As of right now, Electric Vehicle (EV) sales account for 3.7% of total vehicles sold globally. That number is forecasted to grow massively over the coming years; growing to 25% in 2025, 27% in 2030 and 35% in 2040. The average range for EV’s on our roads however, is expected to remain within 200miles on a full charge, leaving a huge requirement for EV charging infrastructure to support this fleet. In fact, it’s estimated that the US alone will need 1-2million public charging stations alone. Whilst I do not know who will ultimately win the race to sell EV’s, there is undoubtedly huge demand for charging services to come, and that’s what I want to look into today.
Current EV Charging landscape
As of right now, the US has close to 30,000 charging stations for EV’s. This is compared to 20,000 in Jan 2018. Over the last 5 years, the number of charging stations in the US has grown at 25% compounded rate. In 2020 alone, there was a 7% increase in Q2 vs Q1. This is sizeable growth and clearly, there is a lot of groundwork being laid for the electric future.
Not all charging stations are built equal
Unfortunately, not all charging stations are the same. There are three broad categories of charging stations; Level I, Level II and DC Fast/Level III. The main difference between these is the speed of charge/voltage. Level I amounts to a typical household 120 Volt charge, Level II is approximately 6x faster than that, at 240V, and DC Fast does the quickest job, achieving around 70 miles of range in just 20minutes with 480 Volts of power.
|Level||Voltage||Range per hour of charge|
|Level I||120 Volt||2-5 Miles|
|Level II||240 Volt||20-25 Miles|
|DC Fast||480 Volt||210 Miles|
Faster charge = Better?
DC Fast, as the name implies, is the fastest and newest technology, seeing remarkable growth in adoption (11% Q2 vs Q1 2020). Part of the reason for this is because certain high powered vehicles, such as public busses and trucks, can only use DC Fast charging technology to accommodate their higher capacity batteries and frequent usage.
Nonetheless, Level II charging stations are not far behind – growing at 7% Q2 vs Q1 2020. This is despite being the larger network, accounting for around 75% of total charging stations in the US, as we can see below.
So you might be wondering, as I was initially….‘DC Fast is clearly the best because it’s quickest, which means less time waiting around for your car to be fully charged. So ultimately, that’s going to outpace all the other charging technologies going forward…’
…Unfortunately, this is far from the case.
Why DC Fast can’t replace Level II charging
DC Fast charging is not a universal system whereas Level II charging is. Unlike Level II, DC Fast does not have a standard connector. Instead there are three competing technologies in the market; CHAdeMo (built for Nissan Leaf, Kia Soul), SAE Combo (built for American EV’s such as BMW, Chevrolet) and then Tesla connectors (built exclusively for Tesla cars only). This competing landscape makes connectivity a key issue, particularly for non-Tesla vehicles (Tesla owners can buy adapters for non-Tesla connectors) and ultimately, will limit useability and adoption rates.
- Battery longevity
Whilst somewhat disputed, there is growing evidence to suggest that high power intense charging reduces battery life and efficiency, when compared to Level I/II charging. 
- Most users don’t need DC Fast charging
The most compelling reason for the limited potential of DC Fast charging is because most drivers simply don’t obtain much value with the additional speed of charging it provides. This is because driving, for most, is not a continuous activity.
Most drivers in the US drive within 60 miles each day, with the majority of those drivers driving less than 40 miles. Assuming a range of around 180 miles on an EV and a daily commute of 60 miles, a Level I charge every night at home is sufficient to get the average driver back to full charge for the next morning (assuming 5miles/hour charge rate for 12 hours per day). If you assume you have a a Level II charging station at the workplace, then you likely don’t even need the charge back at home. In fact, unless users specifically travel long distances with infrequent stops, the average driver would not see any additional value from a DC Fast station.
- DC Fast costs A LOT more than Level II
The cost of DC Fast charging makes this technology even more prohibitive, especially as it generates almost zero value for the average driver. Compared with $400-$6500 in costs for a Level II port, DC Fast costs closer to $10,000-40,000. Installation costs are an additional $600-$12,700 for Level II ports compared to $4000-$51,000 for DC Fast. What this means that all in, DC Fast costs around $3400 – $38,300 more than Level II (approximately 3.4-4.7x as much!).
So what does the future look like?
Based on a scenario in which there are 15m EV’s in 2030, independent studies estimate we need approximately 27,500 DC Fast stations and 601,000 Level II charging stations in the US.
In Q1 2020, there were 14,000 DC Fast and 72,000 Level II charging stations in the US. In other words, today there are almost 50% of the total required DC Fast charging stations but only 12% of the Level II charging stations that we will require. This indicates a strong likelihood that we see more Level II charging stations being rolled out.
These stations are likely to expand in predominantly private systems as that’s where they work best. These include workplaces, and multi-unit dwellings (e.g. appartment blocks) because these locations naturally have the most cost synergies; allowing providers to make back the higher costs associated with installation. This is also where we are seeing the most growth today.
Charge Point: by far the biggest Level II provider
By far the biggest provider of Level II charging stations is Chargepoint (CPN). They have over 80% market share for charging stations, of which almost all is Level II Charging. They are continuing to roll out stations in the US, growing their stations by 9% qtr/qtr in 2020, almost twice the growth rate of their direct and closest competitor, Blink (BNK).
Meanwhile, other providers such as Tesla, have focused exclusively on DC Fast charging. These markets are seeing quicker saturation. Electrify America (EA), recently had to cut back 70% of their expansion plans due to predicted slower growth in DC Fast infrastructure demand in Q2 2020.
Whilst there currently remains no public traded stock of CPN, Switchback Energy Acquisition, a SPAC, has announced that they will be merging with CPN in the 4th quarter of 2020. The combined company is expected to have an Enterprise Value of $2.4bn as well as a cash pile of $683m, allowing for continued expansion of CPN’s charging network. SBE at the time of writing, is trading almost at the same valuation as CPN’s competitor, Blink (BNK) but with 8x the market share.
Whilst it is not possible to obtain a closer breakdown of CPN’s financials for now, Switchback Energy does represent the biggest opportunity to get into a secondary and somewhat overlooked EV market which is undoubtedly going to grow over the years to come.