Who is well placed to benefit from EV infrastructure boom?
10:53, 27 January 2022
The shift to electric vehicles continues apace, with more than a quarter of all cars made in 2021 in the UK either battery electric (BEV), plug-in hybrid (PHEV) or hybrid-electric (HEV), according to data from the Society of Motor Manufacturers and Traders (SMMT).
Almost a quarter of a million (224,011) zero and ultra-low emission vehicles were produced last year, representing 26.1% of all cars made.
With the push for ending combustion engine vehicle sales in 2030, can the infrastructure for electric vehicles keep pace with sales of EVs?
Which companies will benefit from the rush to build this infrastructure? Will the oil majors have to step up, or will they be the victims of lower oil demand?
Firstly, the challenge ahead in providing the infrastructure should not be underestimated.
In its 2021 report Net Zero by 2050, the International Energy Agency (IEA) forecasts that EVs will go from around 5% of global car sales to more than 60% by 2030.
Massive demand for charging points
The IEA also maintains that the number of public charging points globally for EVs needs to rise from around one million today to 40 million in 2030 – requiring annual investment of almost $90bn in 2030.
To a large extent, the oil majors have already made their move. In 2018, BP acquired Chargemaster and the Polar network, