Investors and automakers agree
the future is electric. Electric cars are very
much in America's future. We still do believe in an all electric
future and we're using this time to accelerate our work. And we believe let's get to all
electric vehicles as quickly as possible. The popularity and success of Tesla
has proven there's demand for electric cars in the U.S. Tesla made up about 80 percent of
electric car sales in 2019, and new competition continues to enter the market
as more countries and states promote the use of EVs. Analysts predict record growth for EVs
in 2021, especially in Europe and China. But in the U.S., electric vehicles
are less than two percent of autos sold annually. Several hurdles remain for the market to
really take off, and one of the biggest is charging. The demand for EVs is
not very high right now. And that's been one of the
biggest discussions is how much infrastructure should we build out compared to
the sales, because everyone's planning for an electric future, but we're not even
close to it being there yet. And consumers know it. In one study, 83 percent of consumers
who would not consider buying an EV said it was because of
battery life and charging anxiety. This is not a simple problem. Transitioning a whole transportation and
energy set from petroleum based all the way to electrification is
not something that's going to happen overnight. We wanted to explore the
current state of electric charging and what needs to happen in order
for electric vehicles to become mainstream. Electric cars are not a new idea and
were invented as far back as the 30s, but it hasn't been until the last
20 years that electric vehicles or EVs have started to gain popularity, thanks
in part to the advancements in battery technology and the push
to reduce greenhouse gas emissions. And when the all electric Tesla Roadster
came out in 2008, it changed people's perception on what electric cars
could be and helped launch and accelerate more EV programs. But a lot of consumers
still aren't making the transition. Consumers are very set in their ways. You have to know how to plug them in. You have to know the range. You have to know what impacts your range
so you don't run out of energy. Last year, 143 new EVs launched across
the globe, and by 2023, IHS predicts over 43 brands will offer an EV. The range of how far our car can
drive on a single charge is improving, but still remains a
concern for some buyers. Tesla's Model S leads the industry with
a range of 402 miles, while other manufacturers can be anywhere from 100
to 250 miles per charge. And Lucid Motors new EV sedan is expected
to have a range of 517 miles. Clearly, the technology has its merits
and that the remaining challenge relates ultimately to the
electric vehicle charging. In 2019, 68 percent of owners said
that there is not enough charging available around their home. There are over 88,000 charging
outlets and roughly 27,000 charging stations, compared to the 156 ,000 gas
stations in the U.S., according to the Breakthrough Institute. There is an anticipated need for 9.6
million EV chargers in the U.S. by 2030. Not all charging
stations are the same. Tesla Chargers, for example, only
work on Tesla vehicles. While most other companies are brand neutral
and can charge any type of EV, there are three
major types of charging. Level one and level two are most
common in homes, workplaces and public charging areas. They charge between two to
20 miles of range per hour. DC fast charging or a level three can
deliver 60 to 80 miles of range in roughly 20 minutes. Not every EV on the market
can handle this type of charge. As more cars come out, most
are working towards higher voltage charging. We're not going to to charge electric
vehicles in exactly the same way that we refuel gasoline vehicles, the
vast majority of electric vehicle charging so far does and will
continue to take place at home. But of course, this
isn't applicable for everyone. Not everyone has perhaps their own car
or their own garage in which to charge. California is
somewhat different. They have a lot of charging stations,
which is why Tesla sells so well there. But I mean, in the heartland
of America or anywhere else, it's very difficult to find
EV charging station. Tesla has set a high bar
when it comes to charging. Its supercharging network has created what
Morgan Stanley referred to as a "competitive moat" over other
EV charging companies. A majority of the DC
fast chargers in the U.S. are Tesla Superchargers. GM's philosophy. They have not wanted to invest
a lot of their own money to build out their own network. They've instead partnered with different
EV charging startups or companies. Gm announced earlier this year
that it plans to spend 20 billion through 2025 on its next
generation, all electric and autonomous vehicles. It unveiled the Cadillac Lyriq,
GM's all electric Hummer and acquired an 11 percent stake
in electric truck maker Nikola. But the company is
also getting into charging. GM announced a partnership with EVgo in
July to build more than 2,700 new fast chargers across the U.S. in the next five years. GM and EVgo declined to announce
how much it plans to invest. When we're looking at strategies
associated with bringing infrastructure to light, we really want to
enable that infrastructure for all customers. And so part of that is also
enabling a business model that works. And so partnering with a group like
EVgo really helps us establish those business models where things like utilization
and other aspects of the business can come to market. Many automakers have decided to partner
with private companies rather than take the route Tesla did and build
out their own networks, Ionity is a joint venture made up of several automakers
that aim to add more charging stations throughout Europe. Other automakers are not necessarily going
to follow the path that Tesla have taken because it is quite unique
and it's certainly one that we should admire and learn from the
path that they've taken with the infrastructure that
they've installed. I think what Tesla did great was they
realized from the off that the high power, fast charging capability on key routes
was the bit that they would need to implement in order to convince
potential consumers to buy a Tesla. Other automakers are realizing
having reliable, widely available infrastructure can help sell cars. The bottom line is, if you want those
vehicles in your backyard, you got to have the charging. The infrastructure has
to come first and customers have to see that infrastructure start
to be comfortable with it. Several key players have emerged to fill
in the gaps across the U.S. Chargepoint says it has 115,000 charging
point globally, most of them in the U.S. Chargepoints investors include Daimler,
BMW and the venture arm of Chevron Corp., among others. It plans to create as many
as 2.5 million chargers by 2025. Electrify America was created as
part of Volkswagen's diesel emissions settlement with the U.S. and California. As part of the settlement,
