U.S. electric vehicle charging system a priority in Biden’s $ 2 trillion infrastructure plan

President Joe Biden is prioritizing a nationwide electric vehicle charging network as part of his $ 2 trillion infrastructure bill, promising to install at least 500,000 devices in the United States by 2030.

The Biden administration on Wednesday rolls out a $ 174 billion plan to boost the development and adoption of electric vehicles, which includes money to retool factories and boost the domestic supply of materials, tax incentives for buyers electric vehicles and subsidy and incentive programs for charging infrastructure.

But it will take more than government support to successfully develop EV infrastructure. There aren’t enough EV drivers yet to make it a viable business, and building a network of chargers is much more complex than it looks. It takes a mix of public-private partnerships that can involve local municipalities, businesses and utility companies as well as car manufacturers and an emerging group of electric vehicle charging companies. It’s not as easy as having a gas station on every corner.

“As EVs increasingly become the primary vehicles for people, it’s definitely not like we’re going to replace the gas station with the charging station and that’s it,” said Mark Wakefield, Managing Director and global co-leader in automotive and industry. practice at AlixPartners.

AlixPartners estimates that $ 300 billion will be needed to build a global charging network to meet the expected growth of electric vehicles by 2030, of which $ 50 billion will be in the United States alone. The costs of EV chargers vary depending on the “level” of the charger. The higher the level, the faster the charge and the more expensive it is to install.

“It’s a big pill for anyone to swallow,” Wakefield said. “These are really, really expensive, especially these fast chargers” which some automakers say will only take 10 minutes to charge upcoming EVs to around 80%. This compares to lower level chargers, including household outlets, which take several hours. According to AlixPartners, level three chargers cost an average of $ 120.00 to $ 260,000 installed. “These are not cheap.”

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

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

While automakers like General Motors and Volkswagen are investing heavily in improving performance and lowering prices for electric vehicles to catch up with Tesla, they are much less interested in building, owning and operating their own networks of electric vehicles. recharge. Profit margins and the effort required to maintain them just don’t make sense. Tesla, one of the early leaders in the industry, built its own charging network out of necessity and, in part, to help sell its cars.

Most car manufacturers partner with third-party companies to provide charging stations. Their strategy, combined with Wall Street’s enthusiasm for electric vehicles, has boosted investor demand for charging companies like ChargePoint and EVgo. Chargepoint went public through reverse mergers with a special purpose acquisition company, or SPAC, in March. EVGo plans to do the same in the second quarter.

There are approximately 41,400 electric vehicle charging stations in the United States, according to the Department of Energy. Less than 5,000 are fast chargers. That compares to more than 136,400 gas stations, according to GasBuddy.

“The answer is not universal,” ChargePoint CEO Pasquale Romano told CNBC. “You are going to need a whole universe of easy to use and accessible charging infrastructure for the different scenarios to play.”

Suppliers and charging operators have largely concentrated infrastructure at destination points in urban and suburban areas such as grocery stores and other places where people regularly shop. Companies consider this to be a raffle for EV owners. There is also a growing call for additional fast chargers between major cities to allow faster and longer trips for electric vehicles. Tesla has been building such a network for its owners for almost a decade.

GM has pledged to launch 30 or more electric vehicles through 2025 as part of a $ 27 billion investment in electric and autonomous vehicles. It is also one of several companies, along with Volkswagen and Volvo, to announce its intention to become a fully electric company.

“We are entering this year at a tipping point for electric vehicles and really an inflection point on sustainability, inclusion and growth,” GM CEO Mary Barra said at a JPMorgan conference Thursday. Securities.

Public chargers are needed to power these vehicles, but companies like EVgo need the demand for charging to justify their business. Many have described it as a “chicken and egg” scenario about what is needed first. Levy, who served as deputy chief of staff in the Department of Energy during the Obama administration, calls it “peanut butter and jelly” instead.

“It’s not ‘the chicken and the egg’ because we’re not starting from scratch,” he said. “We have recharges, we have electric vehicles. It’s not what comes first. It’s peanut butter and jelly, in that we have to build these things in complementary ways.”

About 30% of Americans do not have access to home or workplace charging that will need a way to charge future electric vehicles, according to Levy.

As of 2020, IHS Markit reports that electric vehicles only accounted for 1.8% of new light vehicle registrations in the U.S. AlixPartners expects there will be 18 million electric vehicles on the roads United States by the end of 2030.

EVgo, which plans to go public in the second quarter under a $ 2.6 billion SPAC deal, owns and operates more than 800 charging points in 67 major markets across 34 states. The company’s business model is different from ChargePoint, which sells stations to businesses and other establishments and then charges them a subscription fee to be part of their network.

“We’re basically crowdfunding for the driver, one business at a time, the largest network of EV chargers in the region for them and they see it all as one network through our mobile app,” said Romano of ChargePoint. . “All of this tells ChargePoint that we don’t own it. It looks like we have it for the driver and that’s what we want is to create a model in which every company does its part.

ChargePoint is Cowen’s “first choice” for the charging market, which the investment company says will represent a total addressable market of around $ 27 billion by 2040. The company went public on March 1. under a SPAC agreement with Switchback Energy Acquisition Corp.

Although largely new to public investors, Cowen believes that “the sector is poised to experience tremendous growth and value creation, supported by a large and strong unit economy and recurring revenues,” according to a recharge report. electric vehicles earlier this month.

But that growth must be matched by sales of electric vehicles as well as incentives and investments from several sources, including the federal government, officials say.

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