Charge point operators in Germany: players, strategies, and market shares

In the last article, we spoke about the demand for electric vehicle charging power based on our expectation of the BEV penetration. Today we will figure out where Germany stands with the rollout of infrastructure: what are the leading players? Which strategic assets and challenges do they have? What are their current market shares and their future perspectives?

I. Categories of charge point operators

The official register of public charging points counts 7,317 operating entities (as of March 21, 2024), with most of them operating an insignificant number of charge points: 92% of all listed operators own less than 25 charge points, and even 97.7% operate networks smaller than 100 charge points. Focusing on the larger operators that follow a specific business strategy, there are six major operator categories: (1) traditional electricity providers, (2) big fossil fuel producer-distributors, (3) Automotive OEMs, (4) Retailers, (5) municipal utilities, and (6) CPO pure plays. Their respective shares in the German market in terms of installed power capacity are shown in Fig. 1.

Let’s discuss the specific strategies of each category one by one, including more details on the leading players in the German market:

1.????? Electric power suppliers

• Leading players: EnBW, E.ON, EWE Go and Mer.
• Strategic assets: power generation, grid control
• Strategic challenges: Location access, Strength of end-customer relationship

As they are natural owners of the core product “renewable charging power”, being a CPO is just developing another sales channel for their business, additional to household and corporate customers. They control the cost of the product and invest in charging networks as a logical downstream distribution network. Due to the legacy ownership structures dating back before the energy market deregulation, they still have many ties to municipal utilities, be it as co-owner or majority- shareholder or as a very close business partner. This brings them into a good position to get local grid access where the charging station is located. They do not own the charging locations though, and securing these by lease can be a major challenge. Exposed to almost 25 years of tightening deregulation, the once-sleepy utility de-facto monopolists faced more intense competition for household customers and started their transformation into more agile and customer-oriented enterprises. Yet, with E-Mobility and charging representing a completely new customer journey, the transformation towards agility and customer understanding must be elevated to a new level; therefore, we consider that area as the most crucial challenge for players in this category. They invest in both normal and fast charging networks, with remarkable distinctions.

• EnBW, the leading player in the energy category, is most heavily investing in Fast Charging, focusing on a B2C model.
• E.ON’s primary business model is B2B-oriented, covering the complete capital investment, rollout, and operations for partner businesses that dispose of the favorable locations. E.ON also determines the pricing; in turn, the location owner takes the revenue and bears the utilization risk. 85% of their charge points are normal chargers, as the model appeals to location providers where customers tend to stay for several hours. Volume customers for this business model are for example car parking space operators like Contipark, for which E.ON will install and operate 4,000 AC charging points.

2.????? “Big Oil”

• Leading players: Aral Pulse, Shell, Total Energies
• Strategic assets: Gas station location, retail shop diversification
• Strategic challenges: access to renewable power and grid; balancing of conflicting legacy business interests

The global oil corporations face a long-term existential threat in the transformation to climate neutrality, as their core product is becoming gradually obsolete. Their existing gas station networks could represent one key asset for a successful transformation towards electric-powered mobility; but shifting the property use from gas pumps to charge points is not always obvious and faces several obstacles, from sufficient grid connection to spatial extensibility. Fast charging will in the future allow for much shorter sessions, but will still take some more time than re-fueling, thus requiring significantly more onsite space for profitable operation. Another additional strategic advantage is the accomplished diversification from mere fuel distributors to attached retail shop operators. The shops achieve the best net margins of all retail store segments due to their almost 24/7 availability and have reduced the dependency on the non-differentiating, low-margin product gasoline. The challenges to becoming relevant players have already been on display by recent announcements.

• Aral Pulse with its parent company BP Pulse just one month ago announced a more consolidated international rollout plan in four focus markets (US, UK, China, Germany) instead of twelve, with up to 20,000 fast chargers in Germany operating until 2030.
• TotalEnergies, in contrast, does not see the existing gas station as a strategic asset and has, in 2023, agreed to the sale of its German network to Canadian retailer Alimentation Couche-Tard in favor of a greenfield approach in building charging hubs.
• Shell announced in March 2023 the divestment of 500 gas stations annually without giving further regional details.

Either way, it is hard to see how the mere distribution of charging power will suffice to generate elevated profit margins in a maturing market, given their slow-melting legacy business and the apparent resistance to change. In the long term, we therefore see only category players in the charging market that will consistently transform their value chain from fossil to renewable energy.

3.????? Automotive OEMs

• Leading players: Tesla, Ionity
• Strategic assets: customer relationship, charging ecosystem data
• Strategic challenges: access to power, grid, location

OEMs were among the early movers in the CPO market: attempting to stimulate the market and help resolve the chicken-egg problem of consumers not buying their BEVs for fear of being unable to charge them, they invested in charging infrastructure. Some, including Tesla, thought they could operate a network exclusively for their brand customers; they soon concluded that such restricted usage would not lead to appropriate utilization and generate accumulating losses, thus opening their networks to non-brand customers one after another.

