Fuel For Thought: The dynamics of EV charging and its impacts on the broader electrification of mobility
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The dynamics of EV charging and its impacts on the broader electrification of mobility
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The automotive electrification outlook is an amalgamation of many intertwined factors from vehicle technologies and infrastructure availability to consumer sentiments and OEM partnerships. Many propose this to be a "chicken-and-egg" paradox, although S&P Global Mobility analysts believe the vehicle (demand side) and charging stations (supply side) can be, and will be, developed and deployed largely at the same time. While there will be momentary shifts toward an oversupply of vehicles or an excess demand for charging, in the long run an equilibrium will emerge in most markets globally.
Trends on charging demand and station supply in the North American market
By now, most OEMs have set their goals and aspirations for partial or complete battery-electric vehicle (BEV) production, ranging anywhere from 2030 through 2050. While the monthly BEV production figures continue to grow globally, electric vehicles in operation (E-VIO) is an important metric when considering charging infrastructure planning. In 2021, S&P Global Mobility analysts estimate 2.2 million BEVs and plug-in hybrid electric vehicles (PHEVs) are on the road in the US market. By 2030, this number should grow to 32 million.
If we break this number down a little bit, there are some interesting trends regarding US state distribution. In 2021, California made up 39.2% of all BEVs and PHEVs in operation, but by 2030, their dominance will drop to only 21.0 % of the US market E-VIO. States such as Texas, Florida, New York, and New Jersey grow dramatically, to account for more than 25% of the national VIO combined.
Furthermore, the Mountain and Midwest states in the center of the country continue to attract more BEV and PHEV adoption through both new car sales as well as "importing" these used vehicles from the coastal states to the interior. In fact, this is producing a phenomenon where some US States have negative scrappage rates. This means, more electric vehicles (EVs) are being registered than new EV sales, accounting for an influx of used vehicles into the state E-VIO. This not only puts a strain on OEMs to meet the demands for BEVs and PHEVs nationwide, but also requires charging infrastructure developers to increase their focus where charging demand is growing fastest.
S&P Global Mobility can also break these figures down to each state and even major metropolitan area in the US. This local view is important because charging is installed and used on a local basis more so than a state or national view. Cities such as Detroit, Michigan, US are currently managing with charging infrastructure congestion, but Dallas-Fort Worth is struggling to keep up with the growing E-VIO demands, and both cities will experience changes to their equilibrium over the next eight years as EV sales continue to grow.
Charging technology requirements
Moving into charging technologies, it is important to describe how each technology has its unique role. While AC charging is and will be the most preferred type of charging, to address range anxiety and faster charging, automakers have been looking at high-voltage architectures. The 800V architecture provides significant benefits in terms of faster charging, compact and lightweight wirings, improved performance and efficiency, and better energy regeneration during braking. This new trend will allow charging rates as high as 350 kW and further reduce the charging time to less than 20 minutes.
S&P Global Mobility analysts forecast the production of BEVs with system voltage higher than or equal to 800V will increase at a massive 56% compound annual growth rate (CAGR) to about 2.5 million units in 2030, remaining a niche application during 2020-30. This growth will largely be attributed to light commercial vehicles and pickup trucks that feature battery capacities higher than 100 kWh or certain premium vehicles such as Porsche Taycan. These vehicles will require EV charging infrastructure that supports charging at 800V.
Overall, about 40% of the BEVs manufactured in 2021 were capable of peak DC charging above 100 kW. In the short-to-medium term, perception of vehicle charging performance will challenge consumer acceptance of EVs until vehicle technology catches up with performance improvements on the infrastructure side. S&P Global Mobility analysts forecast 150 kW to be the most regularly deployed fast-charging rate until 2025, and about 50% of the BEV production in 2030 will be able to charge at or about 200 kW.
Charging Infrastructure deployment
By the end of 2021, there were around 4.3 million cumulative AC charging stations deployed globally, and this should increase exponentially to more than 65 million units by 2030, a 31% CAGR. Similarly, there are around 200,000 cumulative DC charging stations deployed globally, which will quadruple to more than 1 million units by 2030. Of the AC charging stations deployed globally, more than 80% are domestic charging stations installed in people's homes, and S&P Global Mobility analysts expect the trend to continue.
