How To Invest In Electric Vehicle Charging Stations

Are you wondering how to invest in electric vehicle charging stations? I asked myself this question 5 years ago when I first heard about the coming EV revolution.

After buying my first Tesla, I instantly saw a need for more charging options and started researching ways to be part of the solution.

After false starts with 2 failed locations, I finally partnered with a shopping plaza near my local Whole Foods. Our utilization has grown 10x over the past 3 years as adoption accelerated. Other landlords now ask me to install chargers to attract premium tenants.

This transition will only speed up. I promise in this guide to explain the ideal locations, ownership models, policy incentives and equipment considerations new investors need to evaluate. If charging station investments excite you like they did me, read on to expand your knowledge in this area.

This guide will walk you through everything you need to know about the market potential, business models, site selection, ownership structures, equipment choices and more when evaluating investments in public EV charging stations.

The Surging Demand for EV Charging Stations

The adoption of electric vehicles is accelerating rapidly. There are now over 10 million EVs on roads globally, with nearly 70% market share in Norway and around 8% market share in countries like China and Germany. [electric vehicle charging stations] Most major automakers have announced plans to electrify their offerings, with some committing to all EV sales within the next 10-15 years.

Governments have set ambitious EV adoption targets as well, such as the UK aiming for all new car and van sales to be electric by 2030 and California requiring all new vehicles sales to be zero emission by 2035. [invest in ev charging stations] To enable this EV growth, there needs to be a massive build out of charging infrastructure.

Table 1: Government EV Adoption Targets

CountryTarget
UKAll new car and van sales to be electric by 2030
CaliforniaAll new vehicle sales to be zero emission by 2035
Germany7-10 million EVs by 2030

BloombergNEF projects that EV sales will hit 60 million by 2040. Meeting that demand would require investing around $500 billion globally in charging infrastructure through 2040. [ev charging investment opportunities] This represents an enormous investment opportunity as the vehicles come onto roads.

The International Energy Agency (IEA) forecasts there will need to be over 200 million public EV charging points by 2040. [ev charging business opportunities] That is a 50 fold increase from today.

Right now, there are good 4-5 EVs competing for each public charging point globally according to the IEA. [ev charging station market size] As that gap closes thanks to support policies and private investment, incredible upside exists from owning and operating this critical infrastructure.

Evaluating Ownership Models and Station Economics

There are several ways investors can get exposure to the upside promised by surging EV adoption and charging demands. These range from direct ownership of stations, partnerships with site hosts, investing in hardware manufacturers, public market EV charging stocks and more.

Let’s explore the most popular business models for owning and operating public EV charging stations yourself:

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Charging Station Costs and Revenue Potential

Here is a breakdown of the typical costs involved per charging station along with the potential revenue generation:

Table 2: Charging Station Costs and Revenues

TypeCostRevenue Potential
Hardware + Network Fees$5,000 – $60,000Based on usage fees, subscriptions, electricity markups
Installation$4,000 on average
Land Leases$200 – $1,500 per month
Operations and Maintenance$500 – $2,000 per year

Hardware and installation costs can vary widely based on the charging speed provided. [ev charging station equipment] Costs for a typical Level 2 charger can range from $5,000 – $10,000 while a higher speed DC Fast Charger might cost $40,000 – $60,000. There are also ongoing network subscription fees to consideration with most chargers.

The revenue upside per station comes from session fees, subscriptions packages, advertising and marking up the electricity costs. Industry analysts estimate gross margins around 60-80% are achievable for well utilized fast charging stations. [dc fast charging investment] [level 2 charging investment]

Utilization is key though, as the network fees and operations costs involved can still create long payback periods without sufficient usage volume. This is why site selection is so crucial…

Prime Locations Are Key

Identifying sites with great visibility and/or “dwell time” in areas with high and growing EV adoption is key to maximizing revenue potential per charging station. [ev charging station locations] Some attractive targets include:

  • High traffic retail locations like grocery stores, big box stores, lifestyle centers
  • Employment hubs and corporate campuses
  • Highway rest stops frequented by ride share and commercial EVs
  • Urban on-street parking with park & charge capabilities
  • Destinations like hotels, casinos, sports stadiums, airports[charging station companies] Leading charging networks like ChargePoint, EVgo, Volta and Electrify America have valuable data on ideal sites. They also offer turnkey business models, handling permitting, hardware, installation and maintenance in return for a share of the revenue. [evgo charging investment] [chargepoint charging investment] [electrify america investment]

Boutique installation firms also cater to small scale investors looking to develop 1-10 stations at specific locations identified. They handle logistics while you retain full ownership.

