The war to charge your electric car is powering up

Companies are adding thousands of chargers across the country at shopping malls and along interstate highways. Drivers park at a charger and plug the connector into their electric cars until the batteries are juiced up.

Whether the companies—mostly startups—can make money from this business isn’t entirely clear. For now they are feverishly experimenting with a mix of strategies and hoping some of them will show promise. One is to charge drivers for powering up by the minute or the kilowatt-hour (kWh). Another is to turn chargers into ad billboards by building large screens into them. And yet another is to get businesses to pay for charging equipment to be installed on their property as a way to attract more customers.

Tesla’s decision to build an extensive charging network has helped establish Elon Musk’s carmaker as the king of the U.S. electric vehicle market. The company offered unlimited free charging at its fast Supercharger stations to early buyers of its cars but now charges a per-minute or per-kWh fee.

What is clear is that the challengers are aggressively spending to install charging stations. And investors have been happy to pour money into the nascent industry, with a focus on winning over customers. “Mostly, we are all trying to build fast to meet rising consumer demand. It’s less about competing with each other right now, and it’s more about just getting more infrastructure deployed,” says Cathy Zoi, CEO of EVgo, one of the many companies busy installing hundreds of new chargers every year.

Charging companies hope to capitalize on the huge projected growth in electric and hybrid car use. Although the number of EVs sold in the U.S. fell 10% last year to 295,000 in a COVID-hit market, this figure is expected to grow sharply over the long term. U.S. EVs sold annually should top 1 million by 2025 and 3 million in 2030, according to Platts Analytics.

Today, around 80% of car charging is done at home, but “range anxiety”—the fear of being unable to recharge on a long road trip—is dissuading many drivers from switching to clean energy. That’s why a large charging network is key to unleashing demand for electric cars.

At home, a Level 1 charger, which can be plugged into a standard household 120V socket, adds just two-to-five miles of range per hour of charging, while a Level 2 charger, which runs on 240V, adds up to 35 miles of range hourly.

Public charging stations typically have Level 2 chargers or DC fast chargers, which can add 60-to-80 miles of range in 20 minutes, and are therefore the best option for a fast top-up. The amount of power each car can take also varies, complicating the planning process.

In the U.S., there were just under 100,000 public chargers in 2020, most of them Level 2, according to the U.S. Energy Department. President Biden hopes to add far more nationwide. In throwing his weight behind the Paris climate agreement, he said he would invest $7.5 billion in a national network of 500,000 charging stations by 2030.

Nevertheless, Ryan Fisher, senior associate at energy research firm BloombergNEF, describes Biden’s goal as “unambitious.” He expects the country will need three times as many public chargers to meet the demand.

ChargePoint has the most public charger connectors in the U.S. with nearly 40,000, according to BloombergNEF, followed by Tesla at 18,400, and SemaConnect at 4,900. Rated on fast chargers alone, Tesla leads with a 55% market share.

Michael Farkas, CEO of Blink Charging, which both sells chargers and operates its own network, says a “land grab” is underway to secure the best locations. When it comes to public chargers, his company prefers to put them in locations that are used around the clock, like hospitals and parking garages. “It’s all about owning that location, having the rights to that location for a long period of time under exclusive contracts,” Farkas says.

As for making a profit, that’s not Blink’s top priority for now as it instead focuses on growth. The company lost $7.4 million in the first quarter on $2.2 million in revenue, most of which came from equipment sales.

Unlike Blink, ChargePoint doesn’t make money from electricity sales, but instead from selling chargers to homeowners and businesses, in addition to software subscriptions. As CEO Pasquale Romano puts it, every business with a parking lot is a potential customer. “There’s a lot of parking lots,” he says.

Charging stations, he expects, will make money much like gas stations do today. Most profits will come from the convenience stores and restaurants on-site rather than from topping up cars.

Still, ChargePoint lost $197 million in its last fiscal year on revenues of $147 million.

