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Charging-infrastructure for electric vehicles is emerging as one of the biggest investment opportunities of this decade.

We have been tracking the developments in the electric vehicle (EV) industry for many years. Falling battery prices, technological advancements allowing more miles per unit of charge, and the commitment of several governments to reduce carbon emissions, are major factors driving rising EV sales. 

The total global EV count at the end of last year reached 7.5 million units, up from just 17,000 in 2010. Despite this 441-fold increase, EVs currently still account for only 2% of global automobile sales. However, this is changing quickly. Thirteen countries have announced plans to ban all fossil fuel burning automobiles, some by as early as 2025. U.S. Presidential candidate Joe Biden’s recently released $2 trillion clean energy plan includes a program to give big discounts to consumers who trade-in their fossil fuel-based vehicles for EVs. The proposal also includes a focus on developing domestic EV manufacturing and investments in battery technologies.

Bloomberg New Energy Finance (BNEF) noted in its latest Long-Term Electric Vehicle Outlook that global internal combustion engine sales peaked in 2017 and will continue to decline. BNEF also estimates that EVs will represent 58% of new passenger car sales, over two-thirds of all municipal buses, 47% of two-wheelers, and 24% of light-commercial vehicles by 2040 worldwide. BNEF forecasts 54 million EV unit sales annually by 2040. 

However, larger batteries alone will not resolve the EV market’s long-standing hurdle of greater driving range in order to achieve widespread penetration. The ability for batteries to charge quickly is also essential for an owner’s seamless experience in long-distance driving and is central to sustainable EV industry development. BNEF predicts that 12 million public charging points will be needed by 2040, requiring almost $400 billion in infrastructure investments.

Large-scale deployments are already underway. The number of charging points has doubled over the last three years to cross the one million-station threshold this year, notes BNEF. Europe and China have been the primary growth drivers, while the U.S. is beginning to catch up. IDTechEx expects over 100 million EVs will be on road by 2030 and will create a $40 billion charging infrastructure market.

Source: BNEF

High-speed DC chargers will be the key to rapid charging infrastructure. Currently, charging an EV can be done with three levels of chargers, based on time (see below chart). Alternate current (AC) charging (Level 1 and 2) is the simplest and is most common in home and workplace settings. These chargers provide slow charging, take a few hours for vehicles to be charged up, and are less stressful for electric grids. 

Direct current (DC) chargers are ideal for public infrastructure, which requires rapid charging. DC chargers are normally 7x-50x faster than the next best, L-2 AC versions. DC fast-charging bypasses the limitations of the in-car requirement of AC-DC conversion by providing DC power directly to the battery, which increases charging speed. Government incentives to install high-speed charging and automobile companies' growing investment to support long-range EV adoption will drive the development of DC chargers. In the U.S. alone, 45,000 DC chargers are required by 2025, a more than three-fold increase from the current 13,000.

Source: EVGO

Fast EV charging coupled with a renewable-energy grid constitutes the new holy grail of charging standards. The increasing demand for energy to charge EVs will strain electric grids. By 2030, global EVs will create demand for 640 Terawatt hours (TWh). Alternative energy, such as solar, wind, and hydrogen, will not only become a major source of power, but will also provide cost-effective charging infrastructure, while making EVs green.

EV charging stations are already being developed using solar and wind. Last year, China installed several EV charging stations that run on solar energy. For instance, a solar-storage-based EV charging station was installed in Fujian Province. The station is primarily charging buses and is expected to save 50,000 to 100,000 kWh of electricity every year.

In the U.S., integrating solar in the EV-charging industry could be a $15 billion market opportunity by 2030, estimates McKinsey. Several companies are jumping on the opportunity. Envision Solar (EVSI) has developed integrated solar-storage-charging systems to fit in parking lots. Envision Solar has already formed a partnership with Electrify America to install 30 stations in California.

General Motors and EVgo have partnered to install 2,700 fast-charging stations in the U.S. over the next five years that will be completely powered by renewable energy. Tesla has also developed and launched the Supercharger V3, which is an EV charging station that uses solar panels and battery storage.

Governments worldwide are subsidizing charging infrastructure and forming supportive regulatory frameworks. COVID-19 induced stimulus packages in Europe and Asia are supporting EVs and charging infrastructure. For instance, Germany included EV chargers in its €2.5 billion economic package and is also mandating that gasoline stations offer electric car charging. The European Union aims to support the construction of 1 million public EV chargers by 2025, up 5x from less than 200,000 currently.

Other countries including Canada, Australia, India, and the Netherlands have also launched numerous EV charging programs. China, a world leader in EVs, plans to invest $381 million in charging stations as part of its “new infrastructure” program devised to overcome the economic impact of the pandemic. China installed an average of over 1,000 charging stations every day in 2019 and intends to add 78,000 charging stations this year to its existing 516,000 points.

The U.S. has been a laggard in EV charging infrastructure development until now. Recently, the INVEST in America Act included $1.5 billion in funding over the next five years to support alternative fuel vehicle-charging infrastructure. Joe Biden also backs the deployment of more than 500,000 new public charging outlets by 2030, notes Reuters.

States and various agencies are also developing programs to stimulate the sector through policies and funding. Twelve Northeastern states have partnered with Electrify America in a $1.2 billion investment plan to improve fast-charging infrastructure in the region. California also recently released its proposal to build out 1.5 million fast-charging points by 2025.

The nascent EV charging sector has reached an inflection point as a major investment opportunity. Key industrial companies, including Siemens (SIE GR) and ABB (ABBN SW), which are developing products and services for the sector's evolution, are poised to benefit. Siemens is at the forefront of providing equipment and digital solutions for charging stations. Siemens also provides high-power DC chargers and partners with other companies to install charging infrastructure.

ABB is an experienced player in the EV industry and offers a total electric-charging solution including AC and DC charging stations. ABB has sold more than 14,000 DC fast chargers in more than 80 countries.

Other key emerging companies include:

  • Blink Charging (BLNK) – a leading owner and operator of electric vehicle (EV) charging equipment and services in the U.S. Blink’s network runs on a proprietary cloud-based software that operates, maintains, and tracks the EV charging connected stations. Blink’s presence across the value chain along with the strategic partnership it has formed with numerous location types, including parking, residential, and commercial facilities provides it with a competitive advantage.

  • Alfen Beheer BV (ALFEN NA) - offers a range of EV charge points for use at home, work, and in public areas. Alfen also designs, develops, and produces smart grids, and energy storage systems. Alfen has produced over 100,000 charge points and has supplied these in more than 25 countries. Alfen’s key competitive advantage is a digitally-connected network of charging stations along with its continued focus on innovation, broad international presence, and increased production capacity.

  • Qingdao TGOOD Electric Co (300001 CH) – is a world leader in EV-charging infrastructure. TGOOD’s key competitive advantage is its cost leadership, robust supply chain and its advanced energy concepts based on new micro-grid technology. TGOOD’s intense factory testing has reduced charging stations commissioning time by 50%. TGOOD has installed 180,000 charging terminals in over 280 cities worldwide.

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