EV Charging Station Business Model

EV Charging Station Business Model

The future of transportation will be dominated by Electric Vehicles (EVs). With approximately 2 million EVs in the streets of the US, it is anticipated that the number of EVs will steep sharply and grow tenfold by 2030. 

The growth in the number of EVs is overwhelming, which signifies the rapid electrification of transportation. With that, comes the biggest worry for EV drivers or owners i.e., are there sufficient EV charging stations to power to them? 

Contrary to the mounting growth of EVs, the charging infrastructure in the country is expanding at a snail’s pace. Today, there are approximately 135,000 EV charging outlets, which is much behind the total number of EVs presently running on the road. 

Based on the current adoption rate of EVs, nearly 30 million charging points will be needed in the USA by 2035. Given the significant difference between the number of EVs on the road and charging stations at present, federal governments intervened through the National Electric Vehicle Infrastructure Program. 

It provided opportunities for EV charging infrastructure providers to build charging stations by collaborating with site hosts. They would offer EV charging services to the public while meeting the state’s needs and driving proper revenue for station owners. 

This means anyone with a spacious site can be a part of the EV charging infrastructure strategy of the federal and contribute towards sustainable transportation. However, before investing in a commercial charging station, you should know the right EV charging station business model for assured earnings and ROI (Return on Investment). 

So, let’s find out about the various models for EV charging stations to learn how they work and which can be best for you! 

EV Charging Station Market Overview in the US

The US EV charging market is warming up with the government’s intervention. With appropriate funding provided to every state under the National EV Infrastructure Program, the goal of building a country-wide EV infrastructure gained momentum. 

As individual states started working towards the goal, it opened up partnership opportunities for private and public entities. Together they aimed at creating 500,000 charging stations, each spaced every 50 miles across the country to enhance the charging convenience of EV drivers. 

Different electric vehicle charging station business models facilitated the monetization of charging infrastructure. This drew the attention of commercial complexes and businesses to join the movement of installing an EV charging station at their place. 

Now, talking about the current market scenario of EV charging infrastructure, here are the predictions according to PwC. 

  • The number of EVs in the country is estimated to hit 27 million by 2030 and a massive 92 million by 2040. 
  • The market could rise ten-fold to meet the electric vehicle charging needs of the projected 27 million EVs on the road by 2030.
  • The number of EV charge points in the USA is expected to reach an estimated 35 million in 2030.
  • EV charging infrastructure market is projected to grow to approximately 100 billion by 2040.
  • The market analysis for EV charging infrastructure by industry experts further revealed,
  • EV charging point operators or stations will generate a majority of the revenue through EV charging technology advancements. 
  • Huge number of charging stations will be installed in public places, commercial places, and workplaces to supplement the shortage of residential charging. In other words, there will be a shift towards on-the-go charging facilities.  
  • Software and smart charging solutions will smooth out the operations for the stations and also make them cost-effective. 
  • There is rapid growth and proliferation of the EVSE (Electric Vehicle Supply Equipment) startups, which indicates that the US EV charging industry is in the process of maturing. 

Different Types of EV Charging Stations 

Whether you seek a revenue-oriented or cost-effective EV charger business model, you must learn about the basics of electric vehicle charging. 

Well, we are talking about the types of EV chargers available today in the market. 

You need to understand each type of charger used today in EV charging network development across the country to know which is best for you. Of course, the type of EV charger you need for your station depends on the electrification needs of your target customers and the budget. 

To make a wise decision regarding the charger for your electrical vehicle charging business, here’s a brief explanation.

1. Level 1 EV Chargers 

The Level 1 EV charger uses a standard power of 120 Volts and is plugged into a wall outlet. This is the slowest type of EV charger that takes the longest time to charge an EV. However, it has a plus point too. It does not require any additional equipment or involve installment hassles.  

Needless to say, Level 1 chargers are best for single-home use and certainly not the best type for an EV charging station business model. It is also the cheapest type of charger given its slower charging capacity. This type of charger is suitable for overnight charging as it can take 7-8 hours to fully charge a vehicle.

2. Level 2 EV Chargers

The Level 2 EV charger uses 240 Volts AC plug, which is suitable for residential and commercial charging purposes. However, they are mostly used in commercial charging stations for their moderate capacity to charge a vehicle in 2 hours up to 80%. 

