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Chargers Charging Ahead

Sept. 28, 2017
Six key questions about the electric vehicle supply equipment market.

The city of Lockport, NY, is planning to build an electric vehicle charging station at city hall, and the Common Council unanimously approved the expense of $26,000 in contingency funds for the project,” said a report last month in the Lockport Journal.

“In addition to upgrading its current electric vehicle charging stations, the village of Oak Park will install two new charging stations at two of its parking garages,” said the Chicago Tribune, also last month.

The fact that installing electric vehicle chargers is newsworthy, not just in small towns but in suburbs of major metropolitan areas, confirms that we’re still in the very early stages of the process of integrating electric vehicles into the transportation mix.

It seems like a long time coming. Cars from the first production run of Tesla’s Model S are now five years old. According to data from the U.S. Department of Transportation, the average American driver puts in 13,474 miles behind the wheel each year. If used for everyday driving, those Model Ss now have 67,370 miles on them.

It’s been seven years since Electrical Wholesaling ran its first feature on the electric vehicle supply equipment (EVSE) market and the promising opportunity it presents for electrical distributors. A lot has changed since then, but it’s clear we’re still in the early days. Despite all the excitement they’ve generated, electric vehicles now account for 1% of new car sales. Significant, but there’s a long way to go.

The U.S. Department of Energy says there are now 14,349 electric vehicle charging stations nationwide, comprising almost 36,000 outlets.

For comparison, there were 156,065 total retail gasoline fueling sites in the United States in 2012, the most recent year available, according to the Census Bureau.

As the EVSE market continues to work through the thrills and tantrums of youth it’s worth asking some questions about where it stands and where it’s headed.

How far will this thing go?

Since plug-in electric cars entered the market, proponents and observers have expressed anxiety about range anxiety. They are concerned that car buyers are concerned about being able to get where they need to go and find a place to charge when they need one.

New battery electric vehicles are shooting for 200 miles per charge. The top-level Tesla with the 100kWh battery posts an EPA-rated range of 335 miles, roughly equivalent to the distance a 28 mpg internal combustion car will travel on a 12-gallon tank of gasoline. The catch is that when the conventional driver gets to about 300 miles and starts looking for a gas station, she’s likely to find one without much trouble. Range anxiety is the reason many observers point to charging systems as the primary barrier to faster growth in sales of electric vehicles.

Electrical distributors and manufacturers may experience a different kind of range anxiety, wondering how far electric vehicle adoption will go and how soon, so they can determine whether and when to build and stock the charging systems.

Published studies vary in their predictions of growth in the EVSE market. Frost & Sullivan puts it at $45 billion globally by 2025. MarketsandMarkets says, “The electric vehicle charging stations market is expected to grow at a CAGR of 29.8% between 2016 and 2022 and estimated to reach $12.61 billion by 2022.” Navigant Research expects the global market for EVSE to grow from around 425,000 units in 2016 to 2.5 million in 2025. IHS Automotive says the global EV Charger (EVC) market is forecast to grow from more than 1 million units in 2014 to more than 12.7 million units in 2020. In its Electric Vehicle Charging System Market Report, Allied Market Research forecasts that the global market is expected to garner $8.02 billion by 2022, registering a CAGR of 30.7% during the period 2016-2022.

The upshot is that analysts expect growth of around 30% annually on the way to multi-billion dollar market.

How fast will it go?

The top Tesla Model S gets from 0 to 60 mph in 2.275 seconds, making it the quickest production vehicle ever. A video of a Tesla Model X P100D drag racing a Lamborghini Aventador, posted by DragTimes, went viral recently. Tesla’s sport-utility crossover edged out the Lambo and set a record for the quickest SUV, clocking in at 11.418 seconds at nearly 118 mph for the quarter-mile. They call it “ludicrous” mode for a reason.

The performance of the market for electric vehicles doesn’t look much like a Tesla’s power and torque curves. A recent report from Bloomberg New Energy Finance (BNEF) proposes that growth in EV adoption will follow a low trajectory for a few more years, until battery prices fall substantially and spur demand, and then will rise rapidly after that. “While EV sales to 2025 will remain relatively low, we expect an inflection point in adoption between 2025 and 2030, as EVs become economical on an unsubsidized total cost of ownership basis across mass-market vehicle classes.”

“The EV revolution is going to hit the car market even harder and faster than BNEF predicted a year ago. EVs are on track to accelerate to 54% of new car sales by 2040. Tumbling battery prices mean that EVs will have lower lifetime costs, and will be cheaper to buy, than internal combustion engine (ICE) cars in most countries by 2025-29,” BNEF said in its report Electric Vehicle Outlook 2017.

Meanwhile car manufacturers across the board are touting their investment and development of electric vehicles. Sweden’s Volvo, for example, has committed to a plan that all the models it introduces starting in 2019 will be either hybrids or powered solely by batteries. Automotive parts suppliers caution that the conversion will take decades, but the writing is on the wall.

Who holds the keys?

Adoption of EVs and build-out of EVSE networks depends for now on government incentives. In the United States, a federal incentive and the usual mosaic of varying state and local incentives and mandates play the key role in the deployment of public charging stations.

Outside the U.S. market, some countries have taken a more aggressive approach. The European Union: “Every new or refurbished house in Europe will need to be equipped with an electric vehicle recharging point, under a draft EU directive expected to come into effect by 2019,” said the Guardian.

Meanwhile China, India and Mexico are among nations pushing for emissions-free cars.

