EV charging sucks because it hasn’t found the right business model


NopeaRide, Kenya’s first fully EV taxi service, shuts down
Image Credits: Cavan Images / Getty Images

Electric vehicle charging has come a long way in recent years.

Until somewhat recently, road-tripping required lots of advance planning. Charging speeds were slow, necessitating stops that easily stretched past 30 minutes. Sessions were stymied by broken or vandalized equipment or inconsiderate fossil-fueled car owners blocking the charging points.

Thankfully, those days are largely over. Charging networks today are larger and more reliable, and many new EVs can add a decent amount of range in just 20 to 30 minutes. But that doesn’t mean the market is not ripe for disruption.

Public charging has improved dramatically in recent years, yet it’s still not nearly as quick or convenient as using a gas station. And while it’s true that most EV charging today is done at home, many prospective buyers still have concerns about public charging infrastructure. In a recent survey, 61% of Americans said that concerns about charging logistics are holding them back from buying an EV. Broad EV adoption will depend on the speed, distribution and reliability of charging networks.

Next-generation EVs will charge even faster, alleviating some of those worries, but they’ll also demand more robust equipment and grid connections. McKinsey estimates that between now and 2030, the U.S. will need 1.2 million public chargers at a cost of $35 billion.

But I’d wager that’s a fraction of the market’s potential value. No single business model dominates the EV charging market. When one does, it’ll probably come from a platform-like approach, one that will use the core charging infrastructure to unlock more value in other profit centers, which will help solve two pain points — slow chargers and poor maintenance — that can make EV charging a sucky experience today.

Shocking lack of profits

Today’s EV charging business models fall into three main categories — networks run by manufacturers to spur EV sales, networks that focus on consumers directly and networks run as a service for property owners or managers. (That’s a bit of an oversimplification since some use elements of all three, but it’s close enough. There are also attempts to use advertising to support EV charging, but I’m skeptical that’s a standalone model — advertising is a cutthroat business and highly cyclical, a combination that doesn’t jibe with long-term infrastructure investments.)

The first model, in which networks are run by manufacturers to encourage sales, was pioneered by Tesla. The company has won over many converts on the strength of its Supercharger network, which continues to be a terrific selling point. Electrify America partly falls under this model, too. Initially formed as a part of Volkswagen’s settlement in the wake of the diesel-emissions cheating scandal, Electrify America has become the network of choice when auto manufacturers want to offer charging perks with new EVs.

That model is unlikely to last forever, though. As competition helps drive EVs down in price, profit margins will slim and automakers will start to balk at supporting vast infrastructure plays. Plus, as competing networks improve their reliability and fill in their gaps, drivers won’t be reliant on automakers’ largesse. In-house or subsidiary charging networks won’t be as strong of a selling point to consumers, and OEMs won’t see much profit upside in them.

The second model, where networks sell electricity via charging sessions directly to consumers, is unlikely to become profitable because fast-charging will turn into a commodity. Today, having reliable equipment that delivers speedy charges is enough to differentiate Electrify America, for example, but eventually, that’ll be table stakes. (After all, no one walks around saying, “I’m very happy with how quickly and reliably Acme gas stations dispense my gasoline. I think I’ll come back more often.”) And since one charger’s electricity will be the same as any others, networks will have to find some other way to stand out.

Location is an obvious differentiator. If charging stations are in the wrong places, they’ll be useless to consumers, underutilized and unprofitable. Which is why a number of companies are working with property owners and managers to site, maintain and operate chargers on their premises.

For restaurants, shops and more, the sales pitch is a simple one. They gain an amenity without having to worry about permitting, construction oversight and maintenance. Sometimes, they’ll even get a cut of the charging fees. In theory, it sounds win-win.

In practice, it often leaves much to be desired. Since fast chargers are expensive to install, many networks opt for slower Level 2 chargers that only add a couple dozen miles per hour. For some people, that’s barely enough to justify the trip to the charger itself. And once they arrive, they might find chargers that are poorly maintained, meaning that customers can’t count on them when they need them.

Some 40% of respondents in a 2020 California survey said they had to contact customer service when attempting to plug in their cars, mostly because the charger wasn’t working or the plug was broken. Even expensive DC fast chargers are frequently out of order. Another recent study in the San Francisco Bay Area found that nearly 25% of DC fast chargers were broken in some way.

