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We need gargantuan investment in EV charging stations. Where will the money come from?

Governments, utilities, automakers and charging companies are pitching in, but securing the tens of billions needed still won’t be easy.
By Jeff St. John

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The $1 trillion infrastructure bill that passed the Senate this week contains a small down payment on President Joe Biden’s promise to win the EV market”: $5 billion in grants for states to deploy public electric vehicle chargers, plus another $2.5 billion to support EV charging and hydrogen, propane or natural-gas vehicle fueling stations.

But EV industry experts agree that it’s going to cost a lot more than $7.5 billion to build the national EV charging network called for by Biden’s clean energy agenda. Just how much more depends on who you ask, what’s included in the price tag, and how many and what different classes of electric vehicles their vision of the future contains.

To understand the investment gap in EV charging infrastructure at a basic level, we need to understand three things,” according to Stacy Noblet, senior director of transportation at ICF, the consultancy working with the U.S. Energy Department’s National Renewable Energy Laboratory on tracking U.S. EV charging deployments.

Those three variables, Noblet said in an email, include how many EVs we can expect to be adopted across all sectors; estimates of the necessary infrastructure to support that level of EV adoption; and a clear breakdown of associated costs including grid upgrades, equipment, operating costs and more,” she said.

The Biden administration’s initial jobs plan from March included $15 billion, twice what the infrastructure bill provides, to help fund the deployment of 500,000 public EV charging points across the country. That would be a massive jump from the 106,000 public charging ports at about 46,000 stations counted by NREL as of the end of last year.

Estimates of the price tag for EV charger buildout vary widely

Still, $15 billion is far less than what many studies indicate will be needed to drive the switch from fossil-fueled to battery-powered cars, vans, buses and trucks. Much more would be needed to support Biden’s goal, set in an executive order last week, for half of all cars sold in the U.S. to be electric by 2030. And meeting that target, in turn, will be critical to achieving Biden’s larger goal of halving economywide carbon emissions by 2030.

Noblet highlighted two studies released in April — the first from Atlas Public Policy, the second from GridLab, Energy Innovation and the University of California, Berkeley — that modeled the costs of building a charging infrastructure to support 100 percent of passenger vehicle sales to be EVs by 2035.

The Atlas study forecast a need for $87 billion in charging infrastructure investments by 2030, including $39 billion for 495,000 public chargers. That’s close to the $85 billion that some Democrats in the U.S. House of Representatives are seeking to include in the $3.5 trillion budget package they hope to pass without any Republican support in the coming months.

Image credit: Atlas Public Policy

The GridLab, Energy Innovation and Berkeley study projected an even higher cost for a greater number of charging stations to meet its target of growing light-duty EV sales from 2 percent today to 100 percent by 2030, as well as to reach all-electric medium-duty vehicle and heavy-duty truck sales by 2035. That would require 900,000 fast chargers for cars and 400,000 for trucks by 2035, at a cost of about $12 billion per year for the charging infrastructure and associated power grid upgrades.

It’s important to point out that the study found that the benefits would far outweigh the costs of making this switch, compared to a no new policy” scenario that would see much slower rates of EV adoption over the next 15 years.

Image credit: Atlas Public Policy

Public charging infrastructure makes up a relatively small portion of the total costs involved in the high EV penetration targets set forth in the report. But getting it built is central to reaching that goal. That’s because not having enough chargers is the chief barrier to customers buying EVs, due to the range anxiety” of drivers who fear running out of juice before reaching their destination.

Public charging networks vs. residential charging

These public charging networks are distinct from the more than 100 million single- and multifamily residential chargers that both reports predict will be needed to reach their EV targets. But roughly half of all U.S. households can’t rely on chargers where they live, whether that’s because they lack garages to install them or live in multifamily housing that faces installation cost-sharing barriers between tenants and landlords, according to National Renewable Energy Laboratory estimates.

That’s where the need for public support comes in. Public chargers won’t be profitable until there are enough EVs on the road to use them often enough to pay back their costs. But not having enough public chargers thwarts expansion of the EV market. This is the chicken-or-egg problem at the heart of public charging as a business.

Federal funding is expected to play an important role in filling this gap. Critics of U.S. EV policy point to China, by far the world’s leader in EV penetration. China has a wide-ranging industrial policy that has supported the deployment of more than 1.5 million chargepoints across the country, including more than 300,000 fast direct-current (DC) chargers capable of recharging vehicles in less than an hour. (The equivalent number of fast chargers in the U.S. is about 17,400, of which more than half are Tesla’s proprietary systems.)

Federal support is particularly critical for building out the interstate transit system to support electric long-haul trucking, which relies on megawatt-scale charging hubs. The Zero Emission Transportation Association, a group of EV makers, charging networks, EV equipment companies and utilities, is calling for $30 billion in federal investment for public charging infrastructure, with a priority on national highway freight corridors.