In another way, a Level 2 charger powers a vehicle to run 10 to 60 miles of range after one hour of charging. This type of charger is costlier than a level 1 charger but is affordable as per the business plan for EV charging stations. 

In general, the price of a Level 2 charger ranges between $1,000 and $5,000. 

It’s quite a fast charging option and is suitable for any business shops or residential complexes whose customers or dwellers need speedy EV charging solutions whenever they are in need. 

3. Level 3 EV Chargers (DC Fast Chargers)

A Level 3 EV charger, also called a DC fast charger, is the most advanced type of charger in the market today that uses 480+ Volts. No doubt, it offers the fastest charging of EVs and is best for large-scale commercial uses. With just 30 minutes of charging, an EV can run up to 100+ miles of range, which is quite impressive! 

However, Level 3 chargers with their impressive capacity need specialized equipment, intricate installation process, and high-level maintenance. It also means you can expect a higher EV infrastructure investment to install this type of charger.  

EV charging stations with DC fast chargers help in electric vehicle fleet charging in multi-office buildings and commercial places like malls, supermarkets, restaurants, or highways.

EV Charging Station Business Models Feasible For Commercial Facilities

The US federal today encourages private EV charging station partnerships to expand the charging infrastructure network across the USA. On that account, offices or commercial facilities are seeking revenue-driven or cost-effective ways to invest. Different EV charging station ownership models came up assuring profits or substantial returns in the long run. 

By seizing an electric car charging station business opportunity, you can enjoy several benefits like more customers, additional revenue, and brand image improvement. 

However, finding out which electric vehicle charging station business model is worth your investment is the real challenge. It depends on a few factors, including business purpose, costs and resources available, long-term goals, and expertise. To make this crucial decision-making easier for you, we interpreted each type of EV charger model for you. 

EV Charging Station Business Models Based on Monetization

These are the most effective EV charging business models applicable to all businesses regardless of their type, location, or size. Let’s discuss them.

1. Loss leader model 

Under this model, a business offers EV charging services absolutely for free! It might seem unbelievable, but this model existed to help a business grow its share in the vast EV charging market. Free charging services help the owners to attract a huge number of customers and also retain them. 

You might be worried about how to recover the huge costs spent on installing and maintaining the charging station. Well, you will recover it through the increased revenue due to a rise in customer footfall and the growth of your ongoing business activities.  

Of course, this is a suitable business model for big commercial facilities like retail supermarkets, restaurants and cafeterias, hotels, etc. Before finalizing the model, you should first determine whether you can entice more of your target customers by offering free charging. Only then, you can drive your business growth, enhance brand loyalty, and spend further for maintaining your EV charging station. 

So, if you are confident that your customers are mostly EV drivers who will be excited to find a convenient charging location, you can go ahead with this model! While installing DC fast chargers is costlier, Level 2 chargers are also great for this model. You can cause more purchases and earn higher revenue by increasing the average dwell time of your customers. 

2. Operational cost/ total cost recovery model

As the name suggests, this model levies a fee on drivers for charging their EVs at the station. It is again suitable for any kind of commercial or business establishment that draws sufficient customers every day. 

Under the model, you need to estimate the fees based on your operational costs. Set the fees based on the expected number of customers who will charge at your station daily, so that you can recover the costs. 

The additional earned above the operational costs will be useful to pay back for the EV charging equipment and installation. In simple words, you have the opportunity to recover your total costs in the long run and get a minimal profit margin.  

A prime consideration for this EV charging station business model is that your customers must willingly accept the fee to charge their vehicles. Many might compare the charging price with the costs of home charging. 

Therefore, as long as the charging fee is within their acceptable window, it is going to be a successful EV charger business model for you. You are sure to draw a considerable number of customers to your business and collect adequate revenue for cost recovery.  

One key suggestion from our end for this model is to set a competitive fee for charging. The more competitive the price is, the more drivers you can attract! If the fees are higher, you may lose out on many drivers with a short journey ahead. 

Since you are charging a fee to drivers ensure to have an easy and understandable billing method. Also, offer them quick payment options through apps, e-wallets, or cards. 