Those policies may seem like remote curiosities until you consider that global automobile manufacturers as well as manufacturers of EVSE are gearing up to provide the cars and chargers to meet those mandates and that investment will mean greater availability, lower costs and faster technological advances that will influence offerings and demand here.

As for the keys to the EVSE market, a rogues’ gallery of players are involved in building out charging station networks right now and as demand increases it’s likely more will join the fun. Private startups such as ChargePoint, EVgo and Greenlots, are aggressive in the push to scale their networks.

Car manufacturers are building their own networks or partnering with existing network operators to be able to assure buyers that they’ll be looked after on the road. Tesla has deployed proprietary “Supercharger” stations where only Tesla drivers can plug in. Nissan and BMW recently expanded a partnership with EVgo to support a network of DC fast charging stations.

Electric utilities see huge opportunity in converting the transportation system to run on their grid and several have formed partnerships with charging networks or sought to build their own.

Energy Impact Partners (EIP), for example, recently announced an investment electric vehicle charging company Greenlots. Although the amount of the infusion wasn’t disclosed, EIP CEO and managing partner Hans Kobler described it as a “meaningful commitment from the fund,” which was established to invest in companies that are creating technologies or services that optimize energy consumption or that contribute to sustainable generation, according to the website GreenBiz. The companies behind EIP include global utility and power companies: Southern Company; National Grid; Xcel Energy; Ameren; Great Plains Energy; Fortis; AGL; Avista; Madison Gas and Electric; TEPCO; PTT Public Co.; OGE; and Transcanada.

Who’s driving?

Alongside the rising interest in electric vehicles has come a deluge of hope and hype around the idea of self-driving cars. It’s difficult to anticipate whether automated personal transportation will have an impact on the number of EVSE systems required. If the projections of vastly smoother and safer traffic flow produce an increase in the number of people who want to get to or live in the city, it could produce a boost in EVSE demand, but if self-driving cars are primarily used in shared-car services where once it drops you at the office your car goes and picks up Ethyl for a run to the pharmacy, demand for charging may remain about the same.

Will it leave you stranded?

As the mobile world moves up the curve of EV adoption, chargers will most likely come to be seen as unremarkable everyday appliances rather than the novel curiosities they have been up to now. Already parts of the market have begun to slip out of the grasp of the electrical trade supply channel. Best Buy and (of course) Amazon offer Level 2 charging stations and installation services, many car makers and dealers supply them to buyers, and they’ve become common enough that Consumer Reports produced its usual handy guide to selecting the right one for your garage.

So as it went with household appliances and air conditioners that once filled electrical distributors’ shelves and showrooms, EV charging systems could become someone else’s product and distributors again will content themselves with providing the wire and conduit and switchgear and connectors to make it work.

However, just about every full-line electrical distributor’s existing supply chain links to manufacturers of EVSE systems. Leviton, ABB, GE, Siemens, Schneider Electric and many others are among the top producers of charging stations. It seems logical that especially in markets where local or state governments mandate Level 2 systems in every new home or a certain number of chargers for multi-family residential or commercial developments, the selection and purchase of the systems will be more about construction bids than consumer fancies. As with all other parts of the electrical industry, where a distributor can establish itself as the high-performance, low-cost route to installation, the distributor will command the preferred path to market.

Will it change the world?

The appeal of electric vehicles isn’t all about the environment anymore. There have even been signs of push-back from environmental activists following some controversial studies of the lifecycle environmental impact of EVs that showed the mining of materials and production of components that go into an electric car are equivalent or worse than that of their gas-fired peers. Besides, an electric vehicle’s environmental impact depends heavily on how the electricity on which it runs was generated, which is why some skeptics refer to EVs as coal-fired cars.

Nevertheless, local air pollution is the topmost environmental concern in smog-choked metropolises all over the world, even moreso in Mexico City and Mumbai than the legendary brown haze of Los Angeles. Converting transportation in the major cities to electric will make an enormous difference in the quality of life enjoyed by people living there, and while it may only displace the pollution to the towns near the generating plants, centralizing the emissions also makes mitigation a site-specific technical problem instead of depending on the tailpipe breath of every single ill-maintained car, truck and bus.

Besides, since 2012, when the Tesla Model S displaced the Toyota Prius as the iconic electrified vehicle and went on to post such excessive performance numbers that road testers had to recalibrate their scales to account for it, interest in electric vehicles has spread to include those who don’t consider environmental responsibility the most important factor in selecting a car. The fact that executives and fans of companies like Mercedes, BMW and Porsche are positioning their new electric concept sedans as “Tesla-killers” tells a lot about how the market has changed.

On a more practical level, the fact that electric cars are simpler machines, with a tenth the number of moving parts, a fraction of the maintenance requirements and tunable more with software than wrenches means they’re expected to last longer than internal combustion-driven cars.

JP Morgan released a paper in July specifying what kinds of companies stand to lose the most from a conversion to electric vehicles. Aside from oil companies, car dealers that rely on maintenance work and buyer financing for their profitability stand to take a big hit because JPM expects both purchases and repairs to be less frequent.

Meanwhile, companies investing in building out the infrastructure needed to support electric vehicles have cause for optimism if they can survive the hazards of ramping up ahead of demand. ChargePoint, for example, got some headlines recently for suggesting it’s considering a public offering at some point in the next five years.

The EVSE market is being treated in some quarters as a disruptive technology play instead of a commodity appliance play, and will probably continue to be viewed that way until chargers are more numerous than gas stations. Along that rising road, and maybe even moreso once we reach that point, the EV charging system market will be a niche where electrical distributors can play a vital role.