An all-of-the-above strategy for EV charging

On Wednesday, a consortium of utilities, environmental groups, labor unions and automaker and EV charging industry groups formed the National EV Charging Initiative to present a united front on public policy, with a key target of encouraging federal policy support.

John Bozzella, CEO of the Alliance for Automotive Innovation, noted in a Wednesday statement that global automotive companies are planning to invest $330 billion in EVs by 2025. But, he added, Consumers will not buy vehicles they cannot conveniently supply with power.” The alliance includes BMW, Ford, Mazda, Nissan, Toyota, and Veloz, a California-based consortium of utilities, automakers and ride-hailing companies Uber and Lyft.

At the same time, the group acknowledged, federal support is just one part of a much broader effort.

The infrastructure bill’s $7.5 billion in public charging builds upon the multibillion-dollar investment private EV charging companies and investor-owned utilities are already making to deploy EV charging,“ Max Baumhefner, a senior attorney with the Natural Resources Defense Council (a member of the newly formed group), said in a Wednesday email. No single program or investment is sufficient.”

Lauren Kastner, lead transportation and energy consultant with ICF, agreed in a Wednesday email that federal funding is necessary to stimulate the market, fill gaps, and support innovation, but additional investment from sources like state incentive programs, utilities, automakers, and EV charging providers is needed to build out the full extent of necessary infrastructure.”

The biggest U.S. EV charging network operators have big growth planned for the coming years. Two of them, ChargePoint and EVgo, raised more than $1 billion collectively by going public via reverse mergers with special-purpose acquisition companies this year. EVgo has partnered with General Motors on a plan to deploy more than 2,700 fast DC chargepoints across the country by 2025. ChargePoint, which has more than 40,000 lower-voltage Level 2 chargers across the U.S., plans to reach 2.5 million chargers by 2025, roughly half of them in North America.

Electrify America, the entity investing $2 billion in U.S. EV charging as part of Volkswagen’s settlement agreement for its Dieselgate scandal, last month announced it would more than double its current U.S. charging network by 2025, reaching 1,700 stations and 9,500 chargers. Electric truck startup Rivian, backed by at least $700 million in investment from Amazon and others, plans to install more than 3,500 fast DC chargers by 2023.

States step up to the plate

Some state governments are also committing significant funds to EV charging infrastructure, although the scale of investment ranges widely from state to state. States have also driven the policies that have opened up utility investment into EV charging. NRDC’s Baumhefner noted in a Wednesday statement that U.S. utilities have collectively committed about $3 billion in charging infrastructure, with a particular focus on the more challenging markets for multifamily housing and medium- and heavy-duty vehicles.

Much of that investment has been concentrated in California and New York, two states with aggressive EV adoption goals. The California Energy Commission has directed roughly $1.2 billion toward EV adoption, including charging infrastructure support, and California’s three investor-owned utilities are spending more than $1 billion on charging infrastructure and incentives. New York regulators have dedicated $750 million to EV infrastructure buildout, almost all of it via its investor-owned utilities.

Other utilities with significant EV charging investment plans include Duke Energy and Dominion Energy, which have won state regulator approval to support public charging and assistance for school districts to convert to electric buses. The Electric Highway Coalition, a group comprising 14 utilities across the Eastern and Southern U.S., has pledged to work on shared fast-charging equipment along major transport corridors between the 29 states they serve.

Expanding the geographic reach of EV charging will be an important part of a nationwide strategy, Pavel Molchanov, director and equity research analyst at Raymond James & Associates, said in an email.

The difference between the haves’ and have-nots’ is vast” when it comes to state-by-state charging, he said. Of the 10 most populous states, California is the only to exceed 500 charging units per million people, with Georgia and New York in a distant second and third place, he said. (Vermont has more chargers per capita than California but for a much smaller population.) On the opposite end of the spectrum are Ohio, Michigan and Texas, with about one-sixth the penetration of California.

On the whole, the situation is best along the coasts, while varying a great deal in the Midwest and the Rocky Mountain region,” he said. The infrastructure bill passed by the Senate this week does contain language that would direct every state to undertake regulatory efforts to remove barriers to EV charging expansion and cost.

Image credit: Atlas Public Policy

At the same time, dense cities face challenges in building the EV charging and supporting electric infrastructure needed to expand access, ICF’s Noblet said. A recent study by ICF, New York utilities Con Edison and National Grid, and other partners found that New York City will need about 800,000 Level 2 chargers and 60,000 DC fast chargers by 2050 — in an environment already under space and grid strain.

(Lead photo: Tom Williams/CQ-Roll Call, Inc. via Getty Images) 

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.