/U.S. EV charging system a priority under Biden’s $2 trillion infrastructure plan
U.S. EV charging system a priority under Biden's $2 trillion infrastructure plan

U.S. EV charging system a priority under Biden’s $2 trillion infrastructure plan

President Joe Biden is prioritizing a national EV charging network under his $2 trillion dollar infrastructure bill, promising to have at least 500,000 of the devices installed across the U.S. by 2030.

The Biden administration is rolling out Wednesday a $174 billion plan to spur the development and adoption of EVs that includes money to retool factories and boost domestic supply of materials, tax incentives for EV buyers and grant and incentive programs for charging infrastructure.

But it’s going to take more than government support to successfully expand EV infrastructure. There aren’t enough EV drivers to make it a viable business yet, and building a network of chargers is far more complex than it sounds. It takes a mix of private-public partnerships that can involve local municipalities, businesses and utility companies as well as automakers and an emerging group of EV charging companies. It’s not as simple as having a gas station at every corner.

“As electric vehicles become more primary vehicles for people, certainly it’s not like we’re going to replace the gas station with the charging station and that’s it,” said Mark Wakefield, a managing director and global co-leader of the automotive and industrial practice at AlixPartners.

$300 billion

AlixPartners estimates $300 billion will be needed to build out a global charging network to accommodate the expected growth of EVs by 2030, including $50 billion in the U.S. alone. Costs for EV chargers vary based on the “level” of charger. The higher the level, the quicker the charge and the more expensive it is to install.

Charge Point EV stations

Source: Charge Point

“It is a big pill to swallow for anybody,” Wakefield said. “These are really, really expensive, especially these fast chargers” that some automakers are promising will take as little as 10 minutes to charge upcoming EVs about 80%. That compares to lower level chargers, including home outlets, that take several hours. Level three chargers cost $120,00 to $260,000 installed on average, according to AlixPartners. “These are not cheap.”

But demand for the networks isn’t quite there yet. Plug-in vehicles, which include EVs and hybrid electric vehicles with traditional engines, only accounted for about 2% of the more than 17 million new vehicles sold domestically in 2019, according to the Energy Department. But many believe now is the beginning of the end of gasoline vehicles.

“It’s no longer a matter of if, and it’s no longer a matter of when, it’s now the question is how fast? Because we know that the automakers have clipped the money in the retooling,” said Jonathan Levy, chief commercial officer of EV charging company EVgo.

While automakers like General Motors and Volkswagen are heavily investing in improving performance and lowering prices of EVs to catch up to Tesla, they’re far less interested in building, owning and operating their own charging networks. The profit margins and amount of effort involved to maintain them just doesn’t make sense. Tesla, an early leader in the industry, built its own charging network out of necessity and, in part, to help sell its cars.

Mainstream adoption

“The answer is not one size fits all,” ChargePoint CEO Pasquale Romano told CNBC. “You’re going to need an entire universe of charging infrastructure that is easy to use and accessible for the different scenarios to kind of play out.”

Charging suppliers and operators have largely focused infrastructure at destination points in urban and suburban areas such as grocery stores and other places where people regularly shop. Businesses consider it a draw for EV owners. There’s also a growing call for additional fast chargers between major cities to enable faster and longer trips for EVs. Tesla has been building out such a network for its owners for nearly a decade.

‘Peanut butter and jelly’

“It’s not ‘chicken and egg’ because we’re not starting from scratch,” he said. “We have charging, we have EVs. It’s not what comes first. It’s peanut butter and jelly, in that we need to build these things out in a complimentary way.”

About 30% of Americans don’t have access to home or workplace charging that are going to need a way to charge future EVs, according to Levy.

As for 2020, IHS Markit reports EVs were only 1.8% of new light-duty vehicle registrations in the U.S. AlixPartners expects there to be 18 million EVs on U.S. roadways by the end of 2030.

Business models

A Tesla Inc. vehicle charges at a charging station in San Mateo, California, U.S., on Tuesday, Sept. 22, 2020.

David Paul Morris | Bloomberg | Getty Images

ChargePoint is Cowen’s “top pick” for the recharging market, which the investment firm believes will be a total addressable market of about $27 billion by 2040. The company went public March 1 through a SPAC deal with Switchback Energy Acquisition Corp.

While largely new to public investors, Cowen believes ” the sector is poised for tremendous growth and value creation, underpinned by a large, strong unit economics, and recurring revenue,” according to a report on EV charging earlier this month.

But that growth needs to come with EV sales as well as incentives and investments from several sources, including the federal government, according to officials.

“Right now you absolutely need government funding at some level,” Wakefield said. “The reality of it is that the automakers don’t have the money. Utilities have some of the money, but the business case isn’t there. It’s so expensive.”