EV Charging: Charge Point Operators' Top Priorities and Opportunities

"Game on!", as they say - electric vehicle adoption across the U.S. is starting to accelerate, buttressed by massive auto OEM investments and transformations of their electric vehicle (EV) product lines & supply chains, major government funding and policy support and incentives, and growing consumer interest in EV's lower total cost of ownership, zero emissions and longer range (overcoming this anxiety). A 2022 PricewaterhouseCoopers (PwC) analysis estimated that there will be 27 million EVs on the road by 2030, up from about three million currently (~ 1% of registered vehicles).

At the Federal level, the 2021 Infrastructure and Jobs Act delivered $7.5 billion in funding for EV charging infrastructure, with $5 billion of this allocated to all US states for charging along interstate highways under the National Electric Vehicle Infrastructure Program (NEVI). Complementing NEVI's highway corridor focus, the other provided $2.5 billion of funding is part of the Charging and Fueling Infrastructure (CFI) Discretionary Grant Program, directed to U.S. municipalities and rural communities for deploying publicly accessible charging stations. With "Game on!" responses, states, metropolitan organizations and local governments have all started to form and submit their charging project proposals to tap into this funding.

In addition, the 2022 Inflation Reduction Act provides tax credits for electric passenger vehicle (new and used) and commercial vehicles to incentivize their purchase. And the state of California, so often the national bell weather and major "other states" influencer on auto emissions, new vehicle mileage thresholds and air quality standards, has announced that it will ban the sale of new internal combustion engine-powered vehicles by 2035.

With these tectonic shifts to E-mobility underway in our transportation ecosystem, rapid, successful expansion of our EV charging infrastructure will be essential for this growth to accelerate at cost-effective scale over the next several years. According to the same PwC analysis study, which estimates 5% penetration of EVs for total vehicles in use at a given time (vehicle parc) in 2030, the U.S. market could require about 120,000 to 235,000 fast-charge points, and roughly 30,000 to 60,000 charging locations, by then. Given today's U.S. fast-charger network has only 47,000 chargers, this required infrastructure expansion raises several crucial questions:

• How can this infrastructure be constructed at a speed which is sufficient to meet the EV adoption ramp-up, for a variety of EV driver use cases? And if it can, how and where will EV owners get their required charges?
• For firms seeking to enter the EV charging market, what are the best entry points and strategies to set multi-year trajectories of operational success?

Charge Point Operators (CPOs) who are building, installing and maintaining EV charging stations, will be key players in delivering on this vital infrastructure expansion. It is therefore imperative that we review and recognize:

1. What CPOs care about the most
2. How CPOs can best optimize their businesses
3. What are the critical EV charging hardware and enabling software/digital capabilities which address 1) and 2) above, at an enterprise-class, business-critical performance level.

Top Charge Point Operator Priorities

Availability and Operating Performance

• CPOs focus on optimizing the operations of the EV charging infrastructure, ensuring maximum up-time. They need to guarantee to vehicle drivers that the EV chargers they oversee are always available and perform stably on a 24/7 basis, without failures. And to lower operating costs and minimize driver impact, these Operators need to have monitoring systems in place which notify them if a problem arises with one of the chargers. Better still, beyond these notifications, are automatic diagnoses and repair services, helping to minimize downtime impact on EV drivers and prevent expensive onsite field service rep repairs.

Scalable & Modular Architecture

• CPOs want assurance that the initial design and installation deployment of their EV charging solution has the scalable capacity and extensibility to manage high growth in their EV charging utilization rates. This includes having their EV chargers increase their delivered power levels when they are required, and also the ability support charging both current and next-generation EVs using single or dual outlets with different EV connectors. The abilities to add more EV charger power modules over time, and to support several payment types (credit card, AutoCharge, Radio Frequency Identification (RFID, etc.) are also important. Taken together, CPOs can then have confidence that their up-front investments can be amortized over a longer period with higher total usage revenue streams, across a broader range of vehicles, avoiding the need for very costly short-term "rip and replace" steps.

Standards-based Interoperability

• A robust yet flexible charging infrastructure must have full compatibility with industry standards and protocols for back-end operations' communications, smooth clearing of payments, and easy integration of new chargers. This "interoperability" gives CPOs confidence that their systems are prepared for serving the next generation of EVs coming on the market. CHAdeMO was first connector standard introduced through the collaboration of five different Japanese automakers, and remains established on EVs from these manufacturers. The Combined Charging System (CCS) is a second connector standard introduced shortly thereafter, which differs from CHAdeMO by its allowance for AC/DC charging on the same port - CHAdeMO-equipped EVs require an additional connector adapter to achieve Level 1 or Level 2 charging. CCS is the preferred mode of charging amongst European and American automakers.
• Lastly, the Open Charge Point Protocol (OCPP) is a widely adopted open-source application standard protocol for communications between EV charging stations and the charging station management system networks, enabling a wide range of electric vehicle supply equipment vendors and station management systems to work together. OCPP adherence gives Charge Point Operators the powerful flexibility to control their network and manage their connections to their charging stations.

Integration with Existing Software Systems

• Working with existing back-end software such as those for billing and reimbursement services, is important for CPO success. In many cases, major customization investments have been made over the years in these systems, making it imperative to "embrace and extend" them to continue harnessing their value. Digital platforms which have well-defined Application Programming Interfaces (APIs) for accessing, identifying consuming and sending data to these systems will be advantageous for ongoing CPO business agility.

