How Europe can scale its public charging infrastructure for EV markets

The global electric vehicle (EV) revolution is gaining significant momentum. Changing consumer priorities and ambitious EV production targets from automotive original equipment manufacturers (OEMs) mean that the shift to EVs is happening sooner than most analysts had initially forecast. In 2019, fully electric (BEV) and plug-in hybrid vehicles (PHEV) accounted for just 2.9% of European vehicle sales, according to industry analysts LMC Automotive. This had increased to 13.2% as of 2021. By 2035, EVs are forecast to account for around half of all vehicles in operation (referred to as vehicle parc) in major European markets (EY Knowledge predicts that BEVs and PHEVs will account for approximately 52% and approximately 49% of vehicle parc in the UK and Germany, respectively).

As the total vehicle parc in Europe shifts toward EVs, gas stations will need to be replaced with a private and public charging network. Early EV adopters are likely to be high earners able to plug in at home in their driveway or garage. But for all drivers to make the switch from internal combustion engine (ICE) vehicles, significant public infrastructure is needed to support those who lack access to off-street parking. In Germany, the automotive agency ICC estimates that the number of EV owners with access to home charging will drop from 80% in 2018 to 72% in 2030. EV owners in more densely populated countries are even less likely to have access to home charging. The paradox of whether EV adoption follows charging infrastructure upgrades, or vice versa, has largely been answered – strong charging infrastructure is required to give consumers confidence to make an EV purchase. The 2021 EY Mobility Consumer Index, a survey with ~9,000 respondents, highlighted a lack of charging stations as a key reason behind reluctance to purchase an EV – this was second only to the up-front cost of buying an EV.

In many countries, the number of PCPs is set to fall behind EV growth even further going forward as EV sales are set to outgrow forecast public charging infrastructure. This is the case in the UK, France and Germany.

Internationally, European countries appear to be comparable to the US and Canada, which have EV-to-public charge point ratios of approximately thirteen and seventeen, respectively. However, the infrastructure in both Europe and North America is way behind that in China. A leading power in global EV development, China has approximately six EVs for every public charge point.

Alongside questions on the scale of public infrastructure, there is uncertainty surrounding future consumer behaviors and how this may guide the type of infrastructure required. We have just been through the first stage in the EV market evolution, with early adopters making up a small proportion of the vehicle market. We are now transitioning to the second stage, characterized by exponential growth in the sale of EVs and charge points. The final phase of market maturation, which we expect to arrive at well beyond 2035, will see high levels of consolidation of charging infrastructure players and commoditization of charging services.

Evidence suggests the market is unlikely to mature in this decade, though when we do enter the maturing market phase, price will play a more significant role in purchasing decisions. It is still unclear how the importance of other criteria will evolve in this nascent market and how this might vary by customer segment.

Changing consumer priorities and the shift from battery rant anxiety to charge anxiety, will also have an impact on the frequency, speed and location of charges. For example, EY Knowledge predicts ~220,000 public charge points in France by 2030. However, as adoption increases and consumer behaviors become more established, we see potential upside for rapid and destination charging.

France charge points split by private vs. public (#) and France public charge points split by destination vs. other public (#)

1. Private includes home and workplace charging points.
2. Public includes all charge points available to the general public – includes destination and public from EY Knowledge dashboard.
3. Actuals sourced from the white paper authored by Simone Käser, “Market ramp-up of electric vehicles & charging points in France until 2030,” P3 Group GMBH.

There is also uncertainty over what the charging speed mix might look like, which has significant implications for CPO location and hardware strategies. The following chart shows the current distribution of public chargers in several European countries. The Netherlands has the highest total number of chargers, but very few of these are rapid or ultra-rapid (~1%). In contrast, the UK has approximately half the number of public chargers but a significantly higher proportion of rapid or ultra-rapid chargers (~7%).

Split of public EV charges in EU countries by speed

Source: Recharge EU: How many charge points will Europe and its Member states need in the 2020s (pdf), Transport & Environment, 2020, © 2022 European Federation for Transport and Environment AISBL

The main factors that will determine the charging speed mix going forward are:

• Country-specific factors – This determines whether slow off-street parking or rapid en-route and destination charging dominates public infrastructure (number of cities, percentage of urban population, etc.).
• Consumer charging behaviors – Charge speed is matched to location, so where consumers prefer to charge has significant implications for speed mix. For example, if consumers prefer to charge while doing a weekly shop, slower chargers may be more suitable compared with rapid charging at trunk road forecourts. 
• The BEV or PHEV ratio – BEVs require more energy to charge, so a higher BEV proportion will demand faster charging infrastructure. This will be influenced by external factors, such as national legislation. 

In summary, rapid scaling of public charging infrastructure is necessary – however, there is considerable uncertainty in how the future location and speed mix will look.

Sustainable EV adoption is highly dependent on scaling public charging infrastructure. Based on our experience, there are  maximizing value for shareholders, achieving operational excellence and partnering with the wider EV ecosystem.

Maximize value for shareholders

There are three core levers that can improve return on investment in charge point infrastructure:

1. Maximize revenue growth by choosing technology and locations that ensure high utilization, optimizing pricing for strong margins and pursuing auxiliary revenue streams (advertising, etc.).
2. Reduce operational costs such as by improving installation cost efficiency, procuring hardware in large volumes and anticipating future demand in utility installation.
3. Optimize financing costs with the right capital structure and appropriate gearing, which reduces the weighted average cost of capital (WACC), resulting in higher returns for shareholders.  

Achieve operational excellence 

With huge growth of the charging network expected, there will be several opportunities for players across the value chain. CPOs need to ensure that this growth in infrastructure scale is not at the expense of uptime and other key competitive criteria. In our experience, leading CPOs are adopting five principles to scale effectively:

1. Brand clarity: In our experience, focusing on specific charger speeds and locations (public vs. private) leads to better customer satisfaction.
2. Footprint optimization: Finding locations that complement where the operator chooses to play is also key in maximizing charge point utilization.
3. Commercial relationships: The use of commercial relationships is important – these will aid in the search for suitable sites and provide security for both partners through win-win commercial terms.
4. Supply chain resilience: CPOs also need to ensure the strength of the supply chain by carefully selecting technology suppliers and ensuring partnerships will not be a bottleneck to growth. 
5. Strong reliability: The best way CPOs can maintain customer loyalty is to ensure strong reliability of their networks. This can be done by choosing hardware that is reliable, accessible and simple to use, but by also ensuring strong software architecture.

Partnering with wider EV ecosystem

The public charging market will only be as strong as its underlying drivers. The responsibility for creating a customer experience that ensures continued EV adoption does not lie solely with CPOs – we believe there are three important actors in the EV ecosystem:

1. Government: There are two lenses to view government partnerships. The first is through central governments accessing big financial support mechanisms (such as the rapid charging fund in the UK). The second is to work alongside local governments to enable quicker infrastructure development, e.g., quicker planning for grid connections.
2. Automotive OEMs: Work with OEMs to better understand consumer behaviors and match charge point specifications accordingly.
3. Renewable generators: Potential synergies with those looking to enter new markets. Potential to co-locate generation assets with charge points. Localized renewable energy can reduce cost of electricity to CPOs either via private wire or on-site generation.