Energy companies need to improve the EV charging business in order to tackle the energy transition
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Have you ever thought about what could be the next great emerging market? You are not alone.
What these types of markets have in common is that they bring new business opportunities, reinvents legacy markets, and seem to explode overnight. Such as the internet boom in the late 20th century that created total new services, companies and business models. Although it almost seems that it explodes overnight, we know that years of development, testing and strategic thinking is required to be competitive in these markets.
As an Economic student at Hanken School of Economics, it is inevitable that your mind wanders off into these thoughts. An occupational hazard some would call it. But it was these types of discussions that got us intrigued to do a market research project for eMabler once we became aware of the opportunity, and more importantly, aware of what eMabler is going to achieve.
We are talking about the electric vehicle (EV) charging industry. Although we wouldn’t consider it to be a big secret anymore, as EVs are a very much about subject these days, we still think a lot of people aren’t aware of the magnitude of the opportunity that the EV charging service industry holds. With pretty much every car manufacturer being “forced” to start producing EVs instead of the traditional internal combustion engine (ICE) vehicles and with an increased demand for EV charging. It is not a difficult conclusion to make but it is a clear indicator of where we are moving and where companies have a chance to thrive.
EV charging revenue a +35 billion € market by 2030 in Europe
The multi-billion market around EV charging is developing as EV charging networks are built, operated, electricity distributed and eMobility services are offered to the end-users. Also, substantial energy management business is emerging as EVs are charged at home, work and public.
Now it looks evident that different industries have a huge opportunity in the EV charging market: OEMs, energy companies, oil & gas, EV operators and big tech companies. All these companies will compete for their dominant role in this multi-billion market and use different strategies to be competitive.
OEMs use plug and charge to be the dominant service provider in electric vehicle charging
OEMs i.e. vehicle manufacturers will enter the market by bundling electric vehicles with their EMP (service provider) packages. The first company to do this was Tesla and its Supercharger network. Owners of Tesla EV could fast charge their vehicles at Tesla’s own Superchargers. This strategy proved to be effective, especially in the early days as there were limited other charging available. We see other OEMs pursue the same strategy and promote technologies like “Plug and Charge” to bundle the vehicle with OEM’s own EMP service. If OEMs are successful with this plan, they well could be the #1 service provider in public electric vehicle charging, maybe also at home and work. Of course, this will create an extremely fragmented market if all OEMs will have their own service provider.
EV operators are fast to react to customer needs in electric vehicle charging
EV operators are “purpose-built” companies that focus on providing EV charging services. They might focus on a specific segment e.g. to provide home charging service only. The advantage of EV operators is that they don’t need to compromise their strategy and actions in pursuing their business targets in EV charging service. EV operators often lack the financial capabilities of larger corporates but counterweigh this by being faster to react to customer needs and market development.
Energy companies should bundle EV charging with energy management and utilize exiting customer base
Energy companies should offer electric vehicle charging services to their customer base and provide a smooth end-user experience. This means providing EV charging service with existing user interfaces, "one bill” and managing the business with existing business systems. Since most EV charging happens at homes and most energy companies have consumer customers it is only natural that home charging is their strong area. The next step for energy companies is to build new revenue streams from energy management, a substantial and highly lucrative service. We see that the only way energy companies can be competitive in the EV charging market is by bundling electricity, EV charging and energy management to services that add value to the end-user.
Oil and gas are operating an evaporating business, and are now building EV charging offerings and energy stations
Petrol stations will gradually see their business evaporate as consumers switch to electric vehicles. The era of burning fossil fuels, emitting CO2 and pumping gasoline at the petrol stations is coming to an end. The speed of this transition is accelerated by regulators. Oil and gas companies have a substantial customer base and optimal locations for electric vehicle charging i.e. energy stations. Utilizing these assets, oil & gas companies might have a substantial role in eMobility. However, it might require EV market to mature a bit, until big data companies consider entering EV charging market.
Big tech companies with customer access and disruption capabilities to enter EV charging
Big tech companies have disrupted many traditional industries and they could do the same with eMobility. Big tech companies have assets they could use to disrupt eMobility. The assets are a huge customer base, maps, payment and experience to monetarize the data. Big tech companies could launch easy to use and free services to their customer base and take a big part of the eMobility value chain.
Market research about energy companies’ electric vehicle service offering
We conducted market research that looked at energy companies’ current situation with EV charging services and how prepared energy companies are for the competition from other energy companies and from other industries. We focused on European energy companies that already offer EV charging services.
What did we find out?
In short, we found that energy companies still need to develop their business, systems and offering in order to be competitive in the fast-growing EV charging market.
When we asked about energy companies’ capabilities regarding EV chargers, installations, and maintenance services a big majority of our respondents stated that they already provided these and were happy with their current situation. Furthermore, the data showed that if energy companies had one of the previously mentioned products, like chargers, they also offered installations and maintenance services.
However, when it came to system integration and software, energy companies’ situation was more alarming:
- Our findings showed that most companies (66%) were not able to integrate current business systems and customer base with their EV charging system and offering. This means energy companies are forced to use different systems for their existing business and different systems for their EV charging business. Therefore, these energy companies are poorly prepared to bundle electricity sales and EV charging services, and are no ready to build new revenue streams from energy management.
- Furthermore, a big majority (89%) of companies stated that they can only use a limited number of charge point manufacturers, in other words, they are in a vendor lock. An alarming situation in a market where technological development is still fast.
The research shows that energy companies are not well prepared for the competition in the electric vehicle charging market. The need for better eMobility integration platforms and interfaces is obvious. This is where companies, like eMabler, will be able to provide clear value in a booming market.
Do you want to know more?
Download the free executive summary about our research that dives deeper into the subject of this article or get in touch with eMabler directly.
Jonathan Eriksson - Guest writer
Thank you for reading my article, I hope you enjoyed it. If there are any questions regarding the market research or you want to discuss the subject in general, feel free to reach out to me on LinkedIn.
Based in Helsinki, Finland. We believe that eMobility is the way forward, having worked in the industry for over a decade and we see a great boom in eMobility. We’ve also seen many platform providers develop closed ecosystems and realized that there’s a need for a more flexible solution that focuses on end-user experience.
That’s why we decided to build an open platform that lets you integrate your EV charging data into any existing systems, please contact us.