Charging ahead!

BEV charging seems to be in the news at the moment.  The British comedy actor Rowan Atkinson attracted attention with a column in the Guardian newspaper suggesting that he had been duped into buying a BEV by incomplete environmental analyses, but also commented on unsatisfactory charging experiences.

Bigger news came out of the US last Thursday however when GM announced that it would engineer it’s BEVs to use the Tesla Supercharger network from 2025, following on from Ford who made a similar announcement two weeks’ ago.  With the ramp-up in BEV model launches from Ford and GM, combined with the BEV market leadership in the US of Tesla, this means that the significant majority of BEVs in the US market are likely to be using the Tesla charging plug standard (different to the CCS version fitted to European market cars) and the Supercharger network.  Mercedes chose an alternative path earlier this year when it announced that it would build its own charging network, in addition to its existing investment in Ionity, a joint venture with BMW, Ford, Hyundai and Volkswagen.  On the same day as the GM announcement, but on this side of the Atlantic, Van Mossel (who you would have thought had enough on their hands with their recent spate of cross-border acquisitions) announced the launch of its new Energie business unit which will offer a public charging network and provide an installation service for home chargers.  This replicates the move by the independently minded UK dealer group Arnold Clark who announced at the start of May that it would launch its own charging network, initially with 500 points across the UK.

Research by ICDP and others shows that reliable and widespread charging infrastructure is one of the key reasons for consumers to hesitate before buying a BEV, and in general, investment in infrastructure has been left in private hands, creating a ‘chicken and egg’ situation in terms of the investment justification.  Whilst BEV penetration is relatively low in certain geographies, the business case to invest there and to maintain uptime will be weak.  However as long as the infrastructure is absent or unreliable, potential customers will not buy BEVs.  There is therefore a logic for manufacturers and retailers to invest in removing the charging barrier to purchase, but I suspect that they will be drawn to the areas that are already relatively well-served by existing networks, as those are also the areas where the potential additional BEV sales will be greatest.  Tesla has already demonstrated this leverage, as the functionality and reliability of its Supercharger network was always a key reason to buy a Tesla as opposed to another brand – that was certainly a factor for me personally.  It also provides another non-cash lever to incentivise buyers by providing charging credits.  However, opening up access to other brands as Tesla has been doing for a while dilutes this advantage, just as its more competition on the product as well.  This may be a decision it comes to regret.

Clearly a lot of time is being spent in boardrooms across the industry considering whether and how to improve charging network access.  I don’t have access to any of the investment detail, but I find it difficult to believe that the new investments have been justified on the basis of a straightforward direct return on investment based on the profitability of recharging itself.  Infrastructure costs for high speed charging are typically six figures (Euros or GBP), and stations with multiple chargers are likely in millions.  Tesla spent over US$1 billion to build out its network to 2,500 locations globally.  Only where a dealer has already installed chargers to meet OEM standards, might it be possible to offer a charging service that may not require additional capital spend, or the cost might be reduced.  Offering the installation of home charging solutions as Van Mossel intends to do should clearly be a commercial venture, although some dealers who tried to offer this a few years ago decided that there was reputational risk working with contractors who did not always deliver a level of customer service that reflected the standards that the dealer aimed for in their own sales and aftersales interactions.  It does however meet a real need of many first time BEV buyers, and deepens the customer relationship, so worthy of consideration for OEMs and dealers who have the ability to manage the service delivery by their chosen contractors, at a time when other aftersales income streams are under pressure.

Does all this activity suggest that all OEMs and dealer groups should be investing in BEV charging solutions, when there are possibly more obvious candidates such as traditional oil companies and electricity providers?  My feeling is that OEMs and dealers (of all types) need to have solutions that they can offer to customers – they must be able to address the questions and concerns that prospective customers have, and the quality of those solutions will be inextricably linked to their overall BEV ownership experience.  However, with a growing cost of capital and many other opportunities to deploy that capital within the core business, combined with some nervousness about how the BEV transition will now progress, it seems that the right answer is to use partnerships to address the customer needs rather than directing investment into an own solution.  In that respect, it looks like the moves by Ford and GM were an astute move on their part, even if they (and their customers) are now ‘sleeping with the enemy’…

Image: Illustration: R Fresson from the Guardian