EV charging operators run the gamut from publicly owned hosts to businesses that are built to profit on their services to EV owners. Knowing their opportunities and challenges is key serving them.
In the EV charging ecosystem, we often talk about the Charge Point Operator (CPO) as the commercial entity that provides the charge to EV drivers. However, for other businesses in the ecosystem that support charging services, it’s critical to know charging services operate under as many as six different business models, each with their own revenue sources and challenges.
Whether you provide the EV Charging Platforms, siting analysis (i.e., Charge Point Analytics) or just the charging hardware, it helps to understand who owns the property, their motivations, and who makes sure the chargers don’t break down.
Six EV Charging Business Models
The following six types of EV charging models run the gamut from publicly owned hosts to businesses that are built to profit on their service to EV owners. This list starts with two models that often partner with the others to ensure that customers get what they’re looking for.
Charge Point Operator (CPO)
The CPO is a private company that operates a network of charging stations and is making its revenue on charging fees and subscriptions to use the service. They have flexibility in pricing to ensure they are competitive with other local options. They are also flexible in how they own and manage individual sites, since they could partner another property owner and share responsibilities over charger maintenance.
Examples: Blink, ChargePoint, EVgo, Electrify America, Tesla, Shell, Recharge America.
Challenge: If the CPO doesn’t own the site or the chargers themselves, they must clarify roles and responsibilities with the site owner. Lack of clarity leads to downtime, finger pointing, and customer dissatisfaction with the charging experience.
Charging-as-a-Service (CaaS)
CaaS providers build their business on “turnkey” operations for installation, operation and maintenance. This is essentially a variation on the CPO model in which they provide full-service for a subscription at a minimal upfront cost to the site owner. They may also offer “white labeled” service to operate under the host’s brand.
Example: EV Connect supports over 3,000 businesses throughout the US
Challenge: Establishing a brand that exudes quality and reliability. Given the number of players in this emerging market, success of both CPO and CaaS vendors will depend on their reputations.
Host-owned
Property owners who provide EV charging for their customers or employees offer the service with the intent of building customer loyalty or employee satisfaction – and in some cases to meet their corporate sustainability goals. The site host typically maintains control over the pricing and access. Since this is not a core part of their business, pricing may be inexpensive or free.
Local businesses may also partner with an established branded charging network to support the charging stations, which offers the potential of a revenue sharing arrangement between the two.
Example: Since 2011, Simon Malls has partnered with EVgo, Tesla and Electrify America to offer charging at 124 locations.
Challenge: Site owners are ultimately responsible for their charger’s reliability and ease of use, but that’s not their core competency. In addition, it’s hard to stay on top of the innovations in this market. If they install today’s charger technology, they may quickly fall behind on payment and charging hardware in the years ahead.
Partnering with a Charge Point Operator or Charging-as-a-Service provider helps to ensure uptime and timely upgrades of the equipment and network.
Public-owned
Governments are providing charging services to incentivize EV adoption and meet their own sustainability or Greenhouse Gas (GHG) reduction goals. The locations are typically on government-owned property, such as town or city parking lots, recreation areas, or highway service stations. As with many host-owned services, the government entity will partner with a CPO, CaaS or electrical services firm to install and manage the charge points.
Example: Oslo, Norway offers curbside charging supplied by EVINY, a Norwegian renewable energy and services company (see below).
Challenge: Public EV charging is not a core competency of the public entities. Citizens may experience issues with chargers if they are not operating properly – particularly since customer loyalty may not be their top priority. Partnering with a Charge Point Operator or utility is essential for avoiding citizen dissatisfaction.
Utility-owned
Utilities have some advantages in providing EV charging. They know where the power is (duh!) and have the skills to reliably bring it to a charging site. They may choose to handle the installation and maintenance, but could also partner with a CPO or CaaS vendor. They have several incentives to provide this service. One is the ability to off demand pricing to incent people to charge at off-peak time and their own grid control costs. The other is to build a positive brand image as an environmentally conscious public utility. However, this requires that they have regulatory support. For example, the state of Massachusetts does not license investor-owned utilities for these types of services, but municipal light plants can. Across Europe, many utilities are licensed to provide charging.
Example: Holyoke Gas & Electric in USA, E. On in Germany
Challenge: The primary challenge is their regulatory constraints. They must be able to bring services, other than just the power, to the end customer.
Advertising/Sponsorship
In areas with high traffic, such as retail malls or city shopping districts, the combination of digital advertising with low-cost charging, can generate revenue from either the advertising, charging, or both.
Example: Volta ChargeHub has over 2,000 sponsored charging stations across the US (see below).
Challenge: This win-win business model’s primary challenge is optimizing the number and siting of locations within its network to ensure that its costs don’t exceed its advertising income.
Conclusion
The sheer number of vendors and variety of business models in this emerging market means that there will be a shake-out in the not too distant future. Given that many EV drivers can conveniently charge at home, the precise locations where charging demand meets service providers requires a great deal of analysis and experience.
Charging service providers that are deliberate in how they expand their networks and provide great charging experiences will ultimately be successful. Those that do not, will fall by the wayside and create dissatisfied EV drivers.