it will spend two billion by the end of 2026. We have
470 sites in operations right now. The distance that we have between
the sites, it's already in average, about 70 miles. And already today we have 96
percent of Americans, they actually live within 120 miles from our site. So we are young, actually,
but we are growing fast. The company started with a focus
in California and is now expanding throughout the U.S. It sees Tesla not as competition, but
as an example of what its network could be. Tesla is a reference for
us in terms of charging experience. And the good news , we
are working with these companies. We are building some sites together and
we are using Tesla batteries to mitigate the cost of the charges on our
site, one of the 20 sites actually at the moment. Several other companies
in the space are taking different approaches. Volta, for example, uses
its chargers for digital advertising, allowing users to recharge for free. There are also mobile charging companies
like Spark charge and FreeWire, whose business model is
a portable approach. FreeWire has received investments
from Volvo and BP. Envision is taking a solar approach. And even Shell is
investing in the space. Bigger oil and gas companies
are getting into the space. They've invested in a big U.K. network Chargemaster. We've seen the same with Shell. They've taken a significant stake
in NewMotion in the Netherlands. I guess some of the investments in
these in these companies at this stage is relatively minor, given the given
the funds that these companies have. So it could be argued that they
are making these investments to see a future for themselves, whether
EVs thrive or not. Developing infrastructure for electric charging
is complex, companies need to decide how much power they need,
the kind of chargers they're going to install and where to install them. Do we need a charging
station in every corner? I would say no, that we don't. And we don't need as many electric
vehicle charging stations in the public domain as we need at
gas stations to date. Defining exactly how much we
need is a huge challenge. What's greater and really neat about
this industry is sort of matching charging times with the use case. Faster isn't always better. Frankly speaking, when you can get out of
the car, plug in at home at night and go to bed and wake up
with a full charge, much like your cell phone, you really can match the
charging speed, the technology and the experience together to really get at
what you're trying to tackle, which is get that customer their range
back as they need it. When we think about faster charging, when
you're out and about, maybe you live in an apartment building and
you don't have access to charging overnight. So putting in charging at
the grocery store, you're going to want to get most of their battery back
in that 30 to 45 minute shopping trip. Electrify America just finished
building a cross-country route which gives users access to its D.C. fast chargers. The company says its
primary focus is fast charging. If you want to serve customers out
there, you know, to bring into the charging station and back
from the road. Well, actually, I believe that
you need to be fast. In the U.S. alone, McKinsey and Company projects
it will cost as much as 11 billion dollars to ensure public
charging stations are as easily accessible as gas stations. The biggest challenges for the charge
point operators now are to continue the build out of their network and
continue to put an increased amount of infrastructure in the ground
whilst maintaining profitability. From that perspective, I think if you
ask them what do they need, they need that advice. But they also would
like to see, of course, legislation from the governments
to promote ownership. Another challenge when building chargers,
especially fast chargers, is how much power companies need to
pull from the grid. A study by the U.S. Department
of Energy found electric vehicles could raise national power consumption by
38 percent by 2050. The amount of energy needed affects the
cost for the customer to calculate the cost per mile of an EV depends
on the battery type and the cost of energy. Energy costs are different from
state to state, and therefore pricing may be less in
Nevada and more in California. Residential and commercial
rates also differ. Tesla charges 28 cents per kilowatt
hour at most Supercharger locations, at that rate, it would cost $21
dollars to fully recharge a Model 3. Charging network pricing models are pay
as you go, monthly subscriptions or in some cases free. They can charge by the
minute or by kilowatt hour. Paying by kilowatt hour is similar to
paying by the gallon at gas stations. California recently banned pay by
minute, stating time is not an acceptable unit of measure for dispensing
and billing electricity as motor vehicle fuel. When it comes
to charging infrastructure, the U.S. lags behind Europe and China, where
the government has made electric cars a huge priority. China recently announced it will spend
almost 2.7 billion yuan on battery charging infrastructure. And we think that the US has somewhere
in the region of 15,000 outlets for charging at somewhere in the
region of 4,000 locations. Compare this to China, who at the end
of 2019 had somewhere in the region of 200,000 DC fast charge outlets, and
that's expected to rise to 270,000 by the end of this year. That's a level of magnitude higher. Of course, the challenges are
slightly different as well. A lot more people are living
in the urban environments in China. Even less people will have
the opportunity to charge domestically. Electric charging infrastructure has grown quickly
in the past 10 years and will continue to grow as vehicles,
ranges with batteries and charging capabilities continue to improve the capability
and also the maturity of the network will evolve. So you going to have and you
will be able to have a bidirectional communication between the cars
and the network. So the sun shines at two o'clock
in the afternoon in California and there's an overabundance of electricity
because the sun's shining. How do we start to match that
opportunity where we say, hey, cars start charging the sun's here and doing that
in such a seamless way for customers where they've forgotten about,
they're sort of charging behaviors. We're managing that with
electric utilities in the background and we're getting cheaper energy. It's better for the grid and making
it more efficient as well as cleaner energy overall. So I think over time,
what you're going to see with charging is essentially it'll become such
a seamless thing that most customers won't even have
to think about it. The question remains, even when we
do add more charging infrastructure, can it boost electric vehicle
sales and adoption? Once we get to that level where the
price is with gas or even lower, the range is with gas or even lower. I think that's really going to be
an inflection point for consumers and people that are early adopters to
come into the EV space.