EVgo, which specializes in fast chargers, is pushing yet another strategy as it expands its 1,500-charger network. The company, which forecasts losses of $58 million this year on $20 million in revenue, pays for charging stations to be installed at grocery stores and other businesses, while it keeps the money from selling electricity.

Adding DC fast chargers, complex pieces of equipment, doesn’t come cheap. A single one costs about $110,000 to install, EVgo’s Zoi says, about 20 times the cost of setting up a slower Level 2 charger.

Volta Industries, another charging company, takes a different tack. It lets drivers fill up for free at its Level 2 chargers, relying on revenue from ads that play on the 55-inch digital screens affixed to its equipment.

Whatever the financial challenges, car charging is a hit with Wall Street. A number of the companies have recently gone public or plan to through a merger with a so-called SPAC, a speedier alternative to a traditional initial public offering.

EVgo went public in July, while ChargePoint did so earlier this year. Volta Industries and Spanish firm Wallbox are set to follow.

Instead of building their own charging networks, automakers like General Motors and Ford have partnered with charging companies. By giving their customers access to big recharging networks, automakers hope to make their cars more attractive to buy.

For example, GM and EVgo agreed last year to add more than 2,700 fast chargers in the U.S. through 2025. At the same time, Ford’s partnerships give its car owners access to 63,000 connectors across North America. 

Oil companies are also starting to put the pedal to the metal in electric car charging, hoping to stay relevant as electric cars gain at the expense of gas-powered ones. Shell aims to grow its global network from 60,000 charge points today to 500,000 by 2025, while BP eyes more than 70,000 by 2030.

In the U.S., Shell also bought charging software firm Greenlots in 2019, while EVgo worked with Chevron to install fast chargers at some California gas stations.

Still, the charging landscape is complicated by the incompatibility of charging equipment. All electric vehicles can charge slowly using a standard plug. But when it comes to fast charging, there are three different connectors. Many stations offer a choice, and Tesla drivers can use these chargers with an adapter. But for now, Tesla Superchargers in the U.S. only fit Teslas.

That may soon change, though, as Tesla CEO Elon Musk tweeted in July that Tesla would open its Superchargers to other electric car brands later this year. For technical reasons, that is more likely to happen first in Europe, but Musk said that over time, Superchargers would be opened everywhere. That would give non-Tesla drivers access to thousands more chargers, creating new competition for the other charging companies.

Considering the complexity, plus the fact that only a small percentage of U.S. cars are electric, it’s unlikely that traditional gas stations will disappear anytime soon. While some stations may have to shutter eventually, others are ripe to be converted to electric car charging.

After all, says ChargePoint’s Romano, “a hundred years of human driving has told us where people like to stop.” 

Power players

These companies are among the many trying to dominate the nascent EV recharging market.

Tesla

When Tesla launched, there was no national charging network to allow buyers of its cars to go on long trips, so Tesla built its own, initially offering free access. Today, Tesla has more than 25,000 fast chargers worldwide. Though it added charging fees in 2017, Tesla insists Superchargers will never become a profit center.

ChargePoint

Founded in 2007, ChargePoint sells car chargers for homes, businesses, and commercial fleets that come with subscription software enabling bigger customers to manage charging vehicles themselves. A mobile app connects drivers with charging stations.

Blink Charging

Blink designs, makes, and owns car charging stations. In addition to selling power to drivers at its public stations, the company sells chargers to homes and businesses.

Volta

Named after Alessandro Volta, inventor of the electric battery, this company has an ad-supported business model that lets it offer charging at many of its stations for free. The company’s strategy is to install its chargers, which have built-in digital screens for displaying ads, at busy shopping malls and grocery stores. 

EVgo

EVgo specializes in DC fast charging, the segment it believes is poised for the greatest growth. The company partners with grocery stores, hotels, and parking lot operators to install its chargers, making money from selling electricity to drivers.

This article appears in the August/September 2021 issue of Fortune with the headline, “The car charging war powers up.”