It’s hard to pinpoint exactly why EV chargers are so unreliable. It could be that the entire concept is relatively new and kinks need to be worked out. DC fast chargers that hit 150 kW or more are recent developments, and as any early adopter knows, problems with new hardware aren’t unusual. Different locations and times of year may pose their own challenges, too. During a summer trip on a hot day last year, for example, I encountered a 350 kW Electrify America charger that kept tripping offline. Its cooling fans were quite loud, leading me to wonder whether the device had simply overheated.

Looking for inspiration

To make EV charging better and more reliable, networks will have to solve those challenges and more. That will take time and money, which makes it all the more vital that charging networks find business models that work for EV drivers’ unique use patterns.

It’s unlikely they’ll be exactly like gas stations. The dynamics of EV charging are different than filling a fossil fuel-powered vehicle. People will use them a little bit longer, probably on the order of 15 minutes, but less frequently since most charging for daily needs will be done at or near home or work. That infrequency coupled with the longer dwell time makes EV charging a poor fit for the pop-in simplicity of the convenience store.

But observing how tightly coupled gas stations are with other businesses is illuminating. Gas stations are in many places synonymous with convenience stores; that’s how inextricably they’ve become linked. That’s because most gas stations don’t make their profits selling liquid hydrocarbons but on what’s sold inside the store.

Grocery stores, big-box retailers and warehouse clubs use gas as a loss leader to get people in the door. It’s hard to imagine EV charging being any different.

Restaurants are another option, especially if it’s a fast-casual or fast-food chain. The meal will have to be quick enough to order, prepare, serve and eat within the usual charge time. But while restaurants may make sense in some places, they’re unlikely to be a big driver of charging network profits. People on road trips don’t need to eat a full meal every two to four hours, so it’s hard to see that being a big draw.

Porsche, Audi, Electrify America and others are testing out lounges next to their charging stations, sort of like an airline club for drivers. People can pop in to refresh themselves, grab a quick bite or some coffee and be on their way. It’s a great concept and one that may catch on among more wealthy drivers. But it’ll probably remain niche, serving more as a differentiator for the charging networks than a profit center.

Dead and dying malls might be a better fit than restaurants, convenience stores or drivers’ lounges. EVs don’t emit noxious fumes, so mall owners could theoretically retrofit some indoor space to house charging stations. Luxe indoor parking while charging would certainly get a few people in the door. Then they could get out for some brief shopping or dining while they wait. Or if they prefer to stay in the car, the mall could run a concierge service that might bring stuff from the stores and restaurants straight to their car. Malls provide a range of activities that convenience stores or restaurants don’t offer, meaning that drivers can loiter longer and may spend money even if they’re not hungry.

I’m not saying “dead malls” is the right answer, and I’m not pretending to have one up my sleeve, either. But I do know that EV charging will need a business model that will make it both attractive to drivers and profitable for investors. It’s a bit of a “know it when I see it” case, and right now, I know that I haven’t seen one yet.

More TechCrunch

The spam reached Bluesky by first crossing over two other decentralized networks: Mastodon and Nostr.

The ‘vote Trump’ spam that hit Bluesky in May came from decentralized rival Nostr

Welcome to TechCrunch Fintech! This week, we’re looking at the continued fallout from Synapse’s bankruptcy, how Layer wants to disrupt SMB accounting, and much more! To get a roundup of…

There’s a real appetite for a fintech alternative to QuickBooks

The company is hoping to produce electricity at $13 per megawatt hour, which would be more than 50% cheaper than traditional onshore wind.

Bill Gates-backed wind startup AirLoom is raising $12M, filings reveal

Generative AI makes stuff up. It can be biased. Sometimes it spits out toxic text. So can it be “safe”? Rick Caccia, the CEO of WitnessAI, believes it can. “Securing…

WitnessAI is building guardrails for generative AI models

It’s not often that you hear about a seed round above $10 million. H, a startup based in Paris and previously known as Holistic AI, has announced a $220 million…

French AI startup H raises $220M seed round

Hey there, Series A to B startups with $35 million or less in funding — we’ve got an exciting opportunity that’s tailor-made for your growth journey! If you’re looking to…

Boost your startup’s growth with a ScaleUp package at TC Disrupt 2024

TikTok is pulling out all the stops to prevent its impending ban in the United States. Aside from initiating legal challenges against the government, that means shaping up its public…

As a U.S. ban looms, TikTok announces a $1M program for socially driven creators

Microsoft wants to put its Copilot everywhere. It’s only a matter of time before Microsoft renames its annual Build developer conference to Microsoft Copilot. Hopefully, some of those upcoming events…

Microsoft’s Power Automate no-code platform adds AI flows

Build is Microsoft’s largest developer conference and of course, it’s all about AI this year. So it’s no surprise that GitHub’s Copilot, GitHub’s “AI pair programming tool,” is taking center…