3. Fully-funded model

This model works through partnerships with an EV charging infrastructure provider. It will provide EV charge points and miscellaneous equipment as well as installation services for free. You will also get a lease payment for letting your business space, parking, or commercial plot for installing an EV charging station. 

This EV charging station business model works well for every business owner or commercial property owner. It gives them a fixed monthly earning in the form of a rent fee with zero investment! However, the space they allow for the station installation must be at a convenient location. 

It should be at high-travel routes or within 1-2 miles of a highway entry/exit. 

This model is quite an ideal option for offices, hospitals or medical centers, apartment complexes, condos, community parking, etc. There are no capital cost and operational costs involved in this model. But, it offers charging facilities to visitors, employees, customers, etc. at these hosting sites as well as attracts new people. 

Of course, this model has its sets of cons too! Despite being the owner of the commercial place, you have no control over operations or EV charging service pricing. The entire earning from charging services goes to the EV infrastructure supply provider. 

Needless to say, this model is suitable for businesses that have less concern about their branding or charging experience offered to customers.  

Also, third-party suitability is a major consideration for this EV charger model. The infrastructure support, charge points, and proposed type of chargers required electricity capacity may not be suitable for your site. In that case, your site will need overhaul and electrical supply upgrades, which can cause some responsibilities and hassles for you. 

4. Profit-making model

This EV charging station model works with a profit-motive for the business owners. Hence, it’s a great option for any business that wants to multiply its profit earnings by supplementing its products/services with EV charging services. 

This model requires you to charge a considerable fee to the EV drivers for every charging session. You must keep the fee as high as possible to recover all types of costs. They include charging points and hardware, station infrastructure, setup, operational, and maintenance costs. When you can recover all the costs with a sufficient revenue stream, you can enjoy substantial profits.  

The only and biggest drawback of this model is less customer attraction because of high-priced charging services. However, you can still attract more customers by providing a fast charging facility with Level 3/DC fast chargers. If it’s a shopping outlet, restaurant, or hotel, you can draw more customers by offering perks like freebies, additional discounts, loyalty coupons, cashback offers, etc.

EV Charging Station Business Models Based on Operations

While we discussed the key models based on the monetization of charging infrastructure, there is more to it! There are sustainable charging station models that work brilliantly for both parties, i.e., the lessors and EV charging infrastructure providers. Let’s discuss them in brief. 

1. Regional EV Charging Networks

Under this model, businesses with proper premises for a charging station collaborate with an EV charging service provider. The provider will assist in the commercial EV charging station installation, including procurement of charging equipment, charger setup, operations, and maintenance. 

Simultaneously, by offering an EV charging service at your business, you enhance customer experiences and attract more customers. It creates the opportunity to boost your revenue and growth while improving brand loyalty among your customers. 

Investing in an EV charging station through this model is effective if you are trying to gain a competitive advantage in the market.

2. Electronic Fleets and EV Charging Station Model

A lot of businesses are embracing the use of electronic fleets to reduce potential environmental impacts. Workers or employees are also urging businesses to switch to electronic fleets to reduce fueling needs and save up expenses. 

Along with this above financial rationale, there’s one more reason for the electronic fleets model to flourish in the EV charging sector. It is tax rebates! So, there is a potential for workers or employees of your business to earn some additional revenues. While EV owners get tax credits in some regions, businesses using gray fleets are eligible for tax cuts or exemptions. 

Lastly, a major incentive for businesses is the extremely low cost of maintaining electronic fleets. 

Under this model, businesses having electronic fleets install and operate a charging station at their building. They can do this by collaborating with an EV charging service provider for equipment procurement and installation.

Summing it up, business enterprises or organizations have enough compelling reasons to switch to electronic fleets and have an EV charging station integration at their premises.  

A difficulty that EV fleet operators can experience while implementing this EV charging station business model is deciding which type of charger is best suited for them. They need to estimate the required charging capacity based on the number of cars in their fleets, expected income, and operating expenses. 

3. Municipality EV Charging 

Given the increasing awareness of sustainable transportation among the general public, federal authorities are also stepping up their efforts. To promote the widespread use of EVs, municipalities switched their fleets to EVs and are hosting EV charging stations. 

