Everybody first laughed at Bitcoin, but it’s the success story of the last few years, and everybody is now pushing EV charging, but it doesn’t make any profit jet.
So how are these two related, and why must you invest in EV charging platform now?
EV charging is not making a profit, so you need to invest now!
A statement like this, coming from an expert in EV charging management and an EV charging software provider, may sound like business suicide, but it’s true. The vast majority of EV charging stations are not making a profit, at least not directly, and that is good news for all looking for an investment.
Are you advising me to invest in a nonprofitable business?
Yes, we do, and we’ll try to explain it as simply as possible. Just stay with us till the end or jump to the last part if you don’t have 6 minutes to read it all!
Let’s start with the most abused sentence in recent times – “Can you imagine you were one of the first to invest in Bitcoin?”. This sentence is now primarily used in all sorts of scams, but it’s true. It’s all about being there before the rest. Before it’s popular and everybody wants to get on board.
Time for some boring statistics
Although e-mobility and electric cars are the hot topics of last years, the reality is that electric cars represent only 3% or about 7 million units of the current cars on the road worldwide. But a BloombergNEF study predicts that the global electric vehicle market and adoption will grow in the long run. It is predicted that by 2025 electric vehicles will reach 10% of global passenger vehicle sales. The trend will continue and rise to 28% in 2030 and to 58% by 2040. The highest growth in sales of new EV’s can be seen in the first six months of 2021, reaching 157 % in Europe, 197 % in China, 166 % in the USA, and 95 % in the remaining markets. (source: EV-Volumes).
There are, of course, some countries like Norway where 75% of new cars sold are electric plug-in, and the total share of electric vehicles in use is 15%.
Why is EV charging not making a profit?
In every economy, a profit of a business model is determined by demand and supply. The two significant factors for the profitability EV charging business are the number of electric cars on the road and the user behavior. When the number of EV cars on the road rises, the demand for charging will also increase. Still, to boost the numbers of electric vehicles, we must first boost the number of EV charging stations because people will not buy electric cars until they can’t charge them “on every corner.”
The factor that primarily influences the business model or profitability of EV charging today is that most electric-vehicle users charge them at home, at work, or on subsidized free chargers set up by some government agencies that promote e-mobility. While you can’t have a gas station at home, setting up your home charging station is relatively easy and cheap.
With Tesla, ChargePoint, gas station companies installing EV chargers, and other EV charging networks, most other charging stations are just not getting the traffic to make them profitable. With the increased number of electric cars, the demand will rise, and we will see new opportunities for making the EV charging business profitable.
3 ways to make a profit with EV charging
In general, there are three ways a charging business can make a profit, depending on its business model and the industry.
The first one is directly from selling electricity to users. Like ChargePoint, you can implement recurring software subscriptions or other types of billing. Still, honestly, it mostly comes down to securing a good location – something we will talk more about later.
The second option is investing in EV charging stations, EV charging software management, and billing software, building them and renting them out, or making some strategic partnership or collaboration with the third group – the “indirect revenue seekers (IRSee).”
Who are the “indirect revenue seekers (IRSee)?”
The indirect revenue seekers are businesses that see EV charging as an opportunity to attract more customers or enhance customer experience by adding EV charging to their services.
Free meals or drinks in a Casino are there to keep you playing. Free popcorn in a cinema will make you buy more drinks, and reasonable offers on tools in a supermarket will make you also buy groceries if you are already there. It’s the same with EV charging.
If you own an electric vehicle, you will select a hotel with an EV charging station compared to the one that doesn’t have one. A restaurant that lets you charge your car while you eat will get more customers than one without. If a shopping mall offers you charging, they know where you will spend your time while charging your car. Sure, you’ll be shopping inside.
If you make a strategic partnership with car dealerships, you can offer different subscription fees for charging an EV car per year or per usage. The billing software exists, you just need to develop a business plan, and the dealers can promote their electric cars even more aggressively. Instead of the usual discounts, they can offer their EV’s with “Free electricity for one year!”.
All this is nothing new! Even now, with gasoline, it’s a low-margin business. That is why the gasoline stations try to sell you snacks, coffee, cigarettes, magazines, and everything else possible. But there is a big difference. When you enter a gas station, they have less than a minute to sell you something – with EV charging, they have from 15 minutes (supercharge) to 2 hours to sell you what they want.
We are excited about the idea of an EV charge drive-in cinema where you can charge your car, eat popcorn and watch a movie. If you know any, let us know!
It doesn’t need to be free!
