Achieving the economies of scale for electric vehicles: the critical role of EV charging infrastructure

Adrian del Maestro, Strategy and Director, Energy, Utilities and Resources, PricewaterhouseCoopers

The UK is a pioneering market for electric vehicle (EV) charging thanks largely to advantageous funding structures and strong government support in the shape of regulatory frameworks. We also have a vibrant private sector with investment and innovation coming from small niche players through to major energy corporates. However, if the government is to deliver its highly publicised green industrial revolution in the area of road transport, the pace and scale of electrification will need to be accelerated with electrifying fleets a critical catalyst to achieving this.

Progress is being made

The outlook for the EV charging sector in the UK remains positive with the UK government continuing to support the segment through regulatory announcements and funding. The recent 10 Point Plan for a green industrial revolution earmarked £1.3bn to be invested in charging infrastructure and, more importantly, brought the Internal Combustion Engine (ICE) ban forward to 2030, thereby creating momentum for greater EV adoption.

The private sector continues to invest and shape the growth prospects of charging infrastructure with M&A a helpful barometer of the sector’s health. In the past year, for example, EDF acquired Pod Point (and Pivot Power), Shell bought Ubitricity (a charge point operator pioneering on-street charging using lamp posts) and Total acquired Source London. All these acquirers bring scale, innovation and capital to accelerate the growth prospects of their acquisitions. GRIDSERVE also launched the first EV-only charging hub as a potential model for EV drivers and announced it would deliver 100 more of these forecourts over the next five years. More broadly we are also witnessing the proliferation of partnership models between charge point operators (CPOs) and other corporates. BP partnered with Uber to electrify the latter’s fleet in London for example and Instavolt is partnering with McDonald’s to install rapid chargers across the restaurant’s retail network.

As for the number of publicly accessible chargers and EVs on the road this is an equally positive growth story. The battery electric vehicle (BEV) and plug in hybrid vehicle (PHEV) fleet has grown at some 75% CAGR in recent years reaching 374,000 vehicles. Publicly accessible chargers (fast and slow) grew at around 45% totalling some 38,000. As for sales of BEVs and PHEVs, these have remained resilient despite the impact of the pandemic.

But challenges remain

Despite these positive indicators there is still some way to go and more progress to be made. In terms of market size, the number of BEVs and PHEVs combined represent just some 1% of the UK total car parc. Moreover, if we consider National Grid’s Future Energy Scenarios of potentially over 11 million BEVs by 2030 (the Customer Transformation scenario), the scale of electrification remains daunting. 

As for consumers, concerns around range anxiety (or at least ‘perceived’ range anxiety) and choice and affordability of electric vehicles remain lingering obstacles.

Cities will be key to accelerating EV adoption rates as policies to address air quality issues become more prevalent, with easy to reach and reliable public charging critical. This will be a challenge for local and central Government with research from Field Dynamics revealing that 90% of British households (excluding London) that will rely on public EV charging are not within close walking distance of a charger. Clearly the need to optimise the location of chargers will be critical if unnecessary infrastructure costs are to be avoided and consumer expectations around ease of charging are to be met.

Collecting data on charger usage, both public and private, has a role to play here. Not only can data help utilities better manage power flows across the grid, but these data can also help inform EV infrastructure operators and local government on where further investments in public charging need to be made.

Perhaps most troubling for charge point operators is that profitability in B2C charging remains elusive. While operators have focused on a land grab, staking out positions in this nascent market, making money has proved difficult.

Fleet charging – the catalyst for electrification

However, looking ahead there is one emerging trend that could potentially transform EV adoption rates and turbocharge infrastructure investment – fleet electrification. Fleets are a category of vehicles owned, but more commonly leased, by a business, serving a commercial purpose. These can include corporate car fleets for professional services firms for example, or fleets for supermarkets and delivery / logistics companies, or light duty vans used by field service engineers in energy utility companies. As an increasing number of corporates in the UK commit to net zero targets, those with large fleets are turning their attention to electrification. 

Why will this be transformative? Well, as illustrated in our report - Leading the Charge! - fleets have scale. There are over five million vehicles in the UK fleet which if electrified would make a significant step forward to accelerating national EV adoption rates. Fleets also represent nearly 60% of UK car sales and given their share would help generate a second-hand market for EVs improving choice and affordability for consumers. And finally as fleets electrify, they will need to deploy a number of charging solutions ranging from depot-based to home / on-street charging. This push for electrification will provide a much needed impetus for public charging infrastructure. 

If the UK is to retain its pioneering achievements in the corporate sector and the UK government is to deliver on its net zero ambitions, fleet electrification will need to be successful. Needless to say with COP26 on the horizon, success in this area will be an important feather in our decarbonisation cap.

This article is from our Local Path to Net Zero series.