front-end service. Such software is typically developed to provide different functionalities for retail consumers or CPOs and other service providers. These tools can include the monitoring and remote diagnosis of charging networks, running payment processes, billing, and managing energy use.

Notable service providers include:

Multiservice integration: APIs and Open applications

One of the main challenges in the rollout of EVs is the lack of unified standards.

As you can see from the illustration above of the different market participants, there is a lot of moving parts in this market which leads to interoperability challenges.

To solve this lack of unity, some service providers are building APIs that allows stakeholders to interact seamlessly and facilitate interoperability. Typically, CPOs use these solutions to gain broader market access. CPOs must ensure their platform is compatible with different types of charging and vehicle hardware so that they can be operated in mixed hardware,and multiple car-brand environments.

Fleet electrification:

Another interesting area of development in the EV market is the deployment of solutions to support the electrification of commercial fleets. Commercial EV fleets will have unique charging needs including higher power density, optimized site selection for more predictable routes, on-site generation, and coordinated control of charging.

EV fleets, such as ride-hailing, car rental, and logistics fleets, are all making the switch to electric vehicles, and this switch is happening even faster than for individual cars. 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.

You can find two categories of service providers helping with this transition.

First, you find service providers helping with the acquisition and setting up of electric fleets. These companies help with the financing and setting up of the infrastructure which includes all the charging infrastructure, batteries, and even solar panels.

Then you find tools to manage this new electrified fleet. These platforms provide a way to manage fleet operations and maintenance with the help of advanced data analytics. These new fleets need to generate and integrate insights from a variety of EV-specific data sets such as real-time battery usage, charging infrastructure planning, charging demand optimization, available energy in the power grid, charging payments and more.

The market for EV fleet energy management services could reach $4.4B by 2030 in the U.S. alone.

Smart grid solutions

An original and new area of development in the EV space is the roll-out of vehicle-to-grid (V2C) capabilities. Acting like big batteries on wheels, EVs can power equipment, homes, and even transfer energy back to the grid. In a grid system becoming more and more decentralised, integrating EVs into the grid could help balance and optimise the system.

According to the transportation electrification and V2G research organisations, one EV could power a home for two to five hours, or five homes for around an hour. Moreover, EV-elocity, a research and development project focused on V2G, has concluded that V2G can reduce EV battery degradation by one-eighth (the equivalent to one extra year of use), and, in some situations, up to 450 kg of emitted carbon dioxide (CO2) or ~450EUR could be saved per vehicle each year.

For years, the major hurdle hindering smart grid solutions was the lack of standardisation across international legislation and the EV/energy value chain. However, as the pressure to combat climate change heightens, governments are now enforcing ambitious policies to standardise EV charging (e.g., ISO 15118, officially titled “Road Vehicles — Vehicle to grid communication interface”).

Battery specific solutions

Battery management system (BMS)

One critical element of the EV infrastructure deployment is the improvement of the energy storage capability. Beyond the ongoing innovation in the chemistry of batteries, there are several actors working on battery management solutions that improve battery performance. These service providers are building solutions to optimise energy storage, and also usage. Further, these companies are working on services to provide battery diagnostics to increase their lifespan.

By 2030, the US market for energy-optimization services to support the charging of electric-vehicle fleets could be worth $15 billion per year (McKinsey)

Battery recycling

The life cycle of EV batteries is becoming an important focus point of the industry due to the complexity of their manufacturing and cost. Batteries make up a big part of an EV’s total cost and typically account for 30% to 40% of their value. This is because they are composed of many rare earth materials such as cobalt, manganese, nickel, lithium etc.

Due to the complexity of extraction and further geopolitical tension surrounding their processing, the recycling of batteries to extract these rare materials has become essential.

The market is expected to grow from US$ 8.5b in 2024 to US$31.2b by 2030 at 24% CAGR.

Market dynamic

Around 26 million electric vehicles (EVs) are on the road today, and this figure is growing every year. EVs make up around 15% of the global personal vehicle market share, with over 1 million new EVs registered worldwide in May 2023 alone.

By the end of 2022, we saw 2.7 million public charge points installed worldwide. A whopping 900,000 of those charging points were deployed that year alone, an EV charging market growth of around 55% YOY.

Estimates place the value of the global EV charging market anywhere from $17 to $26.3 billion across 26 countries. This wide disparity in calculations can be credited to accounting methodology, types of EVs counted, and which countries are included in the analysis.

Most estimates put the expected compound annual growth rate (CAGR) at around 28% through 2030. This figure implies that the EV charging market will swell to roughly $128 billion over the next seven years.

To put this in perspective, the global market for all vehicles in 2023 is estimated at $2.6 trillion, but it’s only expected to grow by 5.62% CAGR between 2022 and 2032.

Regulations

In 2020, the European Union passed regulations setting emissions targets for cars and vans to achieve a net reduction in emissions of 50% by 2030. These regulations were amended in April 2023 to strengthen the emissions reductions, with a new goal of 100% emission reduction by 2035. Policymakers expect these emissions reduction goals to drive significant EV charging market growth.

Similar legislation was passed in recent years around the world. Notably, in March 2023, the U.S. Department of Transportation launched the Charging and Fuelling Infrastructure (CFI) Discretionary Grant Program. As part of the Bipartisan Infrastructure Law, it makes $2.5 billion available for installing EV charging and alternative vehicle fuelling infrastructure over the next five years.

The EU passed a regulation requiring the employment of an electric charging network for cars with a minimum 400 kW output which will need to stretch at least every 60 km by 2026. For trucks and buses, charging stations will have to be provided every 120 km.

