How Can Companies Capitalize on the Shift to Electric Vehicles?
With the sales of electric vehicles continuing to rise, there is also increasing demand for public charge points, so motorists can charge their vehicles on the go. The market shift towards electric is presenting a commercial opportunity as businesses look to profit from providing these public charge points.
Here, Pöyry Management Consulting’s Benedikt Unger discusses how companies can profit from the increase in electric charging.
This is a good idea on the surface, but margins on electricity sales are relatively slim and may not warrant the large upfront installation costs by themselves. As with any new opportunity, there’s a lack of precedent and companies are uncertain about how to capitalize on this new demand from consumers. Companies need to look to different business models to benefit from installing charge points – here are three ways businesses can use them for their own advantage.
1. Bringing Customers to the Door
Retailers and restaurants can benefit from installing charge points which bring customers straight to their doorstep. Whilst the companies will only make small gains (if any) from providing the electricity to charge up a car’s battery, their customers are likely to buy other products and services whilst they wait for their vehicle to charge. It takes at least 20 minutes to “fill” an electric car which leaves plenty of time for customers to browse and spend time considering other products.
For example, coffee shops at motorway service stations, where people often dwell for long periods, might choose to provide their own electric vehicle (EV) charging bays that can be used in exchange for your custom. The customer gets a pleasant experience drinking coffee while they wait for their vehicle to charge, and the coffee shop increases its footfall – creating a win-win situation. This is not a new concept – think supermarket chains offering discount petrol to attract customers.
2. Building Loyalty
Other companies are offering free or reduced charging in order to build brand loyalty. These not only act as adverts for the company, but are intended to create brand loyalty, enhance satisfaction, and create “lock-in” to their products and services.
The most obvious example of this is Tesla’s proprietary supercharger network. The company has provided electricity for free in order to create buy-in and loyalty from their customers, locking customers into their ecosystem and adding value to their brand. For Tesla the charge points themselves might be unprofitable for some time, but they hope they will have a positive long-term impact on company profits.
Another example is installing charge points at workplaces. In the future, workplaces will be less attractive to EV owners if they know their commute will be considerably lengthened by the need to stop at public charging points. Charging while people work will, therefore, become increasingly important, especially for those who cannot charge at home. Having charging points means businesses can secure the best talent, which then helps them be more successful.
3. Making the Most of Good Locations
Just like how petrol can cost more on a motorway, companies with charge points in prime locations will be able to charge a premium as customers pay for the convenience. For example, multi-story car parks in busy city-center location will attract shoppers and workers that own EVs, who are willing, or have no other option than to pay a premium for the convenience. Likewise charge points on busy streets where demand is high, but supply is low, will invariably be able to charge more.
Commercial charge point provides will want to focus on these locations in order to maximize the profitability of their network.
We are still at the very early stages of charge point adoption, meaning that early movers are identifying and establishing themselves in the best locations to charge electric cars. Moving quickly will be vital in securing these sought-after locations.
A Necessary Service
Whilst we are seeing the shift towards e-mobility accelerating, EV charging alone may still not present a very profitable business opportunity. We have seen that several businesses will be able to use charge points in order to encourage customers to buy other products and services. Some charging providers will also be able to profit from installing charge points in good locations, however we will also need charging infrastructure in places which might not be profitable. This is where government policies should work to encourage widespread installations and acknowledge that incentives are needed for companies to provide charge points which will be used less frequently.
Even though there are obstacles, EV charging is an exciting prospect for start-ups but also for established companies. Utilities, technology companies and even vehicle manufacturers are well placed to enter the space, if they can leverage their existing capabilities and develop partnerships or activities in new areas. As energy, mobility and technology become more integrated, opportunities to create welfare and profits are plentiful.
