In recent years, the electric vehicle (EV) and charging infrastructure industry has received a major fillip, with governments around the world focusing on e-mobility as part of their climate and energy strategies. The trend is expected to continue as these economies aim to become carbon-neutral in the long term. In the near future, EVs are projected to dominate the global mobility market owing to government initiatives such as subsidies and tax benefits. To support the growing EV demand, the EV charging industry needs to expand accordingly. The charging market comprises traditional energy utilities as well as pure charge point operators (CPOs). The charging value chain is currently undergoing forward and backward integration through acquisitions and partnerships.
Emerging trends in EV charging infrastructure
The public EV charging industry is undergoing rapid changes. Some of the key industry trends are regulatory measures, mergers and acquisitions, and technological advancements. Further, policy support will be needed to drive the EV and EV charging infrastructure industry, at least in the short run, till it has enough customer volumes to take off on its own. Several companies, including oil and gas majors as well as start-ups, are investing in partnerships and acquisitions to secure their position in the charging industry. In the coming years, these consolidations will strengthen with a few big players capturing the majority market share. However, the rapid expansion of the EV fleet and the surge in electricity demand will put immense pressure on the power grid. In this case, vehicle-to-grid technology can play a critical role in stabilising the grid during peak times and also allow EV owners to capitalise on high electricity prices by feeding electricity back into the grid.
Further, solar-powered battery charging systems will be increasingly adopted for EVs in the future. This trend will be driven partly by the declining cost and easy portability of solar panels and storage batteries. With more EVs on the roads, the solar-powered systems will not only alleviate the stress of electricity grids but also support the charging of multiple EVs in areas with limited access to grid power. Lastly, interoperability is inevitable for facilitating e-roaming, which is critical for EV uptake as it will allay range anxieties. Several CPOs have signed bilateral interoperability agreements to open up their networks for each other’s customers.
Policy and regulatory developments
The growth in EVs and charging infrastructure has been primarily supported by government initiatives aimed at decarbonising the transport sector. Developed countries have put in place stringent environmental norms and set deadlines for a complete ban on internal combustion engine (ICE) vehicles. In the short term, they will provide incentives (both for EVs and chargers) and special electricity tariffs for EV charging in order to phase out ICE vehicles. These incentives will be eventually withdrawn in most markets over the next decade.
North America: The federal government and several states have drafted supportive legislation and regulations for the development of public charging infrastructure. In Canada, plans are being formulated in different provinces to provide incentives for the purchase of EVs and installation of chargers at multi-family units, workplaces and individual set-ups.
Latin America: Brazil’s EV market is at a nascent stage. Various federal and state-level initiatives have been launched to promote EVs. Mexico is working on the National Strategy for Electric Mobility, which is expected to be released in 2020. It will establish a regulatory, technical and financial base and set guidelines for the promotion of EVs and charging infrastructure.
Asia Pacific: The electrification of the transport and mobility sectors in the Asia-Pacific region has been slow to pick up, except for countries such as China and Japan. Supportive policies have helped these countries achieve their mandates. Other Asian countries such as India, Thailand, Malaysia, the Philippines and Indonesia have established or are beginning to draft comprehensive policies to develop an EV ecosystem. Australia and New Zealand have also taken steps to encourage a transition to e-mobility.
Europe: The European Commission (EC) has directed the European Union (EU) member states to set EV supply equipment (EVSE) deployment targets for 2020 and 2025, which include establishing one publicly accessible EVSE outlet per 10 cars by 2020. The recent announcement of the European Green Deal has reinforced the importance of e-mobility for the continent. As per the deal, the EU should have a fleet of 13 million EVs by 2025, which will require the roll-out of 1 million public charging stations.
Growth of EVs and EV charging infrastructure
According to Global Transmission Research, the global EV market has witnessed tremendous growth over the past five years, registering a compound annual growth rate (CAGR) of 54 per cent during 2015-19. At the end of 2019, over two-thirds of the EV fleet comprised battery electric vehicles (BEVs) while the remaining were plug-in hybrid electric vehicles (PHEVs). The share of BEVs in the EV market increased from 59 per cent in 2015 to 67 per cent in 2019. China is the largest EV market in the world. Six key Asia-Pacific countries accounted for a share of 54 per cent in the global EV fleet at the end of 2019, followed by Europe (14 countries) with a 24 per cent share, and North America (Canada and the US) with 22 per cent.
Public charging infrastructure has witnessed similar growth, with the number of charging points increasing at a CAGR of almost 52 per cent during 2015-19. Of these, 71 per cent were normal charging points and 29 per cent were fast charging points. Normal charging infrastructure includes Level 1 and Level 2 AC chargers, whereas fast charging includes direct current fast chargers and some Type 2 AC points in a few countries. The Asia-Pacific region, which is led by China, accounts for almost 68 per cent of the installed public charging points globally. It is followed by Europe (22 per cent) and North America (10 per cent). Access to public charging infrastructure varies across countries, ranging from 4 to 24 plug-in EVs per public charging point, indicating the disparity in regional performance as well as the market opportunity that could be tapped.
The total EV fleet in 22 key markets is expected to grow at a CAGR of 31.5 per cent between 2019 and 2030, according to data presented by Global Transmission Research. The Asia-Pacific region will lead this growth and will account for about 54 per cent of the EV fleet. It will be followed by Europe with a 32 per cent share and North America with 14 per cent. The total EV public charging points across 22 key markets will grow at a CAGR of 38.4 per cent till 2030. The Asia-Pacific region will lead this growth and will account for about 86 per cent of the total number of public charging points globally, followed by Europe at 10 per cent and North America at 4 per cent.
Outlook
The global e-mobility market is poised for rapid growth with advanced economies investing heavily to establish a leadership position in EV technology and deployment. This trend is expected to continue in the future as these economies target becoming carbon-neutral in the long term. The EV charging industry is at a nascent stage, but has a huge growth potential. The medium- to long-term prospects of the EV charging industry are positive. Currently, the sector is seeing a sharp decline in uptake because of the ongoing Covid-19 pandemic. This is expected to last till at least early 2021. Going forward, factors such as economic stimulus to reverse the forced slowdown, self-reinforcing cost reductions in EV production and policies for mitigating climate change will help drive EV sales and the development of charging infrastructure. There will be a greater integration of solar power and EV charging infrastructure to further ensure the use of clean energy for transportation.