Investors and automakers agree the future is electric.
Electric cars are very much in America's future.
We still do believe in an all electric future and we're using this time to
accelerate our work.
And we believe let's get to all electric vehicles as quickly as possible.
The popularity and success of Tesla has proven there's demand for electric
cars in the U.S.
Tesla made up about 80 percent of electric car sales in 2019, and new
competition continues to enter the market as more countries and states
promote the use of EVs.
Analysts predict record growth for EVs in 2021, especially in Europe and
China. But in the U.S., electric vehicles are less than two percent of
autos sold annually.
Several hurdles remain for the market to really take off, and one of the
biggest is charging.
The demand for EVs is not very high right now.
And that's been one of the biggest discussions is how much infrastructure
should we build out compared to the sales, because everyone's planning for
an electric future, but we're not even close to it being there yet.
And consumers know it.
In one study, 83 percent of consumers who would not consider buying an EV
said it was because of battery life and charging anxiety.
This is not a simple problem.
Transitioning a whole transportation and energy set from petroleum based
all the way to electrification is not something that's going to happen
overnight. We wanted to explore the current state of electric charging and
what needs to happen in order for electric vehicles to become mainstream.
Electric cars are not a new idea and were invented as far back as the 30s,
but it hasn't been until the last 20 years that electric vehicles or EVs
have started to gain popularity, thanks in part to the advancements in
battery technology and the push to reduce greenhouse gas emissions.
And when the all electric Tesla Roadster came out in 2008, it changed
people's perception on what electric cars could be and helped launch and
accelerate more EV programs.
But a lot of consumers still aren't making the transition.
Consumers are very set in their ways.
You have to know how to plug them in.
You have to know the range.
You have to know what impacts your range so you don't run out of energy.
Last year, 143 new EVs launched across the globe, and by 2023, IHS predicts
over 43 brands will offer an EV.
The range of how far our car can drive on a single charge is improving,
but still remains a concern for some buyers.
Tesla's Model S leads the industry with a range of 402 miles, while other
manufacturers can be anywhere from 100 to 250 miles per charge.
And Lucid Motors new EV sedan is expected to have a range of 517 miles.
Clearly, the technology has its merits and that the remaining challenge
relates ultimately to the electric vehicle charging.
In 2019, 68 percent of owners said that there is not enough charging
available around their home.
There are over 88,000 charging outlets and roughly 27,000 charging
stations, compared to the 156 ,000 gas stations in the U.S., according to
the Breakthrough Institute.
There is an anticipated need for 9.6 million EV chargers in the U.S.
by 2030. Not all charging stations are the same.
Tesla Chargers, for example, only work on Tesla vehicles.
While most other companies are brand neutral and can charge any type of
EV, there are three major types of charging.
Level one and level two are most common in homes, workplaces and public
charging areas. They charge between two to 20 miles of range per hour.
DC fast charging or a level three can deliver 60 to 80 miles of range in
roughly 20 minutes.
Not every EV on the market can handle this type of charge.
As more cars come out, most are working towards higher voltage charging.
We're not going to to charge electric vehicles in exactly the same way that
we refuel gasoline vehicles, the vast majority of electric vehicle
charging so far does and will continue to take place at home.
But of course, this isn't applicable for everyone.
Not everyone has perhaps their own car or their own garage in which to
charge. California is somewhat different.
They have a lot of charging stations, which is why Tesla sells so well
there. But I mean, in the heartland of America or anywhere else, it's very
difficult to find EV charging station.
Tesla has set a high bar when it comes to charging.
Its supercharging network has created what Morgan Stanley referred to as a
"competitive moat" over other EV charging companies.
A majority of the DC fast chargers in the U.S.
are Tesla Superchargers.
GM's philosophy. They have not wanted to invest a lot of their own money to
build out their own network.
They've instead partnered with different EV charging startups or
companies. Gm announced earlier this year that it plans to spend 20
billion through 2025 on its next generation, all electric and autonomous
vehicles. It unveiled the Cadillac Lyriq, GM's all electric Hummer and
acquired an 11 percent stake in electric truck maker Nikola.
But the company is also getting into charging.
GM announced a partnership with EVgo in July to build more than 2,700 new
fast chargers across the U.S.
in the next five years.
GM and EVgo declined to announce how much it plans to invest.
When we're looking at strategies associated with bringing infrastructure
to light, we really want to enable that infrastructure for all customers.
And so part of that is also enabling a business model that works.
And so partnering with a group like EVgo really helps us establish those
business models where things like utilization and other aspects of the
business can come to market.
Many automakers have decided to partner with private companies rather than
take the route Tesla did and build out their own networks, Ionity is a
joint venture made up of several automakers that aim to add more charging
stations throughout Europe.
Other automakers are not necessarily going to follow the path that Tesla
have taken because it is quite unique and it's certainly one that we
should admire and learn from the path that they've taken with the
infrastructure that they've installed.
I think what Tesla did great was they realized from the off that the high
power, fast charging capability on key routes was the bit that they would
need to implement in order to convince potential consumers to buy a Tesla.
Other automakers are realizing having reliable, widely available
infrastructure can help sell cars.
The bottom line is, if you want those vehicles in your backyard, you got to
have the charging. The infrastructure has to come first and customers have
to see that infrastructure start to be comfortable with it.
Several key players have emerged to fill in the gaps across the U.S.
Chargepoint says it has 115,000 charging point globally, most of them in
the U.S. Chargepoints investors include Daimler, BMW and the venture arm
of Chevron Corp., among others.
It plans to create as many as 2.5 million chargers by 2025.
