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We have recently announced our investment in Dodona and it seems to be a good time to review the EV Charging landscape to underscore the thesis on why we think Dodona will help a lot of the providers in the long run.
So in the following paragraphs I will try to answer questions like:
To understand Electric Vehicle (EV) charging it is useful to understand the underlying drivers. The key driver of building EV chargers is of course EV cars (PHEVs [Plug-in Hybrid Electric Vehicles] and BEV [Battery Electric Vehicles]). But why do people buy them?
There are a couple reasons:
But the push for EVs on the road is also driven by the other side:
So the trend is clear, EVs are getting cheaper, especially with government subsidies and some of the range anxiety will be solved eventually by technological innovation. EV purchases are driven by wealthier countries and there is a clear upward trend in EV sales in the EU, US and China.
Just like with regular cars, EVs also need an infrastructure to work though. But unlike combustion engine cars which can be filled in 5 minutes with gas, EVs are a little more complicated. They need chargers too, but the way people use them is a little different.
By 2030 most new cars sold will be electric and this means 58 million new chargers will be needed to be installed. This will provide EUR51bn of new revenues to the various participants that are involved in the production, installation and operation of these chargers.
So, yeah, it will become a pretty huge market that is probably worth looking into.
As I said above, the way EV charging works is a little different from gas stations and normal cars. This is mostly because EV cars need more time charge (even with the fastest chargers).
The best way to understand the charging landscape is to look at the destinations people charge their cars at.
But before we do that, worth looking at the type of chargers available:
You can then charge your with these at:
Out of these from a commercial standpoint the more energy consumption, the more high yield the charger is since the product is the electricity itself.
Also worth mentioning that as there will be more EVs, public charging will become more important because most people live in apartments without dedicated garages so they will need chargers elsewhere.
Since there are so many different types of places to charge your vehicle, the way you charge an EV is more similar to how you charge your laptop (both run on a battery!): Everywhere you go, you can plug it in a little to top it up and when you go home you can fully charge it. But for this to be done, you need chargers basically everywhere.
You can see that EVs are a rich (or relatively well off) people’s game just by looking at the charger distribution in Europe.
Countries with more GDP/capita have much more chargers (DACH, Benelux, UK and Nordics) while the poorer countries (starting from CEE) have much less charging power. This is also reflective of EV car ownership and the presence of private companies deploying chargers.
Private companies will usually deploy chargers that help them to make the most money, so DC and HPC chargers. They will also do this at locations where they will be used the most, so the very expensive chargers get a high utilization rate. This usually means richer metro areas, although a lot of DC chargers are along highways as well.
It’s worth talking a little bit about what is actually going on inside of the charging space, what are people buzzed about and what are some of the challenges that we need to overcome.
Payments
Currently most payments are done via MPSs, which are closed ecosystems, orchestrating the payments between the CPOs and the users. This means that at most charging points, you are not able to pay with your credit card right off the bat, but you need to be registered with one of the MPSs. But actually users don’t like this and most of them would want to pay with a card at the charger. This is actually already a requirement in Germany and will be compulsory everywhere in the EU by 2027.
Another trending concept here is Plug & Charge. This allows an EV driver to plug their car into the charger, and charge automatically without having to use an app or pay. The charger recognizes the car and the linked card and charges that automatically. This is amazing for the drivers, but requires tight coordination between OEMs, MSPs, and CPOs to make it work and so it is not very widespread yet.
Charger wars
It looks like the DC chargers are winning the charger wars, at least this is where the money is going. It is more profitable to build higher capacity chargers, so the ratio of high capacity chargers is expected to grow substantially in the coming years.
Red tape
Currently, the biggest barrier for establishing new Charging points is bureaucracy. A CPO needs to jump through many hoops with the government and the operators of the grid to be able to finally set up the charger. This needs change otherwise it will slow down the adoption
Managing peaks & the grid
One of the challenges of charging especially with fast chargers is to manage the peaks. There are common times for EV users to start charging, causing a surge in electricity needs. The underlying infrastructure was not built with chargers in mind and oftentimes this creates such energy needs that is harder to manage.
CPOs need a way to manage this. There are already ideas out there, like Xenon a system that allows extra local batteries to be added to the charging capacity, reducing the need for more energy that is harder to obtain and also is more expensive.
Heavy Duty Vehicles (HDVs)
Charging HDVs and fleets are especially a large challenge to solve because they need a lot of energy from the grid. Some of the other challenges include
Most of the locations for HDV charging stations are going to be around the motorway and depots and logistics but there are also planned bus station chargers. Ekoenergetyka, a Polish manufacturer of high power chargers is experimenting with Megawatt chargers (that can charge multiple electric buses) that is an interesting experiment.
Range anxiety
EVs batteries actually wear out over time just like laptop and other batteries. But that’s not all: they also have significantly reduced performance in cold weather compared to ICEs. This means that in certain locations you will need much more chargers and infrastructure. Probably also means that in some areas EVs will never become super widespread (usually it is less infrastructure dense areas where you need more reliability)
In the EV charging ecosystem there are quite a few players involved:
There are a substantial number of startups in the EV space, ranging from Charging Point Operators and their analytics to Battery Technology. The industry map below is a glimpse into that space, from which a few interesting observations can be made.
Battery technology companies receive the most funding out of all categories: $3.5 billion. Since modern grids cannot keep up with ongoing renewable revolution, batteries provide a physical solution to the problem of unpredictable demand/supply. Adjacent start-ups, focused on recycling and charge control, also depict a high interest from investors.
Charging Point Operators companies are the second biggest funded category with $1 billion. These companies range from being early stage to raising Series-C rounds.
On the contrary, the least funded categories are Charging Points Analytics and Mobility Service Providers. These companies are still in very early stages and have not gained much traction from other EV players, thus the small amount of investments.
Most EV related start-ups are based in Western Europe (Germany, the Netherlands, the UK) or in the US. This can be attributed to European countries and the US rapidly developing EV infrastructure and governments incentivising decrease in carbon emissions by supporting startups in that area.
Link to the market map on Dealroom: https://app.dealroom.co/lists/45682.