Reducing the Total Cost of Ownership & Delivering High Quality Customer Experience

Operations Management and Decision-making:

• Beyond the charging station hardware itself, CPOs require complementary digital solution services which deliver real-time data for them to optimize their charging operations and make intelligent decisions. Intuitive dashboards and reporting on both the overall site and specific chargers, with accompanying notifications (w/ real-time monitoring and diagnostics), must be part of the their services mix. And in the customer & technical support domain, there must be additional automated services of tools to handle technical and charging transaction-related issues, thereby avoiding expensive and time-delayed employee or 3rd party service provider intervention.

Energy Management

• As part of Charge Point Operators' operations, managing energy intelligently is important for reducing both their capital and operating expenditures. "Smart energy management" enables CPOs to balance demand across their charging site ecosystem (chargers, energy storage systems, depots for fleets, micro-grids and the local area's power grid), ensuring energy is delivered to the right resource, at the right time, and at the lowest cost. This includes managing energy demand during peak hours, and integrating other energy sources such as local storage batteries, renewables and "vehicle to grid" (V2G) sources. All of these energy needs must also be addressed for CPOs with intuitive digital services which seamlessly complement those service solutions noted above for ongoing charging asset management.

Increasing the Top Line: Charger Utilization, Revenue & Loyalty

The Selected Business Model

Not only do Charge Point Operators want to ensure that their charging systems are fully operational, with the aforementioned systems in place to identify and repair issues before they are discovered by customers. CPOs also need to identify and execute on their chosen business model, each of which has a different top "Profit & Loss" objective - there is a variety here which I will briefly touch upon, and then delve into more deeply in an upcoming article.

• "The Loss Leader": free charging simply to attract drivers.
• Operational Cost or Total Cost Recovery: define usage fits which then cover the cost of your charge points.
• Profit Making: establish usage fees which both cover the operator's costs, but also generate profit.
• Fully funded: a network operator funds the installation of the charge points, but then sets specific conditions on their operation. I.E. a business does not absorb any capital or operational cost, but cedes control over the charging experience and possibly pricing as well.

Given the sizable required initial investment in charging hardware, station installation and high-powered grid connections, (and excluding the "Lost Leader" model), it is essential that the delivery of energy provides CPOs with high enough recurring revenues, based on solid re-sell premiums or other offered services. In Public charging use cases, CPOs have the ability to charge a premium, optimizing the following attribute areas to increase utilization and drive customer loyalty:

• Location, location..: CPOs need to carefully select highly-trafficked macro- and micro-locations, as part of establishing a dense and reliable network.
• Charging speed: Drivers are increasingly demanding faster charging, particularly for "on the go" use cases. And as noted earlier, flexible charger connectivity to all EV auto brands is also an essential requirement for higher speed delivery.
• Engaging, Intuitive and Reliable User Experience: The requirements here run the gamut, from easy to read touch screen displays which clearly show key charging session metrics to dependable field-tested cable management & interoperable charging connectors, consumer authentication & access, and secure payment authorization. As EV adoption and charging levels ramp, the ability to tailor the user interface (for the charging user and CPO's branding) are valuable for fostering loyalty (trust) and personalization ("recognized returning customer").
• Strategic Partnerships: CPOs can and should increasingly leverage network partnerships to further customer loyalty and scale. There is exciting room for creativity here in CPOs' new business models, to raise utilization and $ charged energy consumption. Depending on the CPO's business model & strategy, sample partners could be marquis national/regional retailers who draw high daily foot traffic, or automotive OEMs who are willing to offer less expensive "prioritized" access to specific charging station locations.
• Additional Paid Services/Product Lines: for managing their business model risk, CPOs can and should look to adjacent service & product streams which can increase utilization revenue and operating margins. Intuitive charging reservation services and convenience retailing tie-ins such as pharmacies are good examples that can drive repeat consumer visits given the higher value to them.

Brand Establishment: All of the previously noted drivers not only enhance the top and bottom line (high-quality and reliability) performance; they are also key elements of the perceived "brand" to consumers. CPOs can look to further enhance and differentiate their brands through other factors as well, such as trumpeting that their power comes from renewable sources such as solar, wind or even geothermal, or creating co-marketing partnerships with companies positioned with similar brand quality attribute ambitions for the customer segment(s) they are both targeting.

E-Mobility Service Providers (EMSPs): Partnerships for Reach

To attract more drivers to their charging stations and achieve higher and more predictable utilization rates, Charge Point Operators may choose to partner with E-mobility service providers (EMSPs), and open their network to roaming (allowing customers to charge at other networks via roaming cards). These operators may either work directly with individual EMSPs via peer-to-peer connections, or leverage roaming service providers and hubs to create a single contract agreement with multiple EMSPs. CPOs who are focused on building public (or semi-public) networks will increasingly find these roaming agreements attractive, allowing them to advertise their charge points to their drivers, and enable (charging) session payments via either the driver's "go to" application or charging payment card. The attractiveness of roaming will vary in different EV charging markets, based on differences in their respective densities, local regulations and competitive player landscapes.

An Exciting Future Ahead for Charge Point Operators

To achieve reliable profits in EV charging over the next several years, CPOs will need to excel on a number of fronts, especially in overall customer experience: charger reliability, enabling software services for seamless use, and securing clean and safe locations. But this experience will need to be complemented by other business model pillars such as partnerships, network expansion and adjacent service revenue streams. So expect to see a lot of CPOs testing out different business models and solution value propositions over the next few years, learning rapidly and making adjustments to optimize their respective financial and operational performance.