BOSTON—July 20, 2022—New research from Bain & Company shows electric vehicles (EVs) are set to reshape the automotive and mobility industries faster than anticipated. Bain expects the profit pool for the EV charging sector in the US, Europe and China to grow to up to €13.5 billion by 2030—with up to  €6 billion coming from the US, up to €5 billion coming from the European Union (EU) and up to €2.5 billion coming from China.

Countries worldwide have already introduced ambitious green energy targets and supported the transition to EVs. Now, the Ukraine war has accelerated those efforts and prompted many governments to further reduce their dependence on Russian oil and gas. Charging infrastructure and services critical to the adoption of battery-powered EVs (BEVs) are a huge and strategic new business opportunity.

“The next decade will be unprecedented for the EV charging ecosystem worldwide,” said Lucas Martin, partner at Bain & Company. “Future winners are moving fast and building partnerships to secure the best locations and digital platforms to provide a seamless charging experience. These leaders are navigating uncertainties in the market by designing scenario-based strategies that allow them to pivot quickly when consumer behaviors or regulations shift.”

Where to compete

In the near term, investment will flow into building up the required infrastructure. In transit charging, profitability will depend on the ability to achieve high utilization rates. Winning in this sector will require a large capital expenditure on a network of convenient, reliable, fast-charging stations (150-plus kilowatt) that deliver an excellent customer experience.

In the future, the largest profit pool for home and work charging will likely be linked to next-generation smart energy services, including vehicle-to-grid and vehicle-to-home EV charging. These services will represent roughly one-third of the total profit pool by 2030, becoming increasingly important as the volume of solar and wind energy grows. These services allow electricity companies to harness the storage capacity in car batteries to better balance supply and demand.

Regional differences

The EV charging markets in Europe, the US and China will differ based on the share of electric car sales, local driving and charging habits, predominant housing type and market regulation. By 2030, for example, BEVs are forecast to make up 55% of total car sales in Europe, compared with 40% in China and 32% in the US.

The predominant type of housing in a specific market is another important factor influencing charging solutions. For example, the market for single-family-home charging products will be bigger in the US, where 82% of the population live in single-family homes, compared with 60% in the EU and 37% in the relevant urban regions of China.

Regulation will also play an important role in developing the smart energy services market. The complex patchwork of state-by-state rules in the US will significantly affect vehicle-to-grid services strategies and could slow widespread adoption. The EU aims to create a policy framework to improve energy storage and expand services, while China’s market will remain strongly regulated and concentrated. These conditions will likely accelerate the development of smart energy services.

Charging occasion

“As companies and investors consider where to play and how to win in the EV charging ecosystem, it will be critical to understand how demand for different charging occasions and regulatory landscapes differ by region today and in the future,” said Eric Zayer, partner at Bain & Company. “While consumers in suburban areas around the US and Europe will be able and keen to charge at home, consumers that live in dense urban areas, such as in China, will be forced to charge more in other locations, like work, at destinations such as restaurants or in transit.”

• Transit charging: High-speed transit charging stations require heavy capital expenditure—$30,000 to $150,000 per unit. Reliability, convenience and a differentiated customer experience, such as wifi service and quick-service restaurants, will be critical to success.
• Home charging: Winners in home charging will prioritize easy installation, affordable prices and bundles with the purchase of an EV. Owners will also be looking benefits to their overall home energy management system, including the ability to save electricity and protect against power outages.
• Destination charging: What matters most in destination charging is selecting highly frequented locations, such as supermarkets or restaurants, and the right type of charger to match the amount of time consumers typically spend on site. As with transit charging, destination charge points need to be highly reliable and offer competitive prices.
• Work charging: Offices and other work locations require chargers that are easy to operate and low cost. There is an opportunity for employers to offer this access as a benefit to employees. In certain industries, there is a need for charging fleets of light commercial vehicles and buses. These large-scale depots often need to be equipped for overnight charging and able to collaborate with power grid operators and utilities.
• Smart energy services: Providers of next-generation smart energy services will need to offer electricity companies access to a sufficient number of parked cars to create a powerful energy reserve capable of balancing grid demand. They also must provide smart home or facility devices and an extensive, secure IT platform for intelligent charging. That includes powerful cloud-based software that can help predict how many cars will plug into the network and what time they will access the service. Leaders will work with grid operators to help them use electric car charging to stabilize the network system.

Editor's Note: For more information or interview requests, please contact Katie Ware at katie.ware@bain.com or tel. +1 646-562-8107.