The United States is lagging behind on building EV charging stations. If it doesn’t catch up, it could spell trouble for the federal government’s push to clean up greenhouse emissions by boosting electric cars: Worries about charging are one of the main reasons drivers say they’re not ready to go electric.
One of the biggest challenges for building more charging stations is that — like gas stations — they tend to make tiny profits or lose money, according to Alan Jenn, an assistant professor at the University of California at Davis who studies electric vehicles.
But, he said, charging stations can borrow the business model that has made gas stations ubiquitous: Sell fuel at a loss as a way to get people to buy snacks, drinks and other items.
A study published last month in the journal Nature found that charging stations boost sales at nearby businesses. Shops, restaurants and hotels within about 300 feet of an EV charging port see sales increase roughly 3 percent compared to similar businesses that don’t have a charger nearby, according to the MIT-led research team. That adds up to several hundred dollars of extra revenue at each store every year.
“This number may seem small at first glance, but if we accumulate all the surrounding businesses, the number is quite substantial,” said Yunhan Zheng, a postdoctoral associate at the Singapore-MIT Alliance for Research and Technology and the study’s lead author. Each year, the extra sales at all nearby businesses are worth about a tenth of the cost of building a charging station, Zheng estimated.
More ways to make money
Today, there isn’t much money in public charging stations. Just 1.2 percent of U.S. cars are electric, according to Energy Department data, and many EV drivers charge at home. So even though the country will need more charging stations in the future, a lot of public ports don’t get much use right now.
“You can’t survive on just selling electrons, even with much higher utilization of chargers than we’re seeing today,” said Jenn, who analyzed 1,300 fast charging stations in California and found that, on average, they make “nowhere near” enough money to pay back the cost of construction within three years.
But the Nature study suggests there are other ways to keep charging stations afloat aside from government subsidies — including $7.5 billion in federal funding to build chargers that have been slow to materialize — and raising prices for EV drivers, which would make electric cars less affordable. Shops, hotels and restaurants could play a bigger role in building chargers as a way to lure in customers.
“Understanding that the value is there may make the businesses more willing to cooperate with infrastructure deployment,” said Jenn.
Many malls, grocery stores and hotels already set aside space in their parking lots for EV charging because they expect to see bigger sales, according to Albert Gore, executive director of the Zero Emission Transportation Association, an industry group that promotes EVs.
Usually they just lease the space to charging companies such as EVGo or Electrify America, which build and operate the plugs. But as more businesses recognize the sales benefits of having charging nearby, Gore said, building owners are starting to install their own charging ports — usually the slower Level 2 chargers that are much cheaper and easier to build than fast chargers.
Just as businesses offer free parking to attract customers, he said, they may offer cheap charging to get people in the door.
Charging in California
Although charging companies often claim their stations are good for nearby businesses, the Nature study is the first to thoroughly quantify their impact. “This is definitely first of its kind,” said Jenn, who was not involved in the research. “I think it’s tremendous.”
The scientists used data on credit and debit card transactions, along with a public database of EV charging stations, to estimate the effect 4,000 charging stations had on 140,000 nearby businesses in California. The small sales increase they found holds true across tens of thousands of businesses in rich and poor neighborhoods.
They focused on California, where 3.4 percent of cars are electric, because it’s the state with the highest EV adoption rate in the United States. As more people begin to drive EVs, Zheng said, the sales boost for businesses near charging stations may increase.