This model, as the name says, is about municipality-owned EV charging stations. They offer free charging services to on-site employees as well as the public to promote e-mobility. Municipality charging station accessibility is always free for government employees. However, they may charge a very minimal fee from the general public based on per charging session or kilowatt-hour (kWh) consumption for recovering the operational costs to some extent.

To recover the costs, many municipalities with spacious campuses provide parking services to private cars, cabs, and delivery companies. This helps them to raise some revenue while supporting other professionals to adopt EVs. 

4. Commercial EV charging

Businesses with vast parking spaces can host a supercharger station and offer charging services to the public in transit and their customers. Generally, dine-outs, food chains, supermarkets, and hotels can consider this EV charging station business model. 

Small businesses, including shops, cafes, and retail outlets can also invest in this commercial EV charger model. It ensures lower risks with minimal investment when you partner with an EV charging solution provider. Moreover, there are many feasible financing options for charging stations, such as Green Financing Programs, private partnerships, and sponsorships.  

This model also works great for commercial real estate owners as it will help promote their plots among the target customers while offering a public charging facility. 

Some of the prerequisites for operating this EV charging station commercial model successfully are:

  • Expertise in EV charging station installation from the solution provider
  • Unwavering maintenance support from the solution provider
  • Additional services or offers to customers to extend their dwell time at your business stop
  • Strong customer support services
  • Mobile payment convenience 

EV Charging Station Business Models Based on Revenue

Many businesses or property owners seek revenue opportunities from the free or extra space available at their property. They are eager to make an EV charging station investment to support EV adoption across the country if that offers a constant revenue stream.

If you are one of them, choose from these two simple revenue models for charging stations.

1. Pay-per-use EV charging station model

If you choose this model, you need to ask the customers to pay a price based on the Kilowatt-hour (kWh). It implies the energy or power consumed by the EV during the time it was plugged in. 

Businesses decide the kWh pricing model based on their charging station location planning. For instance, if your station is located near a highway egress or a community center, you can keep the EV charging service pricing higher. On the other hand, stations located away from the city hub must set a lower price. 

This model is most appropriate for small businesses, retailers, and facility centers like gyms, studios, clinics, salons, etc.

2. Subscription-based EV charging station model

Under this model, you need to fix a monthly and yearly subscription price for offering charging services to EVs. Customers subscribing can use your charging station any number of times the whole month or year. 

Subscription-based model assures stable EV charging station revenue streams for the owners of the stations, regardless of their existing business activities. 

This EV charging station business model gives enormous scope for revenue to businesses, real estate owners, and commercial property owners.

Costs Associated with a Commercial EV Charging Station Business

As a business owner interested in EV charging station investment, you might be wondering what is cost of installing a station is. Well, several factors influence the total costs, including the types of chargers installed and access to EV charging infrastructure suppliers. 

To help you plan the installation of a commercial EV charging station with appropriate cost estimation, we summed up the different costs. 

1. Hardware costs

This involves the costs needed for purchasing EV charge points and associated hardware equipment. Of course, the cost here will vary depending on the level of chargers and number of chargers you need to install in your station. 

An EV charging station design and installation is incomplete without several other components, which include a cable feeder, wiring, circuit breaker, and a power protection system. 

2. Installation costs

It includes the cost of installation labor along with the cost of materials needed for site preparation, engineering, and construction. It may also add the cost incurred for repairing any part of the site or concrete that got damaged by the installation works.

If you are partnering with an EV charging solution provider, it will supply you with all the necessary equipment and components for infrastructure.

3. Supply grid upgrading costs

The cost of installing any type of EV charging station business model is always lower if the electric supply grid needs no upgrade. If an upgrade is required to cater to your EV charging needs, you will also need a permit from the local electric commission. Though it is not a direct cost, it involves paperwork and hence is considered a cost for grid reinforcement. 

The direct costs for the electric supply upgrade include the major ground works, wiring and additional grid construction equipment, voltage information signage, and associated costs. 

4. Electrical costs

Electrical costs imply the price you pay for kWh usage at your station. It is calculated based on price per kWh multiplied by the total kWh you need for charging an EV.  

Along with the cost of electricity consumption, the EV charge points also consume a certain amount of electricity for their stand-by features and power LEDs.

