EV charging infrastructure update (part 1): More speed, more positions, more power

What a difference two years makes.

2019 saw the biggest expansion of public charging infrastructure for EVs in the UK to date, and 2020 wasn’t a bad year either, all things considered. To cap off these two good years, in November 2020 the UK government announced a Ten-point plan for a green industrial revolution to support its goal for net zero emissions by 2050. The plan outlines an end to the sale of new petrol and diesel cars from 2030 onwards.

So, it seemed a good time to update the report Deloitte published in May 2019, Hurry up and... Wait, which looked at the roll-out of a public electric vehicle (EV) charging infrastructure to 2040.

This first article of two reviews activity since we last published and provides new content on the funding coming into the sector. The second article will update our model, moving it forward ten years to 2030, and consider upgrades to the distribution infrastructure that will be required.

Overview


The stock of EV public charging infrastructure has nearly doubled in the two years to the end of 2020. The number of devices (the equipment that goes into the ground) increased to 20,961, up from 11,083 at the end of 2018. The number of connectors (the cables that come off the devices and plug into the car, usually between one and three per device) went up from 19,118 to 37,895. And there were 13,861 locations at end-2020, compared to 6,669 at the end of 2018. See Figure 1.

Figure 1. Growth in EV charging infrastructure, 2018 vs 2020

Source: Zap-Map

In 2019 new public charging infrastructure was being deployed at a steady pace, but utilisation of the public network was low—and unlikely to be profitable for the increasing number of companies getting into the market. Approximately 90 per cent of EV purchasers charged their cars at home or at work.

2020 however was a particularly noteworthy year for EV sales, despite it being the worst year for car sales since 1992. Total car sales fell by 29.4 per cent or 600,000 units; but sales of battery electric vehicles (BEVs) were 108,205 units, an increase of 185 per cent compared to 2019, and sales of plug-in hybrids (PHEVs) rose by 91.2 per cent to 66,877 units. Together BEVs and PHEVs made up more than 10 per cent of total car sales in 2020. See Figure 2.

Figure 2. New car sales, 2019 vs 2020

Source: The Society of Motor Manufacturers and Traders (SMMT)

EV sales were boosted by two factors: a reduction in the benefit-in-kind taxation of EVs to zero, and the introduction of a greater range of models covering all segments of the car market. Buyers were now able to find a model that better suited their preferences, at a price point much closer to those for petrol and diesel cars.

More speed


Slow chargers (3-6kW AC) continue to make up about 20 per cent of total connectors installed, due largely to the increase in on-street (mainly, lamp post) charging. This segment currently represents about 4-5 per cent of the public market by use and is estimated to grow to about 14-15 per cent by 2030, as more people without access to charging at home or work seek to charge close to home.

The largest segment by number of connectors is Fast chargers (7-22kW AC). (It’s probably time for some new nomenclature, given the increases in charging speeds!) These make up the bulk of the ‘Around Town’ segment, and include chargers located at workplaces, car parks and other places where people are expected to ‘dwell’. Most EVs on the road today can take this speed of charging, and Fast devices have relatively low installation costs, especially when it comes to site preparation and grid upgrades.

Rapid charging (50kW DC/43kW AC) is growing at a steady rate of about 2,000 new connectors per year. These devices have higher costs associated with their increased power rating yet can still require long times to fully charge newer EVs with bigger batteries. They seem to be at risk of being overtaken by even faster chargers: a recent article in Forbes referred to 50kW DC as ‘fairly fast’.

The Ultra rapids (100kW+) are the fastest-growing segment—up by 65 per cent in 2020 (from 476 connectors in 2019 to 788). From their first installation in 2014, it has been almost exclusively Tesla providing charging at this speed, but a number of other providers, such as BP Pulse, Shell Recharge, IONITY, and InstaVolt have opened ultra-rapid charging hubs since 2019. See Figure 3.

Figure 3. Number of public charging points by speed (2011-March 2021) (cumulative).