Ionity, as a grouping of OEM shareholders BMW, Ford, Hyundai, Mercedes Benz, and Volkswagen, puts the idea of shared risk and capex between OEMs one step further; but as a Joint Venture between stakeholders competing in their core business, Ionity is prone to an inherent risk of conflicting shareholder interests. Recent economic history is full of examples where JVs have proven incapable of steering clear in times of rising divergence of shareholder interests, e.g. profitability criteria will not be met, lower willingness to invest in subsequent financing rounds, synergies with core business are deemed too small, etc.

In the legacy business model of selling cars as discrete products, OEMs do not dispose of many strategic assets of the CPO value chain, except “owning the customer relationship”, i.e. controlling the on-board digital customer interface. As it is crucial for a positive charging user experience to embed the workflow seamlessly into the overall vehicle experience, OEMs contribute a great deal with the software integration of charging planning, battery management, route planning, charge point reservation, and transaction and payment processing.

But the transformation to E-Mobility goes hand in hand with another transformation, from a product-based business model to a service-based one. As a mobility service provider, OEMs will still sell a proportion of their output as products, but a growing share of revenues will be derived from mobility services in all shades from B2B to B2C, from single autonomous rides (think of Tesla’s upcoming Robotaxi service as the first such business operating at scale) to integrated logistics services for delivery companies. This is where an attached CPO business makes the most strategic sense, but after all, it does not require to actually own it.

We conclude that for OEMs stuck in the classic product business model, the CPO business will not generate real synergies with the core business and will fail to meet the same profitability criteria and therefore will be divested sooner or later. Only those players that will successfully transform from car sellers to mobility service providers will likely stay in the CPO business.

Tesla is the prime example of a company that goes beyond car manufacturing and selling, adopting a strategy of an integrated renewable energy value chain service provider, including PV energy generation, residential to large-scale storage solutions as well as residential, enterprise, and public charging. Tesla adopted a first-mover CPO strategy with their supercharger network. Early on, Tesla internalized the whole value chain from building its own charging hardware to specifying charging standards like the NACS plug and communication protocols, exemplifying the station rollout, and operating the charging hubs at a great scale. The first-mover advantage and rapid scale on the US national level made it possible that the proprietary plug, North American Charging Standard (NACS), as it was touted in anticipation, remarkably within several months of 2023 reached the status of a de-facto standard in the US, widely accepted by OEMs and CPOs. In Germany, Tesla’s supercharger network is the leading CPO in terms of installed capacity, by far exceeding EnBW which operates the biggest number of charge points. Despite falling victim to one of Elon Musk’s hasty downsizing rushes in April, Tesla’s supercharger business has re-gained his blessing and an official statement on X of a $500M investment budget in the aftermath of the restructuring blow.

4.????? Retailers

• Leading players: Aldi Süd, Schwarz-Gruppe (Lidl, Kaufland)
• Strategic assets: Outlet location ownership, Supply Chain mastery
• Strategic challenges: operational complexity, lack of synergies with core business

Big retailers (or their related property-owning entity) have enough parking space available at their outlets to accommodate a large and extensible number of charge points on site, which means they own a key asset of the value chain. And with their extended opening times, they are assured of high frequency as a destination charging site. Initially, they were giving away the installed charging power for free to lure customers into the outlets and spend more inside. But with mounting energy supply costs, all retail facilities turned to paid charging models.

Those that fully embrace the CPO business model are discounters with the scale of several thousands of outlets, like Aldi Sued and the Schwarz group, owning Lidl and Kaufland outlets. 53% of the retailers that offer charging onsite have outsourced the rollout and operation of the infrastructure to partners, acknowledging that the cost and complexity are too high and leasing the space to specialized partners creates a win-win situation. [1] ?This is not only the case for small-scale retailers, but also those who have fragmented ownership structures, e.g. with franchise models, or outlets that are located on rented space, where the property owner is better suited to lease the space to a CPO partner.

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5.????? Municipal utilities

• Leading players: Westenergie, Stromnetz Hamburg, N-Ergie, Pfalzwerke
• Strategic assets: Location ownership, power, and grid ownership
• Strategic challenges: customer orientation, organizational aptitude

There are about 735 communal enterprises (“Stadtwerke”) in Germany that currently operate charging infrastructure on their own. Based on their historical role, they not only provide the local electricity distribution networks that connect chargers, but oftentimes operate power plants, combining heat and electricity production. Thus, offering charging infrastructure is a natural extension of their duty to local citizens. While the local utilities have the major assets to be successful CPOs, like power generation and distribution assets, and the location ownership in managed public parking space, most of them lack a significant footprint, thus offering little scalability; networks that remain limited in size will long-term produce too much overhead cost to be profitable. Some, but not all of those entities have undergone an earlier consolidation process, and those consolidated to a regional scale are today the category-leading CPOs. While high profitability is not the KPI that matters most for a public welfare-oriented entity, it must be noted that a cost-effective operation is in the citizens’ interest to avoid subsidies deducted from local funds. So, we conclude that a strict resource consolidation is needed to keep municipal CPOs in the business; there are several levers to apply, ranging from bundled sourcing to unified IT backend systems and maintenance/customer care organizations. Operational excellence serves the customer and can only be achieved in a stringent and scalable organizational environment.

