Leveraging Opportunities in Charging Infrastructure and Strategic Partnerships Will Drive the Next Phase of EV Growth
This article is written by Rich Steinberg, expert in eMobility, automotive industry veteran and Silverline’s Mobility Advisor.
The world is moving rapidly toward electrifying everything. With sales of battery-powered vehicles set to account for approximately half of the global vehicle market by 2035, the electric vehicle industry is maturing, costs are decreasing and investments are soaring. In fact, automakers will invest more than $500 billion in technology through 2026 to make more EV models available.
Against this dynamic landscape, EV charging is expected to see a 20-fold jump in profits, from about $300 million in 2021 to more than $6 billion in 2030 in the U.S. alone. The latest EV profit forecast from global management consulting firm Bain & Company underscores this steep trajectory, citing the opportunities ahead for companies flexible enough to navigate this emerging and complex market in the U.S., China, and the European Union.
EV charging can include home, work, transit and destination categories. As Bain accurately identifies, smart energy services represent the greatest opportunity, with as much as one-third of the profit pool by 2030. These next-gen smart services include vehicle-to-grid and vehicle-to-home charging, and successful companies will bring innovative solutions that enable customers to balance these two-way flows of energy and maintain a stable electric grid.
Smart services and more widespread adoption of EVs go hand in hand. Smart services can be best leveraged by having access to large fleets of vehicles and chargers to accept and store energy under sporadic circumstances, such as the intermittency inherent in wind and solar production. On the flip side, these large fleets can be leveraged to throttle back energy needs when demand on the grid is under stress.
Bloomberg agrees that the long anticipated "tipping point" on smart services has finally been reached, due in part to renewed conversations around energy independence resulting from rising gas prices and the war in Ukraine. However, in Silverline’s view, it will be challenging to generate profits over the upcoming decade until this market reaches its full potential. We can anticipate winners and losers in the space until then.
Winners will almost certainly be the companies that are best able to generate partnerships up and down the value chain to optimize opportunities in this emerging market – new players will need to partner with established, well capitalized, and well-respected organizations like Shell and Siemens to drive profitability.
At Silverline, we’re keeping our eye on fleet charging, especially as fleet charging depots can be ideally positioned for smart energy management opportunities and the profitability they can create.
Complementing the $7.5 billion for a nationwide EV charging network funded through a bipartisan infrastructure plan signed by President Biden last year, major climate legislation passed by Congress August 12th would include a potential wealth of incentives for EV consumers and manufacturers that could further expand the demand for equitable charging. That includes the lifting of a 200,000-unit cap that had limited Tesla, GM and other customers from receiving an EV purchasing credit and a new $4,000 used EV purchasing credit, although it is unclear how income and domestic manufacturing qualifiers outlined in the bill will blunt the used EV incentive’s impact with consumers.
We’re also anticipating the role of regulations as the market develops and the potentially inverse relationship of a complex regulatory landscape with increased EV adoption. As Bain points out, regulations in the United States vary from state to state. On the plus side, for example, Low Carbon Fuel Standard (LCFS) credits administered by the California Air Resources Board (CARB) can represent significant profitability opportunities for charge operators in that state.
At Silverline, we’ve also been keeping our eye on addressing energy demands for charging and the equitable rollout of smart charging infrastructure – both of which will be critical to a successful and sustainable future for EVs in America.
Image Credit: SaraWuth702
