Are Electric Vehicle Charging Stations Really Worth Taxpayer Money?
Charging at home is a favored feature of electric vehicles (EVs). But public charging stations are needed for long trips and to maximize market penetration of EVs. However, it’s unlikely that charging fees can cover the capital and operating costs of public chargers or make money for investors.
According to Kelly Blue Book, Americans purchased more than 800,000 new electric cars last year, or about 5.8 percent of all new cars sold. EV sales grew by 65 percent over 2022. The Inflation Reduction Act of 2022 extended and expanded tax credits for EV purchases and for residential and commercial charging stations. Some predict that electric vehicles will become more than half of the vehicles on the road by 2050.
Last week, Travel Centers of America, or TA, announced that it would open 1,000 EV charging stations in 200 locations over the next five years. TA’s announcement follows similar announcements from convenience store chains Pilot and Love’s. These new chargers will add to the more than 160,000 currently in operation in the US.
Most people charge their electric vehicles at home. Home charging accounts for about 80 percent of charging in the US and Europe.
Home chargers are 120 volt, 3.3 or 7.4 kilowatt (kW), AC chargers that can charge an electric car up to 100 kilometers (62 miles) of range in about three to seven hours. Today, about 80 percent of US public chargers are 240 volt, 10 or 22 kW AC chargers that can charge an EV to 100 kilometers in one to three hours. Experience shows that these existing AC public chargers are too slow, so most new public chargers being installed are DC fast chargers. DC fast chargers of 50 kW or 120 kW can charge an EV in 30 minutes or less.
But the business case for public charging service is poor. Because most charging is done at home, public charger utilization rates are low. Fast DC chargers needed for public charge points are expensive. Most studies find that charging stations can’t pay for themselves over a 10-year period.
Let’s compare a traditional gas pump to a fast DC charger. A gas station fuel pump costs about $20,000 and can serve a customer in less than six minutes. A 50-kilowatt fast DC charger costs about $100,000 and can serve an EV customer in about 30 minutes. The pump can serve five times as many customers for one-fifth of the capital cost of a high-speed charger.
Electrify America (EA) is the second largest charging company in the US behind Tesla. Last October, EA announced that it had 3,500 charging stations at the end of 2021, which provided 1.45 million customer charging sessions during the year. This means that, on average, each EA charging station supported just over one charging session per day. While this will increase with more EVs on the road, EA charging stations will never recover their investment costs with such low levels of charging.
Tesla sold more than 60 percent of new electric cars in the US in 2022. Tesla provides a network of almost 17,000 chargers in the US and more than 40,000 worldwide. The firm’s chargers are 90 kW up to 250 kW fast DC chargers. But Tesla’s charger network is paid for by revenues from car sales.
Charging is problematic for residents of multi-unit housing. About 32 percent of US residents and 46 percent of Europeans have apartments. Will apartment building owners install chargers that are money losers?
Most charging stations today reside at unmanned locations. Many drivers won’t want to wait a half hour to charge a vehicle in a remote parking lot location after dark. Remote locations also encourage thieves to cut off charging cables to steal the copper, even while a vehicle is being charged. Public chargers may need to be at manned sites, further increasing costs.
The cost of electricity is a key factor in the price of electric mobility. As part of the world energy crisis, Europe’s electricity cost rose by a factor of six in the last 18 months. Running an EV is now more expensive per mile than a petrol car in many locations in Europe.
It’s unlikely that commercial charging of electric vehicles will become a sustainable free-market business. Look for charging stations to eventually be owned by electric utilities, paid for by higher electricity prices and government subsidies.
This article was published by CFACT and is reproduced with permission.