Charging point outside Strategy Analytics branch office in Milton Keynes, UK

Like many consumers, yours truly is currently putting off his first EV purchase until, as my colleague, Ed Sanchez, says, “The EV charging infrastructure gets more ubiquitous and reliable.”  That has got me thinking.  What are the signs that show “the EV charging infrastructure gets more ubiquitous and reliable”?  Are they a cluster of fast-charging points for every 10 miles along the motorway?  Are they the availability of regular charging points in every shopping centre, supermarket and workplace?  What is a sufficient public charging infrastructure that will tempt consumers off their combustion engine rides for a less polluting, battery electric car?

Well, apart from the current high cost premium, short driving range and long charging times, consumers have said that a sparse charging network is one reason for putting off leasing or purchasing a battery electric car.  According to the June 2018 AA Drive Poll in the UK, 80 percent of respondents were concerned with the lack of public charging stations and 79 percent were concerned with the lack of fast-charging points on motorways that can enable long distance journeys.  In British regions where there is a sparser charging network, such as in Northern Ireland, Scotland and Yorkshire, there was a higher level of concern shown for the limited driving range in electric cars.  There are also concerns about the number of available points at each station, the rate of charging decreases as more vehicles are charged at the same station and over the multitude of charging providers and having to download a multitude of mobile apps to ensure one’s EV can be charged where alternative providers are not available close by.  The Strategy Analytics report “UX of Pure EVs: Can Incentives Overcome Pain Points?” highlights the considerable preparation necessary for EV owners before undertaking a journey.  There were even cases where charging points are so poorly maintained to the point of being inoperable.

But does the availability of a public charging infrastructure really correlate to the demand in electric vehicles?  By studying the market for electric vehicles in other European countries, infrastructure is only one reason that determines demand.

In Norway, the sales of battery electric vehicles are much higher than in the UK.  Norway has a population of 5 million people but, in 2017, had 141,951 BEVs sold (GoCompare 2018 Electric Avenues study).  This compares to the UK that has a population of 66 million (over 12 times more than Norway), but with only around 70,000 BEVs sold (half than Norway).  When you compare the public charging infrastructures of the two countries, Norway only has 2,014 charging stations with 8,921 points (GoCompare study), for a country covering a large area of 385,252 square kilometres.  The UK has a more extensive charging network with 6,838 stations and 17,310 points, for a country covering 242,495 square kilometres, which is expected to grow further following the mandated fitment in motorway services and petrol stations.  For a country with a third of the number of charging locations and half the number of points to serve a larger area, why does Norway have electric vehicle sales that double the UK’s?

The answer is not as simple as getting more charging stations and points built.  Like many Brits, Norwegians tend to own their own homes and live in houses and not apartments.  But Norwegians are more satisfied in making short journeys and by charging their EVs at home overnight.  If they need to make a long distance journey by EV, there are only two major highways to target new infrastructure: the E6 that runs from the capital, Oslo, to the north; and the E39 that runs along the south west coast linking most of the major cities.  However, the road network is not suitable for long distance journeys, even if driving a combustion engine vehicle.  Most Norwegians would rather take a flight instead with local airlines which have an extensive network of domestic airports.  Meanwhile, the average Brit has a more extensive motorway network to conduct long distance journeys, while competing rail and air travel is often considered too costly.  The lack of more suitable competing alternative transport puts pressure on building a more extensive charging network in the UK, at a time when public finances are limited.  Norway may have a smaller charging network than the UK, but with fewer roads, it has 11 charging points per 100 kilometres of road, which is higher than the UK with 3 charging points per 100 kilometres (GoCompare study). 

Even when Norwegians want to drive a long distance, according to the Norwegian Electric Vehicle Association, 70 percent of its 60,000 members also own a second combustion engine-powered car.  By contrast, a British owner of a Renault Zoe, responding to research by Strategy Analytics’ In-Vehicle User Experience service, said his use covers, “All trips (but) sometimes have to take alternative means… train or borrow girlfriend’s car.”  The report “UX of Pure EVs: Can Incentives Overcome Pain Points?” highlights the lack of resources of owning a second combustion engine vehicle, resulting in the embarrassment and frustration in asking another person to borrow her car.  Another point against overspending on infrastructure is that battery technology is continually improving, with energy density increasing, resulting in future models with a longer driving range and fewer trips to recharge.

Furthermore, the level of public funding is much greater in Norway, thanks to considerable oil and gas revenues.  But instead of ploughing it into a public charging infrastructure, the Norwegian government is incentivising sales of electric vehicles by removing the sales tax, the annual tax on vehicle usage and waive the cost on electric vehicle charging, parking and road tolls, as well as reduced charges on ferry crossings.  These incentives are so generous that they enable the cost for purchasing electric vehicles to come down to levels below that for combustion engine equivalents, negating the cost premium that has prevented consumers from purchasing EVs in the first place.  The oil and gas revenue from its majority state-owned Equinor energy company provides the resources for these incentives, which is not available to the UK, whose North Sea reserves are being exhausted and have now become a burden on the UK government as old oil and gas fields are being decommissioned.  However, increasing the tax burden for combustion engine vehicle ownership and purchasing can offer equilibrium with that of electric vehicles.

Where infrastructure is important is where a country has a high proportion of people living in apartments and rented homes.  In the Netherlands, 32 percent of people live in apartments.  Compared to the UK, the Netherlands has a quarter of the population (17 million), but a similar charging network with slightly more locations (7,779), but with fewer points (10,503) and annual sales of around 98,000 PHEVs and 29,000 BEVs.  47 percent of Dutch EV users charge at their workplace.  For a smaller area (41,543 square kilometres), the denser charging network is a necessity to entice apartment dwellers to use plug-in vehicles.  Switzerland, by comparison, is another small country (41,285 square kilometres, 8.4 million population), but with nearly 57 percent living in rented homes.  With just 569 stations and 3,460 points, the charging network is not supporting a consumer base that is more reliant on landlords to build home charging points.  Forcing the fitment of home charging points only on new buildings will not generate enough impact.  This subsequently leads to poor EV sales with the entire Swiss EV parc at 23,858 vehicles being less than the annual sales of BEVs in the Netherlands.

The Electrify America programme, tasked in expanding the US charging infrastructure, could take a look at the various European markets when targeting their resources across the pond.  Locations it has targeted include:

• 17 metropolitan areas that cover cities and conurbations where most people live in apartments.Already there are 22 cities in the US where renters outnumber home owners.
• Fast-charging points along high-traffic corridors in 39 states, as the average American drives longer (29 miles per journey, 2015 AAA study) than the average Brit (21 miles a day, UK Government 2013 National Travel Survey).
• But not every cross-country highway, however, will necessarily see the traffic to justify the building of fast-charging points.Only two cross-country routes have been targeted for deployments by Electrify America, since air travel is already extensive in the US.
• But to increase sales of electric vehicles, state incentives are still needed, at least for the near term, in order to limit the cost premium against combustion engine vehicles, which are aided further in the US by low fuel prices.

Conclusion:

• Public charging infrastructures are dependent on the consumer requirements – they enable the adoption of electric vehicles where there is little alternative transport for long journeys and are very important for consumers renting apartments.
• Ownership and purchasing incentives, however, are more important than infrastructure to overcome the cost premium in electric powertrains.

Kevin Mak is a Senior Analyst in the Global Automotive Practice at Strategy Analytics.  

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Strategy Analytics has also published the report, “User Experience of Pure EVs in China.”