Powering ahead!

Making sense of business models in electric vehicle charging

The electric vehicle (EV) revolution is already upon us. Battery life and other performance measures are rapidly improving at pace. There are now over 130,000 electric vehicles on the roads and 15,000 public charge points installed across the UK – not to mention rising numbers of privately-owned chargers being rolled out.

The successful roll-out of low carbon transport will depend on putting the customer in the driving seat. Many motorists have long seen their cars as more than just vehicles, but in the case of EVs this will take on new dimensions given the potentially transformative role they can perform in storing and supplying electricity. Those capabilities mustn’t overshadow the fact that EVs will be used as cars first and foremost. This means that customer adoption rests on drivers retaining the choice and freedom they have had with their vehicles to date.

5 reasons the UK EV charging market is at a tipping point...

  • Nascent and fragmented market in evolution with multiple business models providing diverse charging solutions
  • Several large players with many new entrants
  • Early signs of market consolidation
  • Venture capital and private equity funding underpinning current growth
  • Strong policy support at international and local level in terms of decarbonisation

“In a rapidly emerging market, business model innovation and evolution is very dynamic. Opportunities exist to innovate and collaborate. So many will succeed and others will fail – only time will tell.”

Graeme CooperNational Grid

Our approach

In partnership with Energy UK our latest report focuses on the charge point operators (CPOs) and the different business models and challenges we see emerging in EV charging. CPOs are the companies that install, maintain, operate or optimise EV charging infrastructure. We interviewed some of the leading operators in charging including Chargemaster, Instavolt, Ovo Energy and Pod Point. We also spoke to other key stakeholders across the value chain such as electricity suppliers and transmission and distribution businesses including Ecotricity, EDF Energy, National Grid and Western Power Distribution.

This research builds upon our previous report “Charging ahead! The need to upscale UK electric vehicle charging infrastructure”, we looked from the consumer’s perspective at the broad challenges facing EV charging in the UK. However, in this report, from the CPO’s view, we identified different strategies, approaches and business models. Our research sought to distill the common strengths and key themes relevant to this array of players.

Key findings

Our research identified four emerging business models for charge point operators in the UK EV charging market.

The ‘Portfolio’ player

This type of company operates across multiple charging segments, such as home, work and destination charging. Typically this player extracts revenue from several charging segments. This approach is more diversified and hence mitigates risk and allows the operator to bundle offerings to generate alternative revenue streams, above and beyond charging tariffs.

The ‘Specialist’ player

Companies in this category tend to focus on one charging segment, leveraging their technical capabilities and relationships with key stakeholders to generate revenue from that business. Some rapid charging operators are a good example of this.

The ‘Network Optimiser’ player

Companies in this group focus on building a future market position across multiple charging segments to capture alternative revenues on the back of traditional EV charging. These secondary revenues could be from helping manage the grid by exporting power from clusters of stationary EVs or by using smart technology to ‘load shift’ (facilitating the charging of EVs at periods of low demand).

The ‘Energy Supplier’ player

For these type of companies, typically an electricity supplier, EV charging is currently not a core part of the business. However, they are keen to build a position in EV charging, given increased adoption of EVs will boost national demand for electricity, which in turn will benefit the power companies. Future opportunities around managing power demand profiles, via smart charging for example, will increasingly appeal to energy suppliers.

“It is essential that charging infrastructure – sufficient access to charging points and their compatibility with energy networks – keeps pace with rapidly evolving technologies and business models in this sector.”

Lawrence SladeEnergy UK

What should you do next?

We are still very much in the early stages of this EV revolution. Creating an environment that allows people to charge easily and where charging fits into their way of living will be fundamental to catalysing EV demand. It is about a lot more than simply building charging points.

From the customer perspective, it’s about developing a holistic value proposition that meets the needs of the user and delivers an experience that encourages EV drivers to come back. From the perspective of the charging operator, it’s about building a business with optionality and potential to scale up.

So whether you are an aspiring CPO, an investor looking to fund an operator or a business looking to partner with a charging company, here are a few key questions to consider:

  • Is there an optimal business model in place for long term success in the chosen charging segments?
  • What revenue streams are planned for now and in the future?
  • What capabilities are needed in-house and what other partners are needed to deliver revenue growth?
  • How will technology and data analytics enable the business to provide ‘smart’ solutions?
  • What are the funding plans for growth now and in the future?

Getting answers to these questions will be critical to making sense of the options. With so many business models in the market, it can be difficult to figure out which ones are the likely winners. However, choosing the right strategy, capabilities and partnerships are essential. 

Contact us

Steve Jennings
UK Leader of Industry for Energy, Utilities and Resources, PwC United Kingdom
Tel: +44 (0) 7704 564 513
Email

Rich Parkin
Automotive Industry, Strategy&, PwC United Kingdom
Tel: +44 (0)7900 163731
Email

Adrian Del Maestro
Director of Research, Strategy&, PwC United Kingdom
Tel: +44 7900 163558
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