By Haggai Dror
With car manufacturers continually introducing new Electric Vehicle (EV) models almost every week, the number of EVs on the road is experiencing exponential growth and is projected to continue increasing throughout the next decade. Despite the undeniable presence of the EV revolution, we still lack a sustainable plan to provide adequate and dependable charging infrastructure for the future influx of EVs.
While the exact form of a stable, long-term charging infrastructure is still being developed, we are compelled to heed the advice of Peter Drucker, who famously stated that “the best way to predict the future is to create it.” Tesla has exemplified this philosophy with great success in recent years. To further build upon Tesla’s accomplishments and prevent it from becoming an entrenched monopoly in the long run, it is essential to foster partnerships between forward-thinking public officials and innovative businesses.
By collaborating in this manner, we can collectively shape the future of EV charging infrastructure, working towards solutions that are accessible, efficient, and sustainable. Through joint efforts, we can avoid potential monopolistic tendencies and ensure that the growth of the EV industry benefits society as a whole.
What is the current state of EV charging infrastructure?
Currently, EV charging infrastructure consists of various options for charging electric vehicles. With an EV being powered by electricity from an integrated battery instead of internal combustion, charging an EV involves replenishing the battery with electrons rather than filling a tank with liquid fuel.
The availability of electric power is widespread, making it convenient for EV charging. However, the existing infrastructure was not initially designed with the rapid charging of 50-100 kWh batteries in mind. As a result, EV owners today have two main charging strategies:
– Slow charging: This strategy involves utilizing the traditional power grid with minimal local upgrades. Most commonly, EV owners charge their vehicles at home overnight using a regular home plug or by installing a dedicated home charger. While this is a cost-effective and straightforward solution, it has a slower charging pace. Generally, low-end charging equipment provides around 2-10 miles of range per hour, while higher-end technology can offer 10-30 miles of range per hour.
– Fast charging: This approach aims to quickly recharge the vehicle. It is somewhat similar to refueling a traditional car at a gas station, although it is not as fast. Fast charging an EV from nearly empty to full typically takes between 30-60 minutes. Although technology is advancing, enabling some combinations of ultra-fast chargers and compatible EV models, a full battery fill-up still takes around 15 minutes.
As more people transition to EVs, these charging solutions are generally sufficient for their daily needs. The average EV user has a relatively short daily commute, allowing for overnight charging at home. Fast chargers, especially those located along main highways, supplement this by providing options for recharging during longer trips away from home, thereby reducing “range anxiety.”
While these solutions appear reasonable on the surface, it is important to consider their long-term sustainability and effectiveness. To gain insights into this, we can examine what Tesla, a pioneering and dominant player in the EV industry, is doing.
The Tesla story and Strategy
Tesla Inc., established in 2003, introduced its first model, the Roadster, in 2008. This was followed by the Model S sedan in 2012 and the Model X SUV in 2015. However, their breakthrough into the mass market occurred in 2017 with the launch of the affordable Model 3, priced as low as $35,000.
As production of the Model 3 stabilized, Tesla quickly became a significant player in the automotive industry, accounting for almost 4% of total new car sales in 2022 and 65% of new EV sales. Tesla’s success in selling a substantial number of cars can be attributed to their proactive approach in shaping the future of fast charging infrastructure.
While many Tesla users initially relied on home charging for their daily needs, range anxiety remained a major concern for potential buyers. The availability of fast chargers was limited, especially in 2017 when they were practically non-existent. To address this challenge, Tesla took matters into their own hands and established a highly reliable network of fast chargers.
Tesla’s charging network, currently exclusive to Tesla owners (although this is expected to change in the future), ensures that while driving on interstates, no one will be further than 50 miles away from the nearest charger without having to deviate from their route. Essentially, Tesla strategically installed numerous chargers across the country, enabling them to sell more cars effectively.
By proactively investing in and developing their own charging infrastructure, Tesla not only addressed range anxiety concerns but also created a competitive advantage in the EV market. This strategic move has contributed significantly to their success and solidified their position as a leading electric vehicle manufacturer.
Will this be the model we adopt going forward?
No, the model of each car manufacturer building its own national network of fast chargers is not the ideal approach going forward. It is both inefficient and unsustainable. Building fast chargers, especially in remote areas with limited grid capacity, is a costly endeavor. It would be challenging to recoup the high investment solely through revenue from selling electricity to drivers, as prices would need to remain low to keep EVs competitive and provide an affordable alternative to gasoline.