GitHub Copilot gets extensions

Microsoft wants to make its brand of generative AI more useful for teams — specifically teams across corporations and large enterprise organizations. This morning at its annual Build dev conference,…

Microsoft intros a Copilot for teams

Microsoft’s big focus at this year’s Build conference is generative AI. And to that end, the tech giant announced a series of updates to its platforms for building generative AI-powered…

Microsoft upgrades its AI app-building platforms

The U.K.’s data protection watchdog has closed an almost year-long investigation of Snap’s AI chatbot, My AI — saying it’s satisfied the social media firm has addressed concerns about risks…

UK data protection watchdog ends privacy probe of Snap’s GenAI chatbot, but warns industry

U.S. cell carrier Patriot Mobile experienced a data breach that included subscribers’ personal information, including full names, email addresses, home ZIP codes and account PINs, TechCrunch has learned. Patriot Mobile,…

Conservative cell carrier Patriot Mobile hit by data breach

It’s been three years since Spotify acquired live audio startup Betty Labs, and yet the music streaming service isn’t leveraging the technology to its fullest potential — at least not…

Spotify’s ‘Listening Party’ feature falls short of expectations

Alchemist Accelerator has a new pile of AI-forward companies demoing their wares today, if you care to watch, and the program itself is making some international moves into Tokyo and…

Alchemist’s latest batch puts AI to work as accelerator expands to Tokyo, Doha

“Late Pledge” allows campaign creators to continue collecting money even after the campaign has closed.

Kickstarter now lets you pledge after a campaign closes

Stack AI’s co-founders, Antoni Rosinol and Bernardo Aceituno, were PhD students at MIT wrapping up their degrees in 2022 just as large language models were becoming more mainstream. ChatGPT would…

Stack AI wants to make it easier to build AI-fueled workflows

Pinecone, the vector database startup founded by Edo Liberty, the former head of Amazon’s AI Labs, has long been at the forefront of helping businesses augment large language models (LLMs)…

Pinecone launches its serverless vector database out of preview

Young geothermal energy wells can be like budding prodigies, each brimming with potential to outshine their peers. But like people, most decline with age. In California, for example, the amount…

Special mud helps XGS Energy get more power out of geothermal wells

Featured Article

Sonos finally made some headphones

The market play is clear from the outset: The $449 headphones are firmly targeted at an audience that would otherwise be purchasing the Bose QC Ultra or Apple AirPods Max.

5 hours ago
Sonos finally made some headphones

Adobe says the feature is up to the task, regardless of how complex of a background the object is set against.

Adobe brings Firefly AI-powered Generative Remove to Lightroom

All cars suffer when the mercury drops, but electric vehicles suffer more than most as heaters draw more power and batteries charge more slowly as the liquid electrolyte inside thickens.…

Porsche Ventures invests in battery startup South 8 to boost cold-weather EV performance

Scale AI has raised a $1 billion Series F round from a slew of big-name institutional and corporate investors including Amazon and Meta.

Data-labeling startup Scale AI raises $1B as valuation doubles to $13.8B

The new coalition, Tech Against Scams, will work together to find ways to fight back against the tools used by scammers and to better educate the public against financial scams.

Meta, Match, Coinbase and others team up to fight online fraud and crypto scams

It’s a wrap: European Union lawmakers have given the final approval to set up the bloc’s flagship, risk-based regulations for artificial intelligence.

EU Council gives final nod to set up risk-based regulations for AI

London-based fintech Vitesse has closed a $93 million Series C round of funding led by investment giant KKR.

Vitesse, a payments and treasury management platform for insurers, raises $93M to fuel US expansion

Zen Educate, an online marketplace that connects schools with teachers, has raised $37 million in a Series B round of funding. The raise comes amid a growing teacher shortage crisis…

Zen Educate raises $37M and acquires Aquinas Education as it tries to address the teacher shortage

“When I heard the released demo, I was shocked, angered and in disbelief that Mr. Altman would pursue a voice that sounded so eerily similar to mine.”

Scarlett Johansson says that OpenAI approached her to use her voice

A new self-driving truck — manufactured by Volvo and loaded with autonomous vehicle tech developed by Aurora Innovation — could be on public highways as early as this summer.  The…

Aurora and Volvo unveil self-driving truck designed for a driverless future

The European venture capital firm raised its fourth fund as fund as climate tech “comes of age.”

ETF Partners raises €285M for climate startups that will be effective quickly — not 20 years down the road