The best part of all of this is that the charging doesn’t need to be free! The days of free charging are coming to an end. Select the right Smart EV charging Management Software. You can create great cross-sell packages that include your services and EV charging inside your customizable application and bill them directly from it.
You can even introduce a charging station reservation with pre-ordered food delivered to your car when you arrive to speed up the process.
So you make money on your product, some extra on charging, and as a bonus, get the customers that use your app so you can stay in touch with them and send them personalized offers, promotions, and advanced discounts. It’s monetization and marketing – all in one.
Real estate and human resources benefits of EV charging
The most expensive power is from 3 pm to 9 pm, and the cheapest is at night at 1/3rd of the price or even less, depending on where you live. That is why EV charging will also play an essential role in real estate development and employee satisfaction. With the number of electric cars rising, people will seek convenience and will want to charge their vehicles at home or the workplace.
Many drivers are not homeowners and can’t charge at home or work. So, of course, they are not interested in buying EVs, but that doesn’t mean they don’t want them. It’s just the idea of charging at public charging stations that is putting them off.
For real estate, this means that they will have to equip apartment blocks with charging stations in their parking lots to attract a certain customer target group. Now it will indirectly increase the value of the real estate, but it will become a must-have in the future.
For companies, providing EV charging to employees can also serve as a relatively cheap bonus that significantly improves employee satisfaction and serves as a bonus point when recruiting new employees. Having an EV can be stressful when commuting long distances to work, and a free EV charging station can be a deal-breaker your HR department needs when trying to attract new personnel or keep the existing one happy.
Update (29.11.2021):
New homes and buildings in England will be required by law to install electric vehicle charging points from next year, prime minister Boris Johnson has announced. Although not everything is 100% confirmed, it looks like all new homes and non-residential buildings and those undergoing large-scale renovations will be required to install an electric vehicle charge station for every ten parking spaces.
In addition, all new charging points will need to be “smart charging devices” that can automatically charge vehicles during off-peak periods.
The government said the move would see up to 145,000 charging points installed across the country each year in the run-up to 2030, when the sale of new petrol and diesel cars will end in the UK.
With Germany, France, Australia, and many other countries demanding or advising new buildings to have “EV charging” pre-installation, the UK move is the most radical so far.
Who should invest?
If you just have too much cash and are looking for an investment that will quickly make you a profit, don’t invest in EV charging. At least not if you don’t have some new business model!
Sure, you can make some money on subsidies and charging, but charging stations also require maintenance, smart management software and marketing. This is where most startups fail – they run out of money before they make a profit and leave behind poorly maintained charging stations that don’t work correctly. A few bad reviews on the internet, and the marketing is also down.
Like with everything else “hot” on the market, the speculators are piling into the industry, just waiting for it to explode. But remember Bitcoin? It needed almost 10 years to explode! Everybody is sure that EV charging will be profitable. It’s just when the tipping point will be that nobody can predict.
Invest if you are in it in the long run (aka land grabbing), then you will make a profit for sure and especially invest in EV charging if you are the “indirect revenue seekers” or want to sell/rent to them. As it currently looks, “land grabbing” and indirect revenue is the only real way to make money with EV charging now.
The “land grabbing”
We think it’s a straightforward operation if you have the capital needed. Like with real estate, grab as much possible land in prime locations as possible. Grab them while it’s still cheap. Think of Las Vegas when it was still a desert!
Set up your charging stations in the best locations for long-distance travelers, at best tourist attractions, in the best residential areas, and other prime locations. The more traffic comes through, the more people will charge there. The more the numbers of EV cars will grow, the more money you will make with charging, or you will sell them to IRSee’s. Look for businesses with “old” thinking and get arraignments with hotels and restaurants that don’t see this potential jet. Install charging stations and lease them back. Or get the best locations and wait for a big EV charging company to come to your town willing to buy you out. Remember, because of electrical infrastructure limitations, there can only be a limited number of charging stations in one area.
A word from the sponsors
No matter what business model you choose, choose the right partner, and with many suitable hardware suppliers, it all comes down to good EV charging management software. It must offer many subscription and billing options that can support every existing or new business model possible. Tridens’ Plug and Charge Electric Vehicle (EV) Charging system is working and proven EV charging solution with many customizable options and a whitepaper application, all of which can be connected to Trident’s monetization solutions.
Stay tuned for more
Subscribe to our email newsletter or follow our LinkedIn page to get more information and blogs. Soon we’ll discuss storage vs. infrastructure in EV charging, limitations of fast charging, why we think Vehicle-to-grid (V2G) technology will fail, and many more hot topics. Learn more about Tridens’ Smart EV charging management software, or watch a free demo!
