The profitability of electric vehicle charging stations will increase significantly in the coming years as demand grows, according to analysts.
Persistence Market Research forecasts that the global EV charging station market will grow at a compounded annual growth rate of 25.5 percent by 2027. The widespread adoption of EVs in various parts of the world drives the market’s growth.
The declining cost of maintaining EVs is also expected to further boost profitability. The costs of EV maintenance have continued to decline due to government incentives. Analysts say the price may go even lower than the maintenance costs for internal combustion vehicles in the next decade.
Profitability from Direct Revenues and Cross-sales
Due to its growth potential, the private sector has begun expressing its interest in the EV charging market. These businesses can gain profitability from direct revenues and cross-sales, say analysts.
Direct revenues refer to revenues that come from the charging service. There are several pricing mechanisms that business owners implement for their EV charging services — price based on electricity consumption, price based on time spent charging and combined pricing.
In pricing based on energy consumption, the business sets up the cost of electricity. Meanwhile, businesses that set up prices based on time implement a flat hourly rate. These costs fluctuate depending on the energy prices at the location. Some operators combine the two methods to lower hourly rates and ensure customers do not “linger” after completing their charging sessions.
Several locations also gain revenues from offering fast-charging services. Fast-charging technologies benefit customers because they can charge their EV batteries in under an hour. Operators will also see a higher turnover rate, meaning they can serve more customers. The growth of fast-charging stations in Europe has outpaced the growth of slow chargers.
Nimbnet, for example, offers fast-charging services for private cars and heavy-duty vehicles in select Swedish cities. Drivers use the Nimbnet App to determine the most efficient routes for their vehicles. The operator offers a dynamic pricing system, adjusting costs based on power availability and hourly rates.
The business can also profit from selling add-on services or products while providing charging stations to customers. A regular charging session can take one to four hours, meaning the driver must stay at the location to wait until the battery is fully charged. It presents opportunities to sell other products to drivers, such as food and beverages.
Data show that EV drivers are generally more educated, younger and wealthier than the average population. They have more disposable income than conventional car drivers, increasing the likelihood of them purchasing more expensive goods and services in visits to charging stations.
As people have become more aware of the environmental damages caused by carbon emissions from fossil fuels, the EV sector is gaining more popularity. Offering an EV charging service increases the business’ reputation because it shows that it supports the e-mobility movement.
Global Authorities Support Charging Infrastructure
Authorities across the world support the development of EV charging infrastructure. Canada, for example, has established a Zero Emission Vehicle Infrastructure Program. The federal government program covers up to 50 percent of the deployment costs for 20 EV chargers. Several Canadian provinces also offer regional programs to help develop charging stations across the country.
Sweden, the second largest EV consumer in the world, also supports the development of infrastructure to support e-mobility. The country aims to reduce greenhouse gas emissions from transportation by 70 percent in 2030 and achieve net zero by 2045.
The government has introduced the Klimatklivet initiative, providing grants for public and private entities that aim to reduce emissions at the local level. Authorities in Sweden also allocated millions of dollars for the Charge at Home program. Under the program, private EV drivers receive subsidies to install home-based chargers.
The Swedish transportation agency, Trafikverket, is also developing an electric road system to reach the country’s climate targets. The 21-kilometer road, located between Hallsberg and Örebro, will charge EVs as they pass through. According to Trafikverket, it plans to build more electric road systems in the future. Germany, France, Italy and the UK are also in talks to develop a similar project.
Need for Reliable Charging Network
Climate proponents have long pushed for a transition toward battery-powered vehicles. However, ease of use is the main challenge in the EV industry. EVs have a limited travel range and require a long charging period.
A reliable charging network is necessary to support EV drivers, ensuring they can top up their batteries whenever needed. Underdeveloped charging infrastructure has discouraged drivers in various countries from moving toward e-mobility, say climate experts.
According to the International Energy Agency (IEA), 14 percent of total cars sold last year were electric. The international body also predicts EV sales will represent 35 percent of total global car sales this year. By the decade’s end, the IEA says electrifying road transport can reduce oil demand by 5 million barrels per day.