EV Power Pulse Issue #13

Current EVents

EV Industry Updates

EV Charging Industry Challenges

A recent report from BloombergNEF (BNEF) highlighted the significant challenges confronting EV charging companies. The report revealed that the number of new public charging installations in the US in 2023 was 76% lower than what BNEF had forecasted at the beginning of the year. Additionally, the report projects that in terms of developing EV charging infrastructure, the US will continue to lag behind both China and Europe.

BNEF suggests charging operators may be hesitant to make significant investments in part due to the expectation of NEVI funds and other federal grants. This perspective will be explored further in the following section, which discusses a new wave of federal funding for EV infrastructure. 

However, while the anticipation of federal funding might play a role, it seems overly simplistic to consider this a primary factor. Other complex challenges, such as supply chain disruptions and difficulties generating charging station profits, likely contribute significantly to EV charging firm’s struggles.

In 2023, ChargePoint, Electrify America, and EVgo saw limited growth in their networks. Specifically, EVgo added 850 fast chargers while Electrify America added 588, and ChargePoint added just 410. ChargePoint also faced a notable decline in its stock price, with a 75% drop in market value, leading to significant leadership changes, including the replacement of its CEO. In contrast, Tesla continued to dominate the sector, installing an impressive 6,000 fast chargers during the same period.

The sluggish expansion of the EV charging sector across the US can also be attributed to a difficult financial environment, a trend that is anticipated to continue into 2024. Looking forward, BloombergNEF forecasts a rise in acquisition activities as companies look for strategies to grow and remain viable—an opinion we’ve shared in previous issues. 

Additionally, head-to-head competition with Tesla only exacerbates the challenges faced by these other EV charging networks. Tesla has built an extensive network of charging stations equipped with connectors that are now synonymous with industry standards, setting a high bar for competitors.

In 2024, the US EV charging sector is poised to face considerable financial challenges, requiring austere measures and new strategic approaches to overcome the demanding environment. I expect we’ll see significant shifts within the industry this year, with increased M&A activity likely emerging as a key trend.

–Steve

Capitol Counsel’s skilled bipartisan team specializes in helping clients secure competitive funding for infrastructure projects by effectively leveraging the Bipartisan Infrastructure Law and the Inflation Reduction Act. Their extensive network spans various agencies, Congress, and the White House.

Power and Policy

Biden-Harris Administration Announces $623M in EV Charging Grants

The Biden Administration recently announced $623M in grants to bolster the development of US EV charging infrastructure. This initiative is a continuation of their strategy to create jobs, promote environmental sustainability, and achieve their primary objective – establishing a convenient, affordable, reliable, and domestically produced national network of EV chargers.

Under President Biden, EV sales have quadrupled, and the number of publicly available charging ports has increased by nearly 70%. The Administration has maintained a focus on establishing a strong public-private partnership. In doing so, the US has seen private companies invest over $155B into EVs and the EV battery supply chain.

This new funding will support 47 projects in 22 states and Puerto Rico, including the construction of approximately 7,500 EV charging ports. The Federal Highway Administration is allocating $311M to 36 community projects and $312M to 11 corridor projects. These projects span urban and rural landscapes, including locations such as schools, parks, libraries, and multi-family housing. 

Steve and I have previously discussed the Justice40 Initiative, wherein 40% of the overall benefits of federal investments are directed to disadvantaged communities. In this new round of grants, over 70% of the funding is allocated to project sites in such communities, contributing to an equitable distribution of the charging infrastructure.

The Administration’s goal remains to make EV chargers easily accessible, reliable, and convenient for American drivers while simultaneously creating job opportunities in charger manufacturing, installation, and maintenance. Given the numerous stories in the past year regarding charger reliability, Steve and I are happy to see a continued focus on workforce development within these grants.

The EV charging industry is poised for a much-needed boost from this public funding following an underwhelming performance in 2023 in terms of charging network expansion. You can see all of the grant winners here. 

–Rob 

Guest Perspectives

The Road Ahead for EV Charging: Balancing Reliability, Location, and Financial Sustainability

By Jason Goldfarb, Esq.

Lately, there has been a lot of negative press about the state of EV charging infrastructure across the United States, but the truth is a bit more complex than the headlines indicate. 

Numerous EV charging infrastructure companies are in serious financial trouble, as Steve explained above. We can trace many of those struggles back to unrealistic expectations and poor business fundamentals. Sky-high valuations for these companies were based on the promise of massive profits and utilization, which have yet to materialize. As a result, we’ve seen multiple examples of business failures and bankruptcies. 

Meanwhile, substantial government investment appears to have inadvertently exacerbated the issue, with a lack of effective oversight leading to a notably slow pace in the rollout of new installations. Moreover, rather than proactively investing in the expansion of the EV network, private companies seem to be biding their time, hoping to secure a share of available funding, even as opportunities may be diminishing.

Even though the majority of EVs charge at home or work, the quality of publicly available EV charging infrastructure is pushing public perception. As the expansion of EV infrastructure slowly begins to ramp up, consumer frustration is mounting due to a lack of reliability, ubiquity, and convenience. These problems are driven by insufficient maintenance, chargers being deployed in the wrong places, or chargers being deployed in the right locations but with inadequate infrastructure to handle the volume of EV customers. 

While some EV charging companies are still trying to figure out the optimal locations for their equipment, Tesla has raised EV charging deployment to an art form. Taking a page from the wireless telecommunications industry, Tesla has made a specialty out of intelligently locating their superchargers where they are needed, and they deploy temporary chargers at scale to handle additional volume over holidays and at special events. Most importantly, their superchargers are always reliable.

Ultimately, I would argue that publicly-owned EV charging infrastructure can only go so far. Private industry and the real estate market should drive the deployment of EV charging infrastructure. However, if the infrastructure isn't financially viable for real estate owners, we're never going to get past the current state of affairs. 

So, how can these conditions improve in 2024? Besides a fundamental focus on ROI, more attention is needed regarding the quality of EV infrastructure contracts. What’s frequently missing from EV  charging deployment contracts are requirements for uptime and reliability, dedicated spaces for EVs, and significant penalties for lack of compliance with those obligations.  

To flip the narrative past the negative headlines, companies and real estate owners need to treat EV charging just like any other real estate infrastructure asset. Prequalify deployment by looking at location, location, and location. Focus intensely on profitability, whether or not they secure government funding,  and scrutinize their contracts to ensure they are contractually incentivizing accountability. 

If you have any questions about navigating electric vehicle charging infrastructure deployment and contracts, you can contact Jason R. Goldfarb, Esq. at Falcon Rappaport & Berkman LLP by email at [email protected] or call (212) 203-3255. You can also contact Jason Goldfarb on LinkedIn. 

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Until next time, stay charged!
- Steve and Rob