Are EV Charging Stations Profitable?
With Congress awarding tax incentives, installing an electric vehicle charging station at home has just gotten more enticing.
Businesses are also entitled to a tax credit of up to 30% of the total cost of hardware and installation under the Inflation Reduction Act.
The fine print varies per state, so be sure to check out this comprehensive guide on Federal and State EV Charging Tax Credits, Incentives, & Rebates so you'll have an idea of how much you can claim.
Now, for all the profit-minded people out there, you might be interested to know whether it's time for you to have a charging infrastructure built on your property.
After all, there's an aggressive push to completely abandon gas-powered vehicles in favor of electric vehicles.
And with high demand comes a big window of opportunity.
Can electric car charging be a business?
The simple answer is, yes.
Though most EV drivers opt to charge at home, they're limited to charging rates of about 3 to 46 miles of range per hour. That's if they have Level 2 EV chargers installed.
This might be enough for EV owners who only need to top up for shorter daily commutes.
But this changes once you take into account longer commutes and road trips.
If you really want to kick it up a notch, DC fast chargers can charge your EV in approximately 30 minutes. But given the installation and maintenance costs (around $50,000), they aren't exactly suitable for private use. However, they are good for public use - which presents a huge opportunity for those looking to turn a profit.
EV charging stations can follow the same business model as gas stations.
You can just simply charge vehicle owners for the electricity they use.
But there are other ways charging stations can earn money.
How to generate consistent revenue from EV charging
Noticed how gas stations in North America are almost always right next to convenience stores?
In fact, most gasoline companies even have their own chains of stores, like Shell Select and Chevron ExtraMile.
That's no coincidence. Gas station owners actually make very little money from selling gas. Most of their profit comes from offering food and drinks in their convenience stores.
Following this business model, fast charging stations not only can earn from selling electricity to EV owners but even more so from simultaneously operating a convenience store or a restaurant.
How to boost customer spending with EV charging
EV chargers are found to attract customers and significantly increase the amount of time customers spend in commercial establishments.
And increased foot traffic means increased sales.
Electric cars can take less than an hour to fully charge at fast charge stations.
However, the duration will still be contingent on the battery size. This implies that commercial customers will have approximately one hour to spare, whether it's for grabbing a meal or doing some impromptu shopping before embarking on an unplanned road trip.
If you're planning on setting up your own public charging station, keep in mind that you're not only selling electricity but also the experience.
Busted restrooms, lack of food options, and outdated facilities could drive away both old and new customers.
And if there's no foot traffic, there's no profit.
How to earn revenue with EV charging at retail locations
Retail locations like supermarkets, malls, and shopping centers are now equipped with EV chargers (often Level 2).
The thing is, you can't really add that much mileage to your car on a mere 20-minute grocery run, especially using a Level 2 charger.
What you can do is analyze what charging level is best-suited for your business model.
Considering this aspect, Level 2 chargers are well-suited for locations such as shopping malls, stadiums, venues, and certain restaurants, where visitors typically spend several hours or more. With Level 2 chargers, patrons can expect a range of approximately 25 to 50 miles per hour of charging, making it convenient for them to charge their electric vehicles while engaged in other activities.
But for businesses located along major highways, like convenience stores, it's safe to assume that rapid chargers are the way to go.
DC fast chargers (or Supercharging network for Tesla owners) promise up to 150 miles of range per hour.
And did you know that Tesla drivers can even access DC fast chargers using the Lectron CCS to Tesla Adapter? That means EV drivers with any charging standard can get a charge, and you can serve 100% of the EV market!
As I previously mentioned, owning charging stations means providing an experience consumers would consider going back for.
This may come in the form of excellent customer service, well-maintained facilities, and shopping options.
Take this full-service auto and tire center, for example.
Aside from the services it offers, it also has a store stocked with local products and hot food options that are not commonly found in other gas stations.
And if you're thinking on a much larger scale, you can even launch a loyalty program for frequent shoppers and chargers.
Understanding different EV charging pricing strategies
There are several pricing strategies that you can implement to make your EV charging business profitable.
Cost per kWh. EV owners only pay for the amount of energy they use (i.e., $0.15 kWh). You can also mark it up according to how you see fit (i.e., $0.10 kWh). To put that into perspective, a car that used 30 kWh will have to pay:
30 kWh x $0.25/kWh = $7.5
Flat rate. Charging a flat rate means drivers will pay based on time spent charging. If you set your hourly rate at $3.00/hr and the station is charging at 8 kW, a car needing 30 kWh will take:
30 kWh/8 kW = 3.75 hours to recharge.
This means the driver will have to pay around:
3.75 hours x $3.00 = $11.25
Combined system. Implementing a combined system isn't a common practice, but this only means you combine the two forms of billing to charge your customers. For example: $0.35/kWh + $0.20/hour. This will reduce the hourly rate while ensuring that they don't wait for hours to get their cars fully-charged.
EV charging stations alone don't generate high profits, but the indirect income they bring to commercial establishments could be a reason to consider them a good investment. For example, being in close proximity to restaurants and shopping centers could drive EV owners to avail of your services while dining in or doing a grocery run and vice versa.
Yes, owning an EV charging station is a great business opportunity. Though you can't expect outrageous amounts of profit from charging itself, you can funnel in foot traffic to your store. And more foot traffic means more selling opportunities.
EV charging stations could make profits, but you'll have to invest in infrastructure. Luckily, the Inflation Reduction Act entitles you to up to a 30% tax credit for the hardware itself as well as installation costs. How much the station earns will depend on the form of billing you choose and the number of customers you attract. Electricity rates in your area will also be a factor, especially if you're charging per kWh.
There is high demand for EV charging stations, especially in areas where public charging stations are few and far between. And with an aggressive push to phase out internal combustion engine vehicles in the next decade, you can expect that demand will continue to increase.