5. Software costs

Do not forget that your station is operating as a part of the EV charging network of the provider. You need to install a software solution and have a subscription to use it. Through charging station software solutions, network providers or operators monitor, assess, and protect your charging operations. 

6. Maintenance costs 

Lastly, you must spend on EV charging station maintenance regularly to ensure that your station stays operable and profitable. If you are lucky, your infrastructure partner will provide support, maintenance services, and even extended warranties of your charge points. 

If you are willing to start a station as a franchise of a reputed EV charging company, the EV charging station franchise cost will comprise these vital costs along with some additional costs.

Key Components for EV Charging Station Profitability & Success

Choosing an EV charging service pricing strategy is imperative for the successful operation of your charging station. However, there are several other components to keep in mind to ensure EV charging station profitability and success.

1. Connectivity cable

Also called the charging cable, it is the cable or conduit that connects the charging station to the electric vehicle. While its length varies, connectors are of various types. 

Make sure to choose a cable that is compatible with widespread EV models so that you can serve a diverse user base. 

2. Power source

To secure a power supply, a charging station is connected to a source of electricity. The source must be efficient enough to supply the necessary power (kWh units) according to your station’s capacity and desired charging speed. 

3. Connector types

EV charging station units use a variety of connectors, tailored to meet the unique requirements of diverse EV models. 

Some common connectors are CSS (Combined Charging System) and Type 2 (Mennekes). Make sure you choose a connector for your station that meets industry standards and caters to your user preferences.

4. User interface

Most EV charging stations adopted technology through a user interface to offer an advanced experience to EV drivers. 

Ensure first-rate charging station user experience with a seamless touchscreen, user-friendly mobile apps, and button panel.

5. Network connectivity 

Your modern EV charging station business model must boast superior network connectivity for uninterrupted operations and revenue flow. 

This underpins the need for a digitalized network system with which the drivers can easily spot a charging station via a mobile app.

6. Payment options

For enhanced charging station accessibility and greater revenue earnings, you must offer multiple payment options, including cards and one-click/scan payments through mobile. 

It offers convenience to the users as they are mostly in a hurry and find it irritating to wait in a queue for payment. 

7. Safety features

Safety during the electrical charging function is pivotal for any EV charging station. For the safety of both, EV drivers and station staff, make sure that the station encompasses key safety features such as overcurrent safeguarding and ground fault protection. These prevent overheating or any mishaps while vehicles are charging. 

Challenges and Opportunities

Investing in one of the sustainable business models for EV charging station seem nothing like rocket science with the right planning and resource support. With solid encouragement and support from the government, private partnerships in the realm of EV charging stations are increasing. 

But, despite all that, small enterprises with viable locations are struggling to enter the EV charging network. Here are the challenges that they face. 

1. Exponential market growth

With exponential growth in the sales of EVs spurred by increasing awareness of sustainable green transportation, federal agencies took a robust approach. With the combined efforts of private companies and businesses, EV charging infrastructure took a major upturn. 

Business outlets, offices, commercial centers, and even municipalities across every state are setting up accessible EV charging stations. Consequently, the competition in the sector is growing. This raises a deep concern about profitability and sustainability in the market for new entrants.

2. Meeting the needs of a diverse user base 

The increasing demand and booming growth of the EV sector encouraged manufacturers to come up with more improved and diversified models of vehicles. With research and development, better EV models are made that optimize electricity consumption, detect issues in real time, and ensure safety.

However, the advancements surfaced some challenges for EV charging station operators. They need upgraded chargers and cutting-edge charging station equipment to accommodate the needs of varied EV models. 

3. Competitive business models

Various feasible EV charging station business models emerged to offer business opportunities in EV charging for small to large enterprises or property owners. 

Each model is apt for a different business goal, target customer segment, location, or revenue stream. Choosing a viable or competitive model amongst them that will give you enough returns while serving EV charging needs is tricky.

4. Grid limitations

Installing an EV charging station needs a major electrical grid upgrade to meet the scaling power requirements. Apart from the wiring and site works for new grid installation, the business also has to acquire legal permits from electrical commissions. 

This needs paperwork and might cause delays in the installation, which is a challenge to the businesses.

