Key Points
- Electric vehicle charging infrastructure must grow fast to meet U.S. demand – from the current 35,000 charging ports to around 32 million.
- Alongside the high-powered highway charging network, a diversity of smaller operators are now serving local markets.
- Innovation in this space will be driven by increased charging speeds.
- A diverse ecosystem is driving the growth of this market, supported by federal funding.
Infrastructure will drive EV adoption
On a recent 1,200-mile road trip through several states, Chris Dendrinos saw plenty of signage for gas stations, but none for EV charging stations. “The common misconception is that the access does not exist,” he says. “There’s no advertising along the road system – adding that would go a long way in helping to educate the consumer.”
In fact, almost 35,000 charging ports are now available in the U.S. That number is set to soar, completing the seamless network required to service EV drivers and prevent “range anxiety” among potential adopters.
In his RBC Elements research report, Anatomy of an EV Charging Network, Dendrinos estimates that 32 million charging ports will be needed to support the EV transition.
“At the end of 2022 there were about 3.4 million EVs on the road; we forecast that number to grow to about 36 million in 2030.”For now, the number of ports per square mile is much greater in markets with the highest EV adoption levels: “Infrastructure is leading the market to drive additional EV adoption.”
“At the end of 2022 there were 3.4 million EVs on the road – we forecast that to grow to 36 million in 2030.”- Chris Dendrinos, Clean Energy Analyst, RBC Capital Markets
Small operators sign up
At present, around 75% of charging is done by consumers at home. That proportion is likely to decline over time, as more EVs are adopted by drivers who lack garage space for their own charging ports.
In a decentralized network, publicly available charging stations can take several forms. Outside the fast-charging highway network led by Tesla, other providers are partnering with apartment buildings, shopping centers or restaurants. Gas stations and retail stores are also buying charging stations as a way to drive trade.
“The entry cost to building out charging infrastructure is actually quite low,” notes Dendrinos. “That creates an opportunity for a large number of small players to develop networks in markets they know.”
“The entry cost to building out charging infrastructure is quite low – that creates an opportunity for small players.”- Chris Dendrinos, Clean Energy Analyst, RBC Capital Markets
Quest for speed
Currently, most public charging is taking place at workplace garages and retail centers, where dwell times are longer. The highway network is more expensive but offers faster charging.
Future innovation will be focused on more efficient charging across the board, driven by drivers’ perceived needs. While most U.S. drivers travel only around 40 miles a day, they want EVs capable of being charged quickly to cover a much longer distance.
“In order to get people over the hump, you’re going to have to meet them where they are,” he says. “That means charging needs to be extremely fast – similar to gas station fill-up speeds.”
“Charging needs to be extremely fast – similar to gas station fill-up speeds.”- Chris Dendrinos, Clean Energy Analyst, RBC Capital Markets
Growth opportunity
While grid challenges may limit development at some point, Dendrinos sees ample electricity capacity for the development of new charging stations for the foreseeable future.
That leaves the way open for manufacturers, operators and investors: “There is a diverse set of stakeholders, with differing motives, that are helping to support this large infrastructure build-out.”
Development will be fueled by $7.5bn in National Electric Vehicle Infrastructure (NEVI) funding, which is being allocated to states for distribution. “So the growth opportunity is there to continue expanding the network as EV adoption increases,” Dendrinos concludes.
