Electric vehicle charging station market struggles to be profitable

One of the major issues facing the electric vehicle (EV) charging station market is how to generate revenue profitably and sustainably.


IHS has acquired IMS ResearchOne of the major issues facing the electric vehicle (EV) charging station market is how to generate revenue profitably and sustainably. Recent research from IMS Research (recently acquired by IHS Inc.) shows that there are 75,000 EV charging stations currently installed globally, rising to 4.8 million in 2015. However, the industry is struggling to find ways to generate a return on this installed base.

IMS Research senior analyst Helena Perslow commented: “Even as volumes of charging stations ramp up in the near term, it isn’t clear which segment of the value chain will be profitable. Various business models are being experimented with, but clearly there will be winners and losers.”

Manufacturers of charging stations are in a very difficult position. Demand for electric vehicles is uncertain, yet a developed infrastructure of charging stations is a pre-requisite for growth in EV sales. Manufacturers are therefore saddled with development costs for a product for which there is no clear demand. Whilst many are taking a long term perspective, many current projects are heavily subsidised by government funding or suppliers are having to sell below cost. Clearly this isn’t sustainable, but until volumes ramp up it is difficult to see how manufacturers can drive profitable growth.

Global installed base for public charging stations. Source: IMS Research

For the actual process of vehicle charging, EV charging station owners have hit upon three main business models. First, some owners have setup large networks of charging points to which drivers can subscribe for a monthly fee. The issue with this model is that significant capital is required to setup a network and a significant number of subscribers are required to make the network profitable.

Second, some owners offer a ‘pay-per-use’ service. Large networks are not required, reducing the capital cost; however, drivers want to be able to charge quickly which requires a more expensive dc charger. IMS Research’s industry research found that consumers would be willing to pay $15 to $17 for a 30 minute ‘quick’ charge.

Third, some owners offer free charging in exchange for drivers’ using their other services or buying additional goods in their stores. It’s extremely difficult to measure the impact of this type of ‘loss leader’ initiative; however, a single charger would have to generate $125/month in extra profit to pay for just the charging station, more revenue would be needed to cover installation, maintenance, and electricity.

Operator/maintenance companies have taken a different approach. Typically, they do not own or purchase the EV charging stations, rather they operate and maintain EV charging stations on behalf of other companies. They will typically charge a monthly fee to manage a network and be responsible for servicing/repair. An operator/maintenance company will take a share of the charging station fees per month, but is not liable for the upfront investment. This is a more sustainable business model.

Perslow commented: “A recent project in Belgium has shown that the industry is starting to ‘home in’ on profitable, sustainable business models.” The country’s first dc charging networks is based on an investment made by VitaeMobility, with the service being installed, run and maintained by ABB. For VitaeMobility, the project utilises profitable dc chargers which should provide a quick return on investment. For ABB, the investment risk has been made by another company, allowing them to focus on sustainable operation and management.

No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me