Opportunities to seize in the prospering EV charging sector

The rapid growth and maturity of the EV charging network offer several affluent opportunities to businesses and commercial property owners.

1. Brand image enhancement

With an EV charging station installation, you can showcase your business’s support and commitment to eco-friendly modes of transportation. It also proves your strive to reduce your carbon footprint and contribute to the global efforts for environmental protection.

Such a move will inevitably uplift your reputation and brand image in the industry, making you an example for others. 

2. Additional income

By offering EV charging services as an amenity alongside your existing business will give you an affluent scope to earn additional income. Either through the charging fees from drivers or as a lease fee from the EV charging infrastructure provider, you get a consistent stream of revenue.

3. Use EV charging stations as a marketing tool

You can also operate a befitting EV charging station business model while drawing extra income as an advertiser or marketer. You can incorporate signage, hoardings, banners, and posters in your station to create ad spaces. Ask local brands or companies to use your EV charging station for branding. 

Future Of Electric Vehicle Charging: Technology Trends to Watch Out

Going ahead with any type of electric vehicle charging business model is going to be profitable for you in the long run. We assume that because the future of the industry looks promising with the following emerging trends in charging stations.

1. Maps enablement

With different EV charging map applications, it will be easier for the drivers to spot a charging station at their nearest. Powering vehicles in transit will become more convenient. This reduces anxieties for drivers to run out of charge while they are on a journey.

2. Shift from home to on-the-go and work charging

Due to the favorable EV charging station business, private sector players are showing more interest in the installation of a station at their premises. All the models are easy to operate, customer-centric, and assure profits or benefits for the station owners. 

As a result, more businesses, including restaurants, retail outlets, convenience stores, cafeterias, offices, and service-based organizations are opening up stations. While stations are more concentrated in the residential complexes earlier for home charging, we can expect to see more work and on-the-go charging facilities.

3. Enhanced accessibility

With research and advancement, EV infrastructure equipment suppliers are gradually coming up with high-grade and fast chargers compatible with a wide range of EVs. This will result in increased charging station accessibility to EVs of all types and therefore, higher income for the station owners.

4. Interoperability enhancement

With an IT-based open network, there will be increased EV charging station interoperability. This will enable EV drivers to charge their vehicles using any charger at any station. It will reduce compatibility issues and make EV charging seamless in the future.

Future Global Outlook of the EV Charging Sector

The future of the global EV charging industry seemingly looks prosperous with innovation in the charging equipment and participation of private enterprises. With the rapid proliferation of EV charging stations in urban and sub-urban regions, it is foreseen that more stations will be seen in the rural regions.  

The EV charging sector will usher revenue-wise or growth-wise with a growing number of stations in the USA, UK, and other countries across the world. With the focus of governments on EV charging infrastructure expansion, you can expect to see a regulatory landscape for EV charging. Regulations and rules will emphasize protecting EV station operators and increasing customer engagement in charging.

As the EV charging industry matures, more EV charging station financing options will come up from public and private agencies to encourage small businesses and individuals to install the stations.

If you are a part of the EV charging sector, keep an eye on the electric vehicle market trends along with charging infrastructure evolution. Partnership or networking with prominent EV infrastructure solution providers will help you gain insights into the industry, and stay tuned.

Operate a Revenue-driven EV Charging Business Model with US Supercharge

Hosting an EV charging station is a high-potential investment whether you want to supplement your existing business or start a new business. Given the flourishing EV market and rapid proliferation of charging stations, it is no doubt a great business choice today. However, you need to make sure to start on the right foot! 

We discussed here the common sustainable charging station models. Making a choice might be tough. Evaluate the critical factors to choose including, your budget, target customers, average charging time or dwell time of your customers, location, proximity to the highway, daily footfall, and so on. 

Once you decide on the right EV charging station business model, it’s time to partner with a locally reputed EV infrastructure provider to assist you in the charging station installation and deployment. 

If you are looking for a trusted partner for executing your EV charging station business plan, US Supercharge is your ultimate stop. We provide end-to-end assistance, including equipment procurement and supercharger installation services to businesses.

If you own a business or commercial facility with enough space to lease for an EV charging station, contact our experts today! We will get it transformed into a high-class and accessible charging station that adds to your revenue flow.