How EVs Are Forcing A Relationship Change Between OEMs, Energy Suppliers, Governments
But for all of the activity surrounding electric vehicle development, the efforts are meaningless unless drivers have a means of powering them. That requires charging infrastructure — an expensive proposition considering automakers’ proprietary connectors and the number of routes in need of infrastructure.
Where The Watts Are Coming From
The electric age is forcing a shift in automakers’ relationships with power station vendors.
What Marathon Oil Corporation (NYSE:MRO) and Exxon Mobil Corporation (NYSE:XOM) have been for gas-powered cars, Blink Charging Co (NASDAQ:BLNK) and General Electric Company (NYSE:GE)’s GE WattStation are becoming for EVs.
The 21st-century “gas station” has also opened doors for new owners and operators.
In some cases, automakers like Tesla control expansive, proprietary networks that generate recurring revenue. Manufacturers like Blink collect station charges. Consumers install home stations. Building managers run them on-site. And in the greatest deviation from the traditional U.S. transportation industry, municipalities are venturing into vehicle power operations.
If the electric paradigm had applied to the gas era, it would have resulted in Ford-branded gas stations, in-home gas stations and government gas stations.
Some fuel-powered cars would have only been fillable through their automaker’s proprietary pump system.
In the EV world, Tesla’s vehicles are only compatible with Tesla plugs, and Nissan and Mitsubishi also use a connector distinct from common standards.
A Public Infrastructure Model
Charging as a public utility is particularly interesting, as governments never really competed with gasoline distributors. Apart from a recent run in Somerset, Kentucky, which opened the U.S.’s first city-run retail gas station, governments don’t control car fuel.
Now, the government is directly involved in the business of charging infrastructure.
Kennesaw and Decatur, Georgia, used tax funds to install public ports; Corona, California, used a state grant to build a network; Charlottesville, Virginia, created a grant for private installation; Columbus, Ohio, is developing a similar financial incentive program; and Sarasota, Florida, partnered with an energy firm to cover the costs.
Some cities offer charging free, while others concede revenue to the station installer, and some charge consumers to recoup installation costs. In many cases, the services directly compete with private chargers.
With about 20 states offering installation incentives — another perk never afforded gas stations — experts aren’t expecting any pullback in government involvement.
“The enviro-religious community has been very active in getting subsidies and such for electric vehicles,” said Robert McCormick, economics professor and dean of the Clemson College of Business.
“While it’s hard to say whether they will stay potent and effective as the number of such cars grow, my best guess is yes. Taxpayers will be enticed to help pay for the direct and indirect costs of electric cars. I can’t see why that might end.”
James Moore, director of the transportation engineering program and systems architecting and engineering program at the University of Southern California, said government relationships with auto power providers shouldn’t change with the transition from internal combustion vehicles to EVs.
“So far as I know, the vehicle power industry is the electric power industry,” Moore said. “The introduction of electric vehicles into the fleet will present public utilities with new decisions, and the government may feel some inducement to fiddle with rates as a result, but hopefully the state will resist."
In the long run, Moore said he expects the market to provide charging stations that react to the same forces that drive gasoline supply.
Regulators might also become more involved in setting infrastructure standards, Moore said.
“Charging infrastructure may be mandated in building codes, like parking requirements, but in general there is no reason to inject the state into provision of a service the market is equipped deliver,” he said. “This likely will not prevent the state from trying to inject itself.”
Clemson's McCormick expects any public involvement to remain at the state, county and city levels rather than federal.
Photo courtesy of Tesla.
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.