Preparing for the Mobility Revolution
Plug-In Vehicles: The Future in Charging
Sales of plug-in electric vehicles (PEVs) are growing at a very rapid pace. PEVs, i.e., battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs), represented 0.9% of global light vehicle sales in 2016, 1.5% in 2017, and is expected to reach about 2.2% in 2018. This growth momentum is getting stronger. In effect, incumbent OEMs are just starting a multi-year salvo of new products covering most segments of the market, with increased range at lower cost. The global PEV fleet is expected to reach 5.4 million vehicles (incl. commercial) by the end of 2018, up 64% vs. end of 2017. This will represent only 1 in 250 vehicles. Yet, the significant growth requires a paradigm change in the charging infrastructure. What is being done to address this?
Significant PEV sales growth across the globe
Global PEV sales grew 50% to reach 1.1 million light vehicles in 2017. They are up 66% in H1 2018 vs. H1 2017 (source: ev-volumes.com). China strengthens its lead with a light PEV market expected to reach 1.1 million in 2018 (4.2% of light vehicle sales) vs. 606K in 2017. Europe follows with 430K PEVs expected in 2018 (2.3% of the market), up from 307K. The USA plug-in market lags with 200K units in 2017, but will catch up with 350K (2% of the market) in 2018, in part thanks to the delivery of Tesla Model 3’s backlog. Bloomberg NEF expects 11 million PEVs to be sold in 2025 and 30 million in 2030.
The sales growth will come in part from a fast growing product offering. The number of plug-in models is expected to increase from about 80 today, to about 200 in 2020 and 300-500 in 2025. At the same time, PEVs’ electric range is increasing thanks to fast dropping battery pack cost. The latest PHEVs offer 100 km up from 50 km. BEVs already reach over 500 km (Tesla Model S 100D) and lower priced models see increased battery capacity. For instance, Nissan Leaf (24 to 40 to 60 kWh in 2019) is catching up with Chevrolet’s Bolt EV (60 kWh for close to 400 km). This will also contribute to higher charging station utilization unless they are more numerous and/or more powerful.
Another long term driver to PEV sales will come from lower operating costs. In Palo Alto in Silicon Valley where I reside, my Chevy Bolt EV (see display below with 287 miles of range) is charged mostly at home, i.e., at $0.10-0.18/kWh. As a result, my energy cost per km amounts to about 1/4 of its equivalent in fuel. Charging at a fast, 43 kW station still brings a 50% energy cost saving — and maintenance is a lot cheaper. In Paris, the city charges 1€/h (one hour max) at its 22 kW public stations, which brings energy cost per km to 1/5 to its fuel equivalent — and charging is free from 8pm to 8am!
Higher range and new charging solutions increase buyer confidence
Range anxiety, an issue that has held BEV sales back, is diminishing. Most of the latest BEVs have at least 60 kWh of battery, except for most vehicles in China where a change in incentive schemes will now favor longer range BEVs. Such battery capacity provides a range of over 300 or even 400 km depending of the vehicle. New charging options and network density also contribute to eliminating range anxiety. Among these new options are induction charging and robotized conductive charging solutions at one end of the spectrum, and higher power charging stations at the other.
Charging takes place in three instances: at home, at destination (work, shopping, hotel,…) or on the road. The mix varies by region. Home charging is dominant in the US due to the pervasiveness of individual homes: it represents 81% of the mix, vs. 10% at a public stations and 7% at work according to a recent study. By contrast, EV owners in Chinese cities mostly live in apartment buildings; this led Nio to opt for swappable batteries for the ES8 introduced there a few months ago.
The charging infrastructure varies by region
How many charging points are there today and how does this compare with fleet size by region? According to its Dept of Transportation, the United States currently has about 56K public charging outlets located at 20K stations. For reference, the US fleet will amount to about 1 million PEVs at the end of 2018. For the EU, the European Alternative Fuels Observatory reports 150K public charging points vs. 70K three years ago. This network will serve a fleet of about 1.1 million PEVs by year-end. Last, China counted about 230K public charging plugs in early 2018 for a fleet estimated at 2.3 million by Dec 2018.
For reference, the European Commission recommends one public charging point per 10 PEVs, in addition to private chargers. The US ratio is significantly below this guidance, but one should consider the uneven sales distribution. Half of US PEV sales originate in California, 40% of which are in the San Francisco Bay Area. Living in Silicon Valley, 5 km from Tesla’s HQ, I can attest to the high density of BEVs and PHEVs (penetration similar to that in China) as well as to reasonable density of charging stations. Even so, they are often in-use, thus unavailable.