Investment dynamics

As mentioned above, global car manufacturers are expected to invest $1.2t into EV production and battery facilities by 2030. The BNEF estimates a substantial $1.9 trillion market opportunity in charging infrastructure.

In 2023, EV market has remained very attractive for investors, outpacing significantly other areas of investments as seen from the graph below.

According to Pitchbook 92 deals were made in the EV automotive market and charging infrastructure in 2023 alone. These represent an aggregate $1.1bln in total capital raised for that year. We can also see from the graph below that investments in the space have been rising quite steadily in the last few years.

Exits

Pitchbook also reports around 213 exits of the past 10 years in this space. Most of which have been the result of M&A transactions.

In 2023, global M&A activity in the charging space surpassed $900 million across 25 deals, as reported by PitchBook.

• Electriphi — battery management and fleet monitoring software startup — acquired by Ford in 2021
• Amply Power — electric fleet charging services — acquired by BP in 2021
• EIQMobility — provider of mobility planning solutions — acquired by Nextera in 2020
• Viriciti — vehicle management software for electric fleet customers, — acquired by Chargepoint in 2021

The other notable comment about exits in the EV space is the SPAC momentum that drove diverse outcomes. The SPAC boom in 2020 and 2021 included multiple EV businesses. And as for many other SPACs, it has left behind a trail of investigations, settlements, and scandals.

Many previously hyped EV automakers and EV charging companies that took the SPAC route filed for bankruptcy in recent years:

• Proterra, the electric bus manufacturer, SPACed in 2021 and filed for bankruptcy. after trouble locking in profitable contracts
• Lordstown Motors, which made electric pickups, went public in 2020 and went bankrupt in 2023, at which point it had little left to its name and tried to sell its factory to Foxconn, which ended in a lawsuit. However, it has recently reemerged under the name Nu Ride.
• Electric Last Mile went from SPAC merger in 2021 to bankruptcy filing in June 2022, after lawsuits and mismanagement allegations, before Mullen Automotive, another EV truck maker that went public in 2021, bought what’s left.
• Arrival, another EV manufacturer, went bankrupt this year and is selling its liquidated assets to EV maker Canoo, which is also struggling to get to production.
• Luxury EV maker Fisker filed for bankruptcy a couple of weeks ago.
• And others, such as Nikola and Faraday Future, are still in business but are trading for pennies on the share amid operational challenges. The valuations of Lucid Motors, Rivian, and several others in the space have also dropped significantly since initial highs.

What does the future hold for the EV infrastructure market?

New turbulence are causing concerns over the expected fast deployment of EVs

The numbers and projections mentioned above show a clear upward trend in the growth of the EV market. Regulations and capital alignment should give lasting support to this current trend.

Having said that, some analysts are warning that the EV market is about to face some turbulence. We have mentioned the reduction of EV stock by Hertz and the price cutting by Tesla. But these are not the only cases showing a slowdown in the deployment of the EV sector. Despite massive investments by Ford and GM, models like the F-150 Lightning and Silverado EV are being discontinued. A lot of carmakers are currently reviewing their production volume for fear of not meeting consumer demand.

American consumers, traditionally favouring gas-powered vehicles, have indeed been hesitant to transition to EVs. The charging capabilities of EVs is causing much stronger “range anxiety” in a country where long-distance driving is the norm.

Adding to this a drop in price in second-hand EVs and raising concerns around the actual sustainability of the EV model, you have a recipe for a significant slowdown in consumer demand.

The other concern in this market relates to the competitiveness of heavily state-subsidised Chinese car makers. The flooding of Western markets by BYD and other Chinese EVs has put pressure on western OEMs.

On both sides of the Atlantic, we are seeing signs of turbulence. A number of new EV actors are closing shop. The UK arm of electric vehicle maker Arrival entered administration, just three years after being valued at more than £9 billion. Swedish electric motorcycle company Cake files for bankruptcy despite raising $74.4 million. We have mentioned above the list of companies that raised large amounts of money via SPAC.

So are these signs of a long-lasting downturn for the EV market? Or is this a normal cycle downturn which is experienced by any new industry?

An unstable transition is in motion

We can probably make the analogy with the PV market, which saw countless failures during its first wave of deployment before reaching a steadier pass of growth.

Our view is that even if in recent months we have seen negative headlines, the macro trend will keep supporting the market.

Some markets will adopt EVs faster than others. We shouldn’t expect a uniform adoption around the world. To illustrate that point, in 2023 82% of new cars sold in Norway were EVs whereas in the US it is still around 7%.

The current trend in the US seems to be an uptake of hybrid vehicles capable of addressing the range and charging challenges. Hybrid could be a way for carmakers to meet customers in the middle until optimal EV infrastructure is deployed.

And this optimal EV infrastructure should arrive soon. As we have seen above, numerous players are working on optimising interoperability, increasing the performance of our batteries and chargers. A few weeks ago, Tesla announced the rollout of the Tesla V4 Superchargers which will charge at 350kW, or 185 Km in 5 minutes! In other words, we are a few years away from finding EVs as convenient to drive as petrol vehicles. The other 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.

Our perspective is that although the EV market is facing some challenges, it is in a phase of significant maturation. Technology is improving and becoming cheaper, and carmakers and energy providers are supporting the transitions. Regulators are aligning with the financial market. Most importantly, users are becoming more comfortable with EVs and can see the financial benefit of switching to electric.

It’s undoubtable that the transition is in motion.