2040 USA Charging Market Value Will Be Between $65 Billion & $145 Billion
It is unbelievable the number of times I have read the following in comments or on social media: The carmakers or government should build the necessary charging infrastructure. Without it, there will never be a transition to electric driving.
The second part is very true. The first part is BS. The charging infrastructure can be built by normal commercial companies. A charging station is not different from any other shop — it only sells a single product, but that is not unique. It is just a retail outlet that sells electricity to drivers of electric cars. The curbside chargers you see in many cities, at least in Western Europe, are no different from the candy and soda vending machines that are all over schools, workplaces, and shopping malls.
The only reason Tesla started building these stations was because it was a new need. There was nothing of the sort. Nissan did the same in collaboration with third parties.
The task for carmakers is to have the right charging interface and software in their cars. For their part, governments have to cut a lot of red tape. It often takes more than two years before a location is shovel ready. That is holding up the rollout of more charging stations more than anything else.
This year, there are four very interesting charging companies that have gone public or are going public on Wall Street.
- ChargePoint via SPAC on NYSE dd. 01-03-2021, valuation of $10.4B (now $6.8B)
- EVgo via SPAC on NASDAQ dd. 02-07-2021, valuation $2.6B (now $2.4B)
- EVBox via SPAC on NYSE before 31-12-2021
- Allego via SPAC on NYSE before 31-12-2021.
Fastned is on the Dutch stock exchange and Ionity is looking for partners to expand to more countries faster. The Tesla Supercharging Network and Electrify America are major players that compete with networks that Shell, Total, and BP are building.
That these companies are looking for more investment clearly shows that they think they have an attractive business for investors. What I have not seen is a clear description of the charging market, just the normal “we’re conquering the world” marketing talk with very creative market prognoses, as if there are no competitors or alternative. The road to profitability is just one step around the corner.
Okay, it is hard to explain that there is a brilliant future ahead of you while currently your losses are bigger than your revenue. This is not stock advice. That is outside my area of expertise, which is charging.
This article is about the future. It’s not about these companies, but about the charging market overall. My main interest is getting everybody behind the wheel of an electric vehicle. For that, adequate charging infrastructure is needed. I don’t know much about the four companies that went or will go public this year. I do have some thoughts about the charging market.
In my vision, there are four charging options:
- Charging while parked at home or at work. Electricity provided by the grid, employer, or private renewable energy.
- Charging while parked, connected to a public (curbside) charger operated by a charge point operator. This is often an AC level 2 charger.
- Charging while doing something else, like shopping. Using a DC fast charger is typically ideal for this, mostly around 50kW capacity.
- Charging while traveling. Using a supercharger is ideal for this, capacity up to 350kW or more.
The first is what everybody likes to do. It is the cheapest option, and no hassle with cards, payments, and eMobility Service Providers (card companies). But without a private driveway, garage, or nice employer, most people must use the other three options.
The free charging at home and at work is not a part of the commercial charging market. Complementary charging at shopping malls is part of the charging market. It doesn’t matter who foots the bill, as long as there is a bill. The USA charging market is currently a very small market.
As with any other shop, there are three things important for the success of a charging station. Those three things are a good, visible location; a high-traffic location; and an easy-to-reach location. For level 2 AC chargers, it is about the same as any other vending machine. It should be at a location where the customers are easy to find. Do not expect the customers to search for you.
Currently, the USA market is about 1.4 million BEVs. Over half of them can charge at home or at the driver’s workplace. Easy access to charging for most EV buyers is a prerequisite. That leaves nearly half of the EV owners needing regular use of public chargers, from a few times a month to a few times a week. These chargers should be in the vicinity of where people live and work, or along the routes they often travel.
For regular use, they can choose any of the above mentioned three types of chargers. Beside the regular charging, most EV drivers will occasionally use a supercharger. In the USA, the average light-duty vehicle (car, CUV, SUV, pickup truck) drives 12,500 miles per year. Newer vehicles drive a bit more than older vehicles, as do more expensive vehicles.
For simplicity, the public charging market is estimated at 600,000 cars times 15,000 miles times 200 Wh. That makes a nice 1.8 billion kWh. If the average price is $0.30, then revenue for the charging companies is about $540 million from daily charging. Besides this, there is charging while travelling. Anecdotally, this is about twice a year for 30 kWh times 1.4 million BEV. That is another $26 million.
This is not enough for nationwide profitable charging infrastructure. The USA is now at 0.5% BEV as part of the fleet. In most of the USA, there are just not enough BEVs on the roads. Furthermore, trucks and transport are not yet electric.
There are two reasons for the lack of BEV sales. The dealers don’t like selling them, and there are not enough chargers for much of the public to buy them. In states with more chargers, there are more BEVs sold, and in states with more BEVs on the roads, there are more chargers.
The dealer’s intransigence is for the carmakers and government to break. The lack of chargers in most of the USA is for the charging companies to solve. Only, they don’t have the money to do it.
It takes a joint effort between government and carmakers to make a wide range of attractive BEVs and force the dealers to sell them. It takes a joint effort of government and the charging industry to create enough charging locations. The Biden plan of slowly increasing the market share of BEVs while also building charging infrastructure will do just that.
Fast forward to 2040.
Depending on who you ask, there are 100 million to over 200 million plug-in vehicles on the roads in the USA. The analysts of Bloomberg New Energy Finance (the most progressive among the settled industry advisors) think the number will be 100 million. Futurologists like Tony Seba, and many readers of news sites for electric vehicles and renewable energy (like CleanTechnica), think it will be at least double that number.
The heavy transportation sector will be 100% electric. The non-electric alternatives can’t compete on a ton/mile price. Short-haul trucks will charge at night at the depot. Long-haul transport will use the chargers along the highways. They also drive the most miles per vehicle. Different categories of trucking, special purpose vehicles, and buses are good for about 10% of all miles driven. Many can charge at their depots or destinations. I presume about one third will use the special fast chargers for road transport at a lower price per kWh than private drivers. The trucks will use about 2kWh per mile
The bulk of private vehicles (PV) and light commercial vehicles (LCV) drive about 12,500 miles per year on average. Contrary to the current situation, where over half can charge in their own driveway, only half can charge at home. Some of the ones with home chargers will use public charging occasionally. For simplicity, assume 50% of charging is public charging.
Again, using rounded numbers, the total miles per year is now 3.26 trillion. Suppose the same for 2040.
Public charging for trucking will be 3.5% of 3,260 billion miles at a price of $0.10 per kWh. That is 3.5% times 3,260 billion miles times $0.10/kWh times 2kWh/miles, which gives $22.82 billion per year. With all of the uncertainty with predictions over a 20-year period, it is a likely market of $20 billion to $25 billion for charging road transport. That is at current prices.
Public charging for PV and LCV is a lot harder to predict. The first estimate is between 50% and 90% of all miles are electric. The second estimate is that US love for large vehicles will bring the average efficiency to 300 Wh per mile. The third estimate is that about 50% of charging will use public charging. The fourth estimate is that the public charging will cost between $0.20 and $0.30 per kWh.
I used a spreadsheet to get some numbers from those four estimates. The conservative BloombergNEF number for the BEV fleet share creates a market between $45 billion and $65 billion. The optimistic Tony Seba fleet share creates a market between $80 billion and $120 billion.
This is a commercial charging market between $65 billion and $145 billion. I know that many Wall Street analysts would produce a market size accurate in 4 places behind the decimal point. In the fine print, it should read the margin is between -80% and +300% — but only if they are honest.
An encouraging set of regulations, incentives, and subsidies are needed to get the market started now. In 2040, this is a very large and profitable retail market.
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