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ev charging station

Future Trends of Electric Vehicle Charging Station Industry

ev charging station
What is the future trends of electric vehicle charging station industry?

The electric vehicle charging station is positioned downstream in the electric vehicle charging industry chain, serving the aftermarket for electric vehicles. Benefiting from the increasing number of electric vehicles and the amount of electricity per vehicle, the future market space is vast.

The electric vehicle charging station industry faces strong barriers such as capital, space, grid capacity, and data resources with a concentrated competitive landscape. And the leading operators enjoying significant advantages. In the short term, as the utilization rate of charging time gradually increases, it is expected that some leading operators have already crossed the breakeven point.

In the medium to long term, electric vehicle charging station operators continue to innovate their operating models, including “co-building and sharing partners” light asset operation, flexible charging, peak/off-peak pricing, “light storage charging” integration, and vehicle-grid interaction, opening up long-term growth space for electric vehicle charging station operators.

Charging Operation:

Benefiting from the increase in electric vehicles ownership and individual vehicle charging volume, the future space of electric vehicle charging is vast. Electric vehicle charging station operators are positioned in the midstream to downstream of the electric vehicle charging industry chain, with revenue mainly composed of electricity fees and service fees, both of which are proportional to the amount of electricity charged. Therefore, with the gradual increase in electric vehicles ownership and individual vehicle charging volume, the electric vehicles charging service market is expected to experience significant growth in scale.

Profit Models:

Time utilization rate is the core indicator of electric vehicle charging station operator profitability. The charging fee pricing formula is “charging price = electricity fee + service fee,” different electric vehicle charging station operators having different charging standards. Taking the mainstream EV charging operators in the market as samples, they currently have charging prices composed of electricity fees and service fees. When the initial investment in fixed assets is relatively certain and electricity and service fees cannot be significantly increased in the short term, the time utilization efficiency of ev charging stations being the core factor affecting the profit recovery period of ev charging station operations.

Competitive Barriers:

Capital, space, grid capacity, and data resources form barriers, with leading ev charging station operators enjoying significant advantages. The ev charging industry mainly faces four major barriers: capital, physical space, grid capacity, and data resources. Leading companies have significant first-mover advantages and scale advantages, making it difficult for new entrants to catch up, and they are expected to maintain a leading edge in industry competition.

What are the core focuses of EV Charging Station operators?

Viewpoint 1:

“Partner” model for light asset operation: Some operators have innovatively introduced the “partner” model, jointly constructing and operating EV charging stations with groups or individuals who have resources (space, equipment, funds, etc.), achieving reasonable resource allocation and benefit sharing, and reducing the proportion of the operator’s own investment from heavy asset to light asset operation.

Viewpoint 2:

Hardware and software upgrades combined with time-based charging strategies to improve charging utilization. Leading operators have introduced flexible charging stack technology to solve the problem of fixed power of single piles, flexibly allocate charging power, improve equipment utilization, and combined with peak/off-peak electricity pricing strategies to guide consumer charging demand and improve time utilization.

Viewpoint 3:

“Light storage charging” peak/off-peak arbitrage to enhance EV charging station operator profitability. The integrated “light storage charging” system utilizes photovoltaic power generation, stores surplus electricity with energy storage devices, jointly undertakes power supply and charging tasks, helps electric vehicle charging station operators achieve peak/off-peak arbitrage, reduce operating costs, and lessen the impact on the grid. In recent years, with the advancement of battery technology, the increase in cycle times, and the continuous decline in battery costs, coupled with the promotion of time-of-use electricity pricing policies to enhance the price difference between industrial and commercial and industrial peak/off-peak electricity prices, the economic viability of “light storage charging” systems will be further enhanced, and their future promotion is expected to be accelerated.

Viewpoint 4:

Vehicle-grid interaction to facilitate the transformation of ev charging station operators into resource aggregation businesses. In the future, electric vehicles can interact with the grid through charging stations for energy and information exchange, mainly including orderly charging and vehicle-to-grid (V2G) bidirectional charging/discharging. Orderly charging can alleviate grid pressure and achieve peak shaving; V2G enables electric vehicles to have load management functions. In the future, ev charging station operators are expected to integrate scattered electric vehicle load resources, flexibly participate in spot market transactions, auxiliary services, etc., in accordance with electricity market demand, and increase profit growth points.

In addition to the above issues, there are the following risk factors.
1. Electric vehicle sales growth is lower than expected:

The ev charging station operation belongs to the electric vehicle aftermarket, which is closely related to the prosperity of the electric vehicle industry. If the future sales growth of electric vehicles is lower than expected, it may affect the overall charging demand for electric vehicles and have an adverse impact on the profitability of the ev charging station industry.

2. Intensified competition in the ev charging station industry:

There are significant barriers to entry in the ev charging station industry, including capital, space, grid capacity, etc. Although leading operators have obvious first-mover advantages, the market space for the ev charging station industry is vast. If there are more new entrants in the future or existing competitors engage in vicious “price wars” regarding charging service fees, it may have a detrimental effect on the profitability of ev charging station operators.

3. New business models may not develop as expected:

In the future, ev charging station operators are expected to become resource aggregation businesses, using the resources accumulated in the early stage (cars, users, grids, etc.) to develop new business models, such as participating in the electricity market’s auxiliary services to obtain additional revenue. However, the development of new business models is still in the early stage, and there is some uncertainty in future development, which may not meet expectations.

4. Risk of upstream equipment price increases for ev charging station:

Electric vehicle charging station operations involve heavy asset investments, requiring the procurement of ev chargers from upstream suppliers for the construction of ev charging stations. An ev charger includes various electronic and power components. If certain core components face shortages in production capacity, it can lead to price increases for ev chargers, thereby increasing the equipment investment costs for ev charging station operators and adversely affecting profitability.

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