Electrify America was created as part of Volkswagen's diesel emissions
settlement with the U.S.
and California. As part of the settlement, it will spend two billion by
the end of 2026. We have 470 sites in operations right now.
The distance that we have between the sites, it's already in average,
about 70 miles.
And already today we have 96 percent of Americans, they actually live
within 120 miles from our site.
So we are young, actually, but we are growing fast.
The company started with a focus in California and is now expanding
throughout the U.S.
It sees Tesla not as competition, but as an example of what its network
could be. Tesla is a reference for us in terms of charging experience.
And the good news , we are working with these companies.
We are building some sites together and we are using Tesla batteries to
mitigate the cost of the charges on our site, one of the 20 sites actually
at the moment. Several other companies in the space are taking different
approaches. Volta, for example, uses its chargers for digital advertising,
allowing users to recharge for free.
There are also mobile charging companies like Spark charge and FreeWire,
whose business model is a portable approach.
FreeWire has received investments from Volvo and BP.
Envision is taking a solar approach.
And even Shell is investing in the space.
Bigger oil and gas companies are getting into the space.
They've invested in a big U.K.
network Chargemaster.
We've seen the same with Shell.
They've taken a significant stake in NewMotion in the Netherlands.
I guess some of the investments in these in these companies at this stage
is relatively minor, given the given the funds that these companies have.
So it could be argued that they are making these investments to see a
future for themselves, whether EVs thrive or not.
Developing infrastructure for electric charging is complex, companies need
to decide how much power they need, the kind of chargers they're going to
install and where to install them.
Do we need a charging station in every corner?
I would say no, that we don't.
And we don't need as many electric vehicle charging stations in the public
domain as we need at gas stations to date.
Defining exactly how much we need is a huge challenge.
What's greater and really neat about this industry is sort of matching
charging times with the use case.
Faster isn't always better.
Frankly speaking, when you can get out of the car, plug in at home at
night and go to bed and wake up with a full charge, much like your cell
phone, you really can match the charging speed, the technology and the
experience together to really get at what you're trying to tackle, which
is get that customer their range back as they need it.
When we think about faster charging, when you're out and about, maybe you
live in an apartment building and you don't have access to charging
overnight. So putting in charging at the grocery store, you're going to
want to get most of their battery back in that 30 to 45 minute shopping
trip. Electrify America just finished building a cross-country route which
gives users access to its D.C.
fast chargers. The company says its primary focus is fast charging.
If you want to serve customers out there, you know, to bring into the
charging station and back from the road.
Well, actually, I believe that you need to be fast.
In the U.S. alone, McKinsey and Company projects it will cost as much as 11
billion dollars to ensure public charging stations are as easily
accessible as gas stations.
The biggest challenges for the charge point operators now are to continue
the build out of their network and continue to put an increased amount of
infrastructure in the ground whilst maintaining profitability.
From that perspective, I think if you ask them what do they need, they
need that advice. But they also would like to see, of course, legislation
from the governments to promote ownership.
Another challenge when building chargers, especially fast chargers, is how
much power companies need to pull from the grid.
A study by the U.S. Department of Energy found electric vehicles could
raise national power consumption by 38 percent by 2050.
The amount of energy needed affects the cost for the customer to calculate
the cost per mile of an EV depends on the battery type and the cost of
energy. Energy costs are different from state to state, and therefore
pricing may be less in Nevada and more in California.
Residential and commercial rates also differ.
Tesla charges 28 cents per kilowatt hour at most Supercharger locations,
at that rate, it would cost $21 dollars to fully recharge a Model 3.
Charging network pricing models are pay as you go, monthly subscriptions
or in some cases free.
They can charge by the minute or by kilowatt hour.
Paying by kilowatt hour is similar to paying by the gallon at gas
stations. California recently banned pay by minute, stating time is not an
acceptable unit of measure for dispensing and billing electricity as motor
vehicle fuel. When it comes to charging infrastructure, the U.S.
lags behind Europe and China, where the government has made electric cars
a huge priority.
China recently announced it will spend almost 2.7 billion yuan on battery
charging infrastructure.
And we think that the US has somewhere in the region of 15,000 outlets for
charging at somewhere in the region of 4,000 locations.
Compare this to China, who at the end of 2019 had somewhere in the region
of 200,000 DC fast charge outlets, and that's expected to rise to 270,000
by the end of this year.
That's a level of magnitude higher.
Of course, the challenges are slightly different as well.
A lot more people are living in the urban environments in China.
Even less people will have the opportunity to charge domestically.
Electric charging infrastructure has grown quickly in the past 10 years and
will continue to grow as vehicles, ranges with batteries and charging
capabilities continue to improve the capability and also the maturity of
the network will evolve.
So you going to have and you will be able to have a bidirectional
communication between the cars and the network.
So the sun shines at two o'clock in the afternoon in California and there's
an overabundance of electricity because the sun's shining.
How do we start to match that opportunity where we say, hey, cars start
charging the sun's here and doing that in such a seamless way for
customers where they've forgotten about, they're sort of charging
behaviors. We're managing that with electric utilities in the background
and we're getting cheaper energy.
It's better for the grid and making it more efficient as well as cleaner
energy overall. So I think over time, what you're going to see with
charging is essentially it'll become such a seamless thing that most
customers won't even have to think about it.
The question remains, even when we do add more charging infrastructure, can
it boost electric vehicle sales and adoption?
Once we get to that level where the price is with gas or even lower, the
range is with gas or even lower.
I think that's really going to be an inflection point for consumers and
people that are early adopters to come into the EV space.