Infrastructure density is increasing fast
Recently, research firm Wood Mackenzie estimated that 12 million residential charging points and 1.2 million public ones will be installed in the N. America by 2030. For Europe, the firm foresees respectively 9 million and 1.6 million points at that time and a global total of nearly 40 million charging points.
Last month, Chargepoint, the US leader, committed to installing 2.5 million charging points by 2025 up from 54K today. For reference, the Silicon Valley-based company counts BMW, Daimler and Toyota among its investors. Similarly, EVBox, one of Europe’s leading charging networks which operates in 45 countries, committed to having 1 million plugs by 2025, up from 60K.
Many other initiatives will contribute to building the required charging infrastructure. For instance, Ionity, a JV between BMW Group, Daimler AG, Ford, and Volkswagen Group intends to install one thousand high-powered charging stations — capable of up to 350 kW — across Europe, aiming for an average of six plugs every 120 km. Electrify America, with funding provided by the VW Group following the Dieselgate settlement, will invest its two billion dollars in the charging infrastructure as well as in communication campaigns over 10 years. I should also mention Nissan, which has co-financed charging stations, both in Europe (2,000 stations between 2013 and 2016) and in the US (800 km fast charging corridor in the Northeast with EVgo).
These multiple charging networks have generally required that you subscribe to each of them, but this is changing. Hubject introduced a roaming service across Europe and is currently deploying it in the US. Similarly, Chargepoint just announced seamless roaming agreements with EVBox for Europe and N. America, and with Canadian leader FLO across the USA and Canada. The infrastructure is progressively gaining in maturity.
New charging solutions
Current charging stations deliver up to 120 kW if you have a Tesla, but only up to 43 kW for everybody else. This is about to change with the emergence of vehicles and stations capable of charging at 350 kW. Porsche Taycan, which will arrive in 2019, will be the first such car, followed by Audi’s e-tron GT, due at the earliest in 2020 (same platform). Porsche promises almost 400 km of range for a 15 minute charge and is currently deploying 350 kW stations at its dealers. With current voltage of 400 V, such high power would require cooling them, thus rendering them too heavy. To address this need for higher power, the voltage is increased to 800 V, resulting in a 75% reduction in power loss.
Wireless charging solutions are emerging from established players (e.g., Qualcomm) as well as startups (e.g., Witricity, Evatran below). The first such solution to be offered as an OEM option will be on BMW’s 530e PHEV, with a max power of 3.2 kW or about 15 km of range per hour of charge. Some solution providers offer 11 kW, while 20 kW seems to be for the near future. Robotized conductive charging solutions offer a higher efficiency. They either plug under the vehicle with an automatic guiding feature (e.g. Gulplug) or in the original side connector (e.g., Diatom). These solutions are mostly relevant for homes and fleets as they require matching units between vehicles and the infrastructure.
Are oil majors pivoting to distribute electricity?
Most European oil majors are indeed investing in the development of the charging infrastructure to prepare for life beyond oil. Last year, Shell acquired NewMotion, a European charging network. The Dutch oil company is also partnering with the Ionity consortium (see above) to expand its EV charging business in Europe. In 2018, Total acquired G2mobility, a charging solution provider. Earlier this year, BP acquired Chargemaster, a UK charging network, and invested in 2017 in FreeWire Technologies, which provides a mobile charging solution. Surprisingly, US oil majors remain absent in the EV charging transformation.
Both the market and the industry have clearly initiated a significant ramp-up in battery EVs and plug-in hybrids sales. The global fleet of PEVs will have quadrupled to 5.4 million vehicles from end 2015 to end 2018 and this is just the beginning. China alone targets 5 million such units to be sold in 2020. Whereas PEVs will represent ~2.2% of global light vehicle sales this year, their market share is expected to reach 11% in 2025, and climbed to 28% in 2030 (Bloomberg NEF). Consequently, the charging infrastructure is adapting on multiple fronts: network density, charging speed, new charging options and roaming solutions. Yet, the charging industry is far from stabilized and its oil-based counterpart has hardly started to prepare for this tidal shift. The future is exciting!
Managing Director, Orsay Consulting
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