Source: Zap-Map

More positions


Installation is very patchy, depending on the area. Greater London has by far the most public chargers. The city’s wealth and dense population (meaning that many car owners do not have access to off-street parking/home charging) make it an attractive market. The South East (particularly around Brighton and Hove) and Scotland are a distant second and third respectively in terms of public charger numbers. Northern Ireland and the North West have the fewest. An interesting piece of research by Field Dynamics assessed the number of ‘on-street’ households (meaning those that do not have access to off-street parking, and hence home charging) within a five-minute walk to some form of public charging. See the map below for a detailed look by local authority.

Figure 4. Public charging density by local authority.

Source: Field Dynamics

Something for everyone in this market


We looked at M&A transaction activity in EV charging hardware and infrastructure for European or UK targets between 1 January 2017 and 31 January 2021. We ignored acquisitions of exclusively software companies (as this would cast the net too wide and capture M&A activity not related specifically to EVs). Our findings cover 54 deals in the four-year period.

Transaction numbers increased from five deals in 2017 to 16 in 2020.

The UK was the top spot for acquisitions, with 20 transactions in the period covered. Germany came second and the Netherlands third. Of those deals for which data was available, six of the 10 largest were for UK-based and three were for Netherlands-based targets. See Figure 5.

Figure 5. Top markets for EV charging-related M&A transactions, by geography.

Source: Capital IQ, Mergermarket, Orbis, Pitchbook, press articles

More power


Among companies making deals in this space, financial investors are the largest, followed by utilities, oil & gas majors, industrial conglomerates, automotive manufacturers and independents. See Figure 6. Large integrated oil & gas majors made a number of acquisitions in the UK: in September 2020 Total purchased Blue Point London, the owner of Source London, the capital’s largest charging network (and fifth largest nationally, with a 6.8 per cent market share: Zap-Map). And in January 2021 Shell acquired Ubitricity, the UK’s largest network (14.2 per cent market share: Zap-Map) and a specialist in lamp-post charging. Across Europe, a few serial investors stood out: Total, EDF and Statkraft each made more than three acquisitions over the four years we looked at.

Figure 6: Investors by type (number of deals).

Source: Capital IQ, Mergermarket, Orbis, Pitchbook, press articles

So what does it all mean?


2019 and 2020 have been a good two years, with the charging infrastructure almost doubling in size. But the rate of increase to 2030 will need to be much greater if the UK is to meet its targets. Our expectation is that EV sales and EV public charging provision will leapfrog each other over the next few years.

The market for car sales is still quite fragile, and demand is very much dependent on tax breaks and subsidies. If any of the incentives are removed before EV price parity is reached, growth in the market could stall.

With the UK government’s November 2020 announcement of a green industrial plan, Prime Minister Boris Johnson reaffirmed a commitment to accelerate the rollout of charging infrastructure in England, with £1.3 billion to be made available through a number of existing and proposed funds, including the Charging Infrastructure Investment Fund and the Rapid Charging Fund.

Private sector investment has responded to these signals by providing finance for the EV charging infrastructure over the past four years. But a lot more will be needed. At present, not all segments of the market are commercially viable, and this is likely to remain the case for a while. Therefore, other funding models will be needed, such as combinations of international financial institutions, national and local governments, equity providers and, increasingly, debt providers and banks.

Yet as the market expands, so too do the opportunities for players in the space. The variety of the value chain is reflected in the investment opportunities. We are seeing a broad range of investors come to the market, from the ‘venture’ types seeking higher risk and higher returns, to more conservative ‘infrastructure’ types.

The longer-term trend is not in question: zero-emission vehicles will make up an increasing proportion of vehicles on the road. And the provision of public charging infrastructure will continue to be an essential third leg, along with vehicle price and battery range, in accelerating the demand for e-mobility.

Next up

The second article provides an update to our investment model and looks at requirements for upgrading the grid.

Read more

Get in touch

Justine Bornstein

Senior Insight Manager

Logan Kube

Energy Advisory director

Mark Lillie

Partner - Global Tech Strategy & Transformation