With the trend of electric vehicles rising, major automakers have invested billions of dollars in developing electric cars in recent years. However, the lack of a comprehensive charging network remains a major obstacle for wide adoption of electric vehicles. Compared to traditional gas stations, the electric vehicle charging infrastructure is still in its infancy. Tesla stands out with its proprietary Supercharger network that covers major routes. By making long-distance travel more feasible for electric vehicle owners, Tesla has gained a first-mover advantage. As other automakers expand their electric vehicle offerings, investing in charging networks could be key to challenging Tesla’s dominance.
Tesla’s early focus on building charging network paid off
As the pioneer in electric vehicles, Tesla adopted a different strategy from the beginning. Instead of just developing electric cars as a product, Tesla treated the whole ecosystem as a platform that requires coordination between vehicle owners and charging stations. This allowed Tesla to grow its network according to locations with more potential demand. With over 25,000 Superchargers globally as of 2022, Tesla has alleviated range anxiety, making road trips practical with an electric vehicle. The proprietary network also serves as a competitive advantage, as other networks remain fractured and limited in coverage. For other automakers hoping to catch up in the electric vehicle space, building out a reliable and wide-reaching charging network should be a priority.
Major investments needed for robust public charging infrastructure
According to estimates, for electric vehicles to reach 50% market share by 2030, the U.S. needs to invest about $50 billion in charging infrastructure. To make electric vehicle charging accessible to more consumers, investments will be required for fast chargers at highway locations as well as slower Level 2 chargers in residential and workplace areas. Besides subsidies and policy support, private capital will play a major role. Companies like ChargePoint, EVgo, and Volta have been building out charging networks through partnerships and acquisitions. But more funding is needed for these companies to achieve national scale. As demand rises, electric vehicle charging could become an attractive investment opportunity.
Partnerships with energy and fuel companies make sense
Legacy gas station and energy companies are paying attention to the electric vehicle transition. With demand for gasoline expected to decline over time, these companies need to adapt their business models. Repurposing gas station infrastructure for electric vehicle charging could help them stay relevant. BP, Shell and Phillips 66 have all announced plans to incorporate charging stations at existing retail sites. Utilities like Duke Energy and Dominion Energy are also expanding charging infrastructure. These companies already have the prime real estate locations and grid connections. Partnering with specialized charging networks like EVgo could accelerate the build-out. For charging companies seeking growth capital, partnerships with these deep-pocketed energy giants could be mutually beneficial.
Government support and regulation will shape the EV charging landscape
In the U.S., the recently passed Infrastructure Investment and Jobs Act provides $7.5 billion for electric vehicle charging infrastructure. Government funding can help spur private investment. Regulations around charging standards and data sharing will also impact how networks develop. Networks that receive public funding may need to provide open access. Policymakers need to balance public availability and return on investment for private charging companies. Companies looking to invest in this space should stay updated on new legislation that could open up incentives or shape what types of business models are viable.
Traditional automakers playing catch-up with charging infrastructure
While Tesla zooms ahead with its proprietary network, traditional automakers have been slow to build charging infrastructure. Volkswagen has ambitious electric vehicle goals but only recently announced plans to partner with BP to install fast chargers across Europe. Hyundai, General Motors and Ford also lag far behind Tesla in charging capability. However, these automakers have the resources to catch up if they make charging network growth a priority. Partnering with existing providers or acquiring a charging network company could help accelerate their infrastructure. For late entrants to the electric vehicle market, large investments in charging coverage will be essential to compete with Tesla’s head start.
Tesla’s dominant position in electric vehicles today can be attributed in large part to its early strategic focus on building out a proprietary charging network. As more automakers shift to electric, investing in charging infrastructure will be key for them to enable long-distance travel and alleviate consumer concerns. Besides government funding and regulations, private capital has an important role to play in building the EV charging networks of the future. Partnerships between charging companies, utilities, oil giants, and automakers could accelerate the growth of a robust public charging infrastructure.