While Tesla has not publicly disclosed the financial details of their charging stations, it is widely understood that the charging network does not serve as a significant source of profit for the company. Many Tesla owners are not required to pay for using the chargers, and it is likely that the costs of construction and operation are covered by the profits from vehicle sales. This approach has allowed Tesla to maintain a competitive edge and support the growth of their EV market share. However, as more traditional automakers enter the EV space, Tesla’s dominance is diminishing, and the sustainability of their charging infrastructure model may face challenges in the future.
Another significant issue, currently not prominent but looming, is the heavy reliance on home charging in the EV market. While it may not pose a major challenge to the grid at present or with the projected number of EVs on the road in the near future, it will become a substantial problem once EVs reach critical mass. The residential grid is already strained and struggles to meet existing capacity demands. Adding a significant amount of car chargers to the network that was never designed to handle such congestion will exacerbate the issue.
Therefore, a more sustainable and efficient approach would involve collaborative efforts among car manufacturers, governments, utility companies, and private developers. This multi-stakeholder approach would enable the development of a shared and robust charging infrastructure that integrates with the existing power grid. By involving private developers, who can bring expertise and investment to the table, the burden on individual manufacturers would be alleviated, promoting interoperability and ensuring that the charging infrastructure can effectively meet the needs of a growing EV market. This collaborative model would foster a more sustainable and scalable charging infrastructure for the long term.
While Tesla undoubtedly has a robust network of highway fast chargers, it accounts for approximately 50% of the overall market. The remaining charging infrastructure has been primarily developed by private developers who leveraged federal and state grants to make their business cases viable. Interestingly, many of these developers are not directly affiliated with car manufacturers. Instead, they are focused on EV charging and have established partnerships with various stakeholders.
The efforts of these private developers received a significant boost with the launch of the National Electric Vehicle Infrastructure plan (NEVI). The NEVI is part of the broader Infrastructure Investment and Jobs Act (IIJA) and provides $5 billion in grant funding over five years, specifically targeting fast charging infrastructure along major highway corridors.
The first two rounds of NEVI, currently underway and planned for the next 12-18 months, aim to fill the gaps along these major corridors. The objective is to ensure that every EV user has access to a reliable fast charger, similar to what Tesla drivers have enjoyed for alleviating range anxiety. The goal is to have fast chargers available within 50 miles initially, and eventually within 10 miles, to provide convenient charging options during road trips.
Is that enough?
No, providing consistent and reliable access to fast charging every 10 or 50 miles across the nation is just the beginning of the solution and by no means the ultimate one. While it is a critical task for the federal government to address, we need to be visionary as both businesses and policy makers in order to shape our future in the EV space. The exponential growth of EV adoption, alongside constant technological improvements, will always keep us behind the eight ball if we don’t have the courage to be proactive and invent our own future.
Furthermore, we must not overlook the significant opportunities, both economically and environmentally, in fleet electrification. Vehicles such as school buses, city transit buses, and last-mile delivery vehicles are excellent candidates for significant electrification in the near term.
An unwritten rule about inventing the future is that you can’t wait for someone else to do it for you. While it involves risks, staying stagnant while others move forward might be an even greater risk. Being courageous and pushing the boundaries can be more rewarding than we think. Visionary companies in the charging space are willing to take significant risks to gain future market share, but it won’t work without a similar mindset from the public sector.
We need to embrace a visionary mindset, both as businesses and policy makers, to shape the future of EVs and charging infrastructure. This requires taking risks, being proactive, and staying ahead of the curve. Collaboration between public and private entities, support for fleet electrification, and a forward-thinking approach are key to success in this rapidly evolving EV landscape.
As the nation embraces the vehicle electrification revolution, a combination of private initiative and visionary policy is essential. Implementing various forms of Public-Private Partnerships (P3), where private entities assume a significant portion of project risk, can optimize the use of public resources and ensure timely project execution. This collaborative approach is well-suited to the current market state.
It is important to recognize that while addressing range anxiety is crucial, we should not overlook other electrification opportunities, such as public or privately-owned fleets. The contained and closed-loop nature of these operations offers significant benefits and can serve as a catalyst for the development of electrification in America.
The future is here, and it is our responsibility to nurture and safeguard it. By fostering collaboration, embracing visionary policies, and exploring various electrification avenues, we can shape a sustainable and prosperous future for the EV industry. Let us seize the opportunities before us and drive the transition towards a cleaner, more efficient transportation landscape.
Haggai Dror is the Managing Director of the Pittsburgh, PA based S&B eMobility, a one-stop-shop for complex transitions into zero-emission transportation, and part of S&B USA, a dominating market force in the United States public-private partnership (P3)
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