The United States has a goal to have 50% of all vehicles sold each year be zero-emission by 2030. According to an analysis from McKinsey & Company, achieving this goal would put 48 million electric vehicles (EVs), or 15% of all total vehicles, on the road in 2030. As a result, the U.S. needs 20 times more EV charging stations than the 129,598 public and 14,673 private charging ports available in the U.S. today, according to the U.S. Department of Energy’s alternative fuel locator.
The news that seven major automakers, including BMW, Honda, Hyundai, Kia, GM, Mercedes, and Stellantis, are uniting to build thousands of EV chargers in the U.S. is an encouraging step in the effort to get more EVs on the road. The companies have planned to form a joint venture (JV) and a multi-billion-dollar investment to build out charging stations.
While the 30,000 fast chargers they plan to deploy in urban and highway areas over several years will almost double the fast-charging infrastructure — and support both North American Charging Standard (NACS) and Combined Charging System (CCS) charging standards — is an important step, it still will not fully address the distribution challenge. Further efforts will be required to ensure widespread and convenient access to charging stations, encouraging customers to readily adopt EVs.
Given the wide gap in supply and demand of EV chargers, there are massive opportunities for startups focused on the space.
The JV also plans to position the fast-charging stations along highways and urban areas, so it will not solve the pressing distribution problem. The current network is heavily concentrated in certain states like California, which has 29% of all chargers nationwide, and in cities along the East and West Coasts. The government funding is focused on charger placement along dedicated corridors aiming to bridge gaps in rural and hard-to-reach areas. This still leaves a significant gap for a growing fleet of EVs.
The allocation of $7.5 billion under President Biden's infrastructure bill to construct 500,000 new chargers by 2030 is undoubtedly a significant step forward. The government's initiative has already ignited substantial investments in U.S. manufacturing facilities and announced plans for over 100,000 charger build-outs. However, more needs to be done to supply the projected 1.2 million chargers needed by 2030.
A global shortfall
Other countries around the world are facing similar EV charging gaps. In Europe, there are roughly 7.5 million cars that plug in on European roads, according to the International Energy Agency. In 2021, Germany set the bar high after providing 5.5 billion euros in funding for the construction of EV charging infrastructure. The French government also announced it was launching funding worth 100 million euros to support the building of fast EV charging stations.
The U.K.'s Climate Change Committee states that 1,170 charging stations will be needed for every 100 km by 2030. At the current growth rate, only a quarter of the expected total number of public charging stations will be realized by 2032.
As EV uptake in Asia has increased, the region’s EV charging infrastructure has also been rapidly expanding, with the Asia-Pacific charging station market expected to grow annually by 30.8% and reach $69.9 billion by 2029. China installed 300,000 charging ports in 2022, far outpacing U.S. EV infrastructure development.
India is also rapidly growing its EV industry. The number of registered EVs in India tripled to 1.01 million from 2021 to 2022, with two- and three-wheeled vehicles being the most popular. Indian state refiners announced plans to establish EV charging facilities at over 22,000 fuel stations and highways by 2024. The private sector is also expected to contribute significantly to the country’s EV infrastructure.
Given the wide gap in supply and demand of EV chargers, there are massive opportunities for startups focused on the space. Although EV charging is a crowded, challenging market, there remain opportunities for companies with stellar value propositions and groundbreaking technology if they adopt the right strategies.
Here are several opportunities to improve the charging ecosystem:
Use AI for smart energy
AI has the potential to optimize charging demand, distribution, and scheduling. Between the energy provider, the infrastructure provider, and the energy consumer, we need an intelligent system that balances the grid, charges the car at off-peak times, and always ensures enough charge for the next ride. AI could make the process user-friendly without too much effort for customers.
Apply charging analytics and data insights
According to Politico, one in five charging stations failed to deliver a charge. Ensuring the operational reliability of a charger is challenging. Therefore, predictive maintenance should be enabled through data-driven insights to minimize downtime.
Design flexible charging solutions
Hardware and charging standards need to ensure compatibility and convenience for all EV users. The market is still determining which type of hardware will dominate in different regions. It’s possible that both charging standards will coexist in some places or that CCS will prevail in one area and NACS in another.
Target the global market
Provide solutions that adapt to all types of hardware, ensuring widespread appeal and usability. Failing to do so means missing out on potential customers, and that's not the way to achieve rapid growth and attract investors. Stay nimble and responsive to market dynamics.
Leverage government funding
Capitalize on government initiatives and position your company where the funds flow. Explore if there's a slightly different path that could lead to more government funding to create added value for employees and investors versus relying solely on dilutive outside money. Nondilutive funding is up for grabs to accelerate the growth of EV startups, but it does require some effort to attain.
Fill the distribution gap in the U.S.
With the U.S. government targeting hard-to-reach locations and the JV focused on urban and highway areas, startups have an opportunity to address the gap. Fixing uneven distribution of public EV charging infrastructure is a crucial aspect of promoting equitable access and widespread EV adoption, which will become more pressing as the number of EVs on the road rises.
Understand the customer
Tailor charging solutions to meet the needs and preferences of EV users, enhancing overall user experience and encouraging wider EV adoption. Remember that while public charging stations might get all the attention, over 64% of EV charging happens at home. Startups in the public charging business should consider expanding their reach to home charging.
Give customers a variety of ways to pay for charging
Given the different payment preferences around the world, consider apps, RFID cards, contactless payments like QR codes — all ways that are easy, straightforward, and convenient.
But beware. Even if you have a value proposition and groundbreaking technology, the go-to-market journey will be grueling. There are painfully long sales cycles, as you must navigate and align with numerous stakeholders along the value chain.
The road toward widespread EV adoption
The inflection point for EV adoption is here, but EV drivers will be going nowhere unless they can plug in versus fill up. Startups can play a vital role in transitioning EVs into the mainstream with technology and business innovations that remove the hurdles for customers wanting to drive EVs and not suffer from range anxiety.
In addition to startups, widespread EV adoption will require collaborative efforts among industry stakeholders, government entities, and charging network operators. By collectively addressing these challenges head-on, we can pave the way for broad EV uptake and look forward to a future where the charging infrastructure seamlessly supports the growing number of EVs on the road.