• Westenergie, which is owned by E.ON and operates in three federal states in West Germany, offers charge point operation as a B2B service predominantly to smaller municipal utilities, cities, and towns.
• Stromnetz Hamburg (since the start of 2024: HenW Mobil) is active in the city and federal state of Hamburg and operates in the public domain in a B2C model.
• N-Ergie is operating in Northern Bavaria and operates a mix of own-branded B2C and B2B charging stations for other municipal utilities, cities, and towns.
• Pfalzwerke has an even more diversified operating model, offering B2C and B2B operations for public entities, but also for retail and property management partners in and beyond West Germany.

6.????? Pure Plays

• Leading players: Allego, Fastned, Comfortcharge
• Strategic assets: “no legacy” approach, startup agility
• Strategic challenges: access to all critical resources, fast scaling

Pure Plays are mostly newly created companies with a single focus on the CPO business. Many of them are funded with VC capital, and a growing number are publicly listed. Their biggest asset is arguably the absence of legacy burdens, as these tend to be an obstacle to a lean and straightforward strategy execution for other players. Pure Plays must rely on good access to management and leadership capabilities and demonstrate very quickly the viability of their business case and go-to-market model, otherwise the flow of capital for further growth will soon trickle. The leading pure plays turn out to be very innovative in terms of securing power purchase contracts, finding the right locations, orchestrating the myriads of stakeholders to ensure fast and smooth network rollout, communicating to the capital markets, and more than anything, understanding the customer needs and reacting in an agile manner on changes of the business model.

Dutch company Fastned, French company Allego, and Deutsche Telekom-owned Comfortcharge are currently operating the largest networks in this category. With much less capital invest available than the energy top dogs or Tesla, they are scaling their businesses rather slowly, but tend to concentrate on the very top spots where high utilization is secured early on.

II.?Market shares of the top 20 players

As explained, there is a range of business and operating models that vary between a top focus on locations where fast charging matters most, and B2B models with customers that prefer slower charging with cheaper infrastructure. We therefore take two distinct metrics to calculate market shares, one is the number of charge points under operation, and the other is the installed capacity. The data points can be derived from publicly available, quite up-to-date, and accurate data and have been enriched by our own research.[2] ?

In Fig. 2, you can see the top 20 CPOs by their number of charge points, whereby AC and DC charge points are differentiated. As you can see, EnBW is not only the overall leader but also leads by the number of fast chargers. E.ON, on the other hand, is number 2 in terms of total charge points but operates 83% AC chargers. Tesla as number 3 in that ranking, operates 100% fast chargers. While the energy suppliers and oil firms concentrate almost 100% on fast chargers, the municipal utilities of which we detailed the business model have predominantly AC chargers in their portfolio.

The second metric, installed capacity, is on the one hand more meaningful to derive the energy output and thus, the value delivered to customers. But the real installed capacity is not just the aggregate capacity of the installed chargers but also has to take into account the layout of the station and power connection to the grid. We rely on official data published by the Federal Network Agency. For Tesla, which only has 27% of its charge points figuring in the official statistics, we derived an average installed capacity of 230 kW per charge point (V3+), based on a blueprint of the supercharger station layout, which uses a DC bus system to manage the load within a location.

Fig. 3 shows the top 20 CPOs according to the installed capacity. Unsurprisingly, the dominating fast charging specialists climb on top in that perspective; we see Tesla as the market leader with 562 MW, EnBW with close to 500 MW, and Ionity as a distant third with 274 MW. With the pace of the announced further rollout, this picture will presumably solidify in the years to come.

A third metric would be based on actual charging revenues, but most players do not publish that data; an assumption-based calculation would be too speculative to be published here. We will focus on the profitability of a CPO in the upcoming article, providing insight into the capex and opex drivers and the utilization needed to attain a certain ROI and profitability margin.

Footnotes:

[1] Whitepaper “Elektromobilit?t im Handel 2024”, EHI

[2] Main sources: Bundesnetzagentur, Ladesaeulenregister as of March 21, 2024 (Schwarz Group: aggregate values for Lidl and Kaufland; E.ON: aggregate values of E.ON Drive GmbH and E.ON Drive Infrastructure GmbH); Tesla supercharger network: https://supercharge.info/data as of May 16, 2024

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