The type and location of EV charging infrastructure varies across major regions. The Greater China and European region are leading in terms of xEV deployment and EV charging infrastructure deployment. Today, approximately 21% of the global AC charging stations and more than 60% of the global DC fast charging stations are concentrated in the Greater China region.
OEMs partnering with charging players
In the interest of advancing adoption of BEVs, mainstream automakers are partnering with charging point operators (CPOs) to subsidize an initial service for new EV owners who are unfamiliar and anxious about charging their vehicles. As such, OEM and CPO partner programs have emerged to provide discounts or free charging for a partial time frame. In the US, Electrify America has agreements with Audi, BMW, Ford, Hyundai, Kia, Lucid, Mercedes-Benz, Polestar, Porsche, Volkswagen and Volvo. EVgo has current agreements with Chevrolet, Nissan, and Toyota, while ChargePoint has an agreement with Mazda.
OEM and CPO agreements are also widespread in Europe and Asia, where the need exists. For example, Ionity - a cross-industry joint-venture (JV) of BMW, Ford, Hyundai, Mercedes-Benz, and Volkswagen Group including Audi, Porsche and VW - recently announced at VW's Power Day, that it would collaborate with Enel X, Iberdrola and BP to fill the demand of its users' infrastructure needs.
Start-up landscape on charging models
While the EV charging infrastructure market is largely driven by established firms rapidly deploying both AC and DC charging stations, various unique business models and charging technologies are entering the market. Companies might prefer to focus on just manufacturing electric vehicle supply equipment (EVSE), providing just network and cloud-related services, or just operating the charging station without owning the equipment among others. Also, some firms only focus on public DC fast charging equipment installations, while others might opt for a mixed approach to suit larger customer needs.
While S&P Global Mobility analysts expect wireless charging and battery swapping to be a smaller subset of the entire battery charging ecosystem, the technology is maturing and the deployment of such unique battery charging systems is increasing. US-based startup Ample has made it clear that standardization of battery packs among EVs can be beneficial for EV fleet owners. Nio, one of mainland China's leading EV startups, has been a pioneer in the battery-swapping ecosystem, with more than 8 million battery swaps at more than 900 battery-swapping stations in mainland China.
Some unique startups such as Elonroad are installing a special wired charging system that charges vehicles while they are being driven, transferring energy using a special setup under the vehicle that is in contact with the charging strip on road. Such unique ideas should further improve customer sentiments toward EV charging and enhance EV adoption, although strong industry inertia is flowing toward traditional charging models.
Consumer survey - major feelings of the consumers towards charging
The S&P Global E-Mobility consumer sentiments survey found that, while researching where EV owners routinely charge their vehicles, only 5% of respondents answered that they charge EVs when parked in a public/semi-public space while they are engaged in leisure or related shopping activities; the vast majority, about 56%, of respondents said that they prefer to charge either at home or work. Such a large difference in charging patterns indicates that EV charging habits have yet to be fully integrated into our lives.
While OEMs, utilities, startups, and established charging infrastructure firms race against one another to capture a larger share of the rapidly growing EV charging market, globally, more than 37% of respondents suggested that the public charging infrastructure is insufficient for their charging needs. Although such a perception is remarkably different between regions -such as in mainland China where EV owners rely on public charging infrastructure for routine charging versus regions where a dedicated parking spot in a home allows EV owners to charge at home, making them oblivious to the public charging infrastructure. Only 11% of EV owners in mainland China said that public charging infrastructure is insufficient, compared to around 40% of EV owners in Germany and the UK.
As the industry moves ever forward with electrification strategies and technologies, major markets globally will see an upending of the status quo. An incumbent demand for charging will emerge and affect businesses, the cities' landscape, and even our personal driving experience. New infrastructure and new technology will start appearing in our lives with the aim of reducing the anxiety of the new form of mobility, while also allowing a smoother transition toward the new refueling process.
What is important to remember is that in this likely decade-long transition, the local impacts will be felt as strongly or stronger than the national ones. A national or state policy may drive the adoption of EVs or charging stations through grants, rebates or other incentives, but the transition to a clean mobility fleet will happen one vehicle at a time, and one charging station at a time in the neighborhoods and garages all over the world.
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.