No matter the path taken, conducting due diligence around zoning restrictions, ease of permitting, utility upgrade needs and site preparation costs are vital. [ev charging station land requirements] Getting support from the property host and ensuring site plans incorporate future expansion capabilities also adds value.

There are also great incentives available in many regions that improve return potential. These help overcome the natural barriers that exist when developing any new infrastructure network.

In the U.S., the Bipartisan Infrastructure Bill included $7.5 billion to build out a national EV charging network. [ev charging infrastructure bill] [biden infrastructure plan ev charging] States like New York, California and New Jersey also offer additional rebates up to 80% of hardware and installation costs. [ev charging incentives] There are also clean energy tax credits that apply to EV charging equipment.

Monitoring policy developments is important as regulations and permitting processes can evolve quickly around EV infrastructure.

[ev charging ahead act] Some investors choose to allocate to EV charging real estate investment trusts (REITs) or private equity funds to get exposure while avoiding hands-on permitting and regulatory nuances. [ev charging reits]

Charging Equipment Decisions

As with any infrastructure buildout, technology decisions you make regarding charging hardware and network interoperability carry long term implications.

There are a few common options to evaluate:

Charging Speed

  • Level 2: Up to 19 kW (75+ miles of range per hour)
  • DC Fast Charging: 50-350 kW (Up to 300 miles in 15 minutes)

Network Connectivity

  • Open Standards Networks (CCS, CHAdeMO)
  • Tesla Proprietary Supercharger Network
  • Private Managed Networks

Added Capabilities

  • Bidirectional charging support
  • Vehicle-to-Grid integration
  • Autonomous charging support

Given the pace of innovation taking place in EVs, building future-proof stations should be top of mind. [vehicle-to-grid charging] [bidirectional charging investment] While Tesla’s network offers unique Supercharging exclusivity, their commitment to opening part of the network through the Open Charge Alliance demonstrates the power of interoperability. [tesla supercharger investment]

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FAQs

How To Invest In Electric Vehicle Charging Stations
How To Invest In Electric Vehicle Charging Stations

Here are answers to the EV charging station investment FAQs in a readable Markdown format:

Can I Make Money From An Ev Charging Station?

Yes, EV charging stations can generate decent revenue thanks to several income streams. Usage fees based on kWh delivered are the main source – anything from $0.30-$0.60 per kWh is common.

You can also charge session fees of $1-$20 depending on dwell time. Monthly membership plans for regular drivers provide another stable income source.

Gross margins typically range 60-80% thanks to the minimal costs of “fueling” with electricity versus liquid fuels. Well utilized DC fast chargers averaging 40-50 charging sessions per week can generate $25,000 to $35,000 in annual revenues according to industry estimates.

Other monetization options include advertising displays, charging station reservations fees, integrating storage for energy arbitrage and grid demand response incentives in some markets.

Overall utilization is key – picking sites with strong EV demand and using tools like PlugShare to market availability are best practices.

How To Build A Ev Charging Station?

For experienced electrical contractors this can be a viable small business opportunity. The main steps involved include:

  • Research permit requirements based on location
  • Determine optimal charging speed level to offer
  • Select reputable charging hardware like ChargePoint, EVBox, ABB, Evie etc.
  • Hire certified electrician to install electrical infrastructure to site
  • Mount, connect and test charging hardware
  • Integrate network software via App or Dashboard
  • Market availability via networks like PlugShare
  • Provide maintenance and software updates when necessary

Many vendors like Chargehub offer packaged charging station installation services too. Charging networks like Volta allow you bring the site while they install and operate the EV charger. These turnkey options simplify getting started.

Why Invest In Ev?

There is an inevitable long term shift towards electric transport given regulatory pressure and consumer preference for cheaper “fuel” costs, advanced technology and lower maintenance. Establishing an EV charging presence early allows you to build up valuable locations as utilization surges over the next decade.

Owning this digital fueling infrastructure also aligns investments with sustainability initiatives being prioritized by governments and corporations. Charging stands to benefit significantly from policy supports too as public funds flow into electrification and grid infrastructure upgrades.

J.P. Morgan projects the charging industry will see 50% CAGR through 2025. With tails of high utilization rates lasting 10-15 years after install, investing now can give great visibility into revenue outlooks as the transition accelerates.

How To Start Charging Station Business?

The basics steps to launch an EV charging station business include:

  1. Research local market EV adoption trends and current/planned charging availability
  2. Scout potential sites based on visibility, traffic and EV driver dwell times
  3. Evaluate incentives/policy supports available to offset costs
  4. Determine business model – outright ownership, partnerships or service provider
  5. Analyze usage scenarios + electrical capacity needs to pick optimal hardware
  6. Obtain necessary permits and complete site preparation
  7. Install and activate charging hardware + software
  8. Integrate with apps like PlugShare and offer value add services

Focus first on establishing 1-2 prime stations rather than a wider network. Optimizing site utilization is crucial so pick spots where lack of charging is visibly impacting potential EV customers. Expand from there.

What Are The Disadvantages Of Ev Fast Charging?

The main downsides of fast charging an EV include:

  • Increased costs of higher powered charging hardware
  • Additional electrical infrastructure upgrades required
  • Higher electricity fees often imposed by utilities
  • Potential battery degradation over time with frequent fast charging
  • Limited EV model compatibility – only newer EVs support speeds >50kW
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While a 50kW station costs ~$40,000 more than a 7kW Level 2 equivalent, the 4-6X faster charge rate unlocks more potential revenue by serving more sessions per day.

The tradeoff is that fast charging works best as a complement rather than outright replacement to daily overnight charging for drivers. This means tapping into both destination and commute charging markets.

How Much Does It Cost To Charge A Tesla?

How To Invest In Electric Vehicle Charging Stations
How To Invest In Electric Vehicle Charging Stations

Using Tesla’s vast Supercharger Network in North American, drivers are charged $0.28 per kWh. So a Model 3 LR (75kWh battery) costs around $21 to add 270 miles of range via fast charging. This equates to around 7-8 cents per mile.

By comparison, the average gas powered sedan costs 12-15 cents per mile to refuel. Though costs vary by electricity rates, charging an EV generally equates to “$1 per gallon” fuel savings along with lower maintenance requirements.

Tesla has aimed to incentivize charging at home for cheaper rates + grid stability so pricing is slightly higher than household electricity rates. Public DC fast charging by third parties can be upwards of $0.60 per kWh.

What Is The Asset Life Of Ev Charging Station?

The typical asset life span ranges from 10-15 years. This aligns with estimated lifecycles for Level 2 charging stations and DC fast chargers before major refurbishment is required.

Of course, trends toward improved batteries, higher charge rates and upgraded software capabilities will impact long term viability. This parallels the evolution from early gas pumps to pay-at-the-pump technology upgrades seen over the past century.

Future proofing investments by ensuring adequate power capacity, flexibility around EV connection standards and over-the-air software upgrade capabilities helps safeguard against premature obsolescence.

What Power Is Required For Ev Charging Station?

For Level 2 charging stations delivering 6-19kW charge rates, a 240V 40A-80A circuit suffices for most EVs. Higher powered 100A+ circuits provide buffer for maximum 19.2kW draws required by EVs with larger batteries.

DC Fast Chargers require much more power – typically drawing 150kW+ from 400V 3 phase electrical service. To enable this, commercial sites need 125+ Amp capacity at higher voltage levels. More modest 50kW DC stations can tap into 240V supplies with 200A+ service.

On the EV side, onboard chargers accepting over 3kW AC power is the norm while newer EVs support 100-250kW DC fast charging. Understanding site infrastructure capabilities and matching appropriately to prevalent EV models locally is good practice when installing.

How Many Types Of Electric Car Chargers Are There?

Are Electric Vehicles A Good Investment
Are Electric Vehicles A Good Investment

There are two main levels of electric car charging stations:

Level 1 – Alternating current using 120V household plugs, delivers 2-5 miles of range per hour

Level 2 – 240V circuits, delivers 10-25 miles of range per hour

DC Fast Charge – 400-900V direct current for > 60 miles of range in 15 minutes

Within each level, charging speed capabilities and connector types vary. Level 2 chargers typically utilize J1772 or Tesla connectors while CCS, CHAdeMO and Tesla Superchargers represent DC fast options.

Higher “future proofed” charge rates align with larger EV battery capacities. Building flexibility to add additional charge posts as demand scales can optimize initial investments.

Conclusion

The EV charging industry finds itself in a similar position to where broadband internet infrastructure was 20 years ago. While the trend of electrification seems inevitable, there remain large upfront infrastructure investments required to make it possible.

First movers and strategic investors in this space have an opportunity take part in building the digital fueling networks that will power cleaner transportation globally over the coming decades. [evbox charging investment] [blink charging investment] By evaluating utilization potential, incentives available, ownership models and equipment decisions wisely, investing in EV charging can offer outstanding financial returns. [voltbox charging investment]

The information we’ve covered here should give you a framework for analyzing the variables involved at potential public charging station locations.

As proposals come your way, the devil is the details around accurately modeling the revenue and costs on a per site basis. Don’t hesitate to consult industry experts as you perform due diligence. The firms active in this space have valuable data to determine if the opportunity pencils out.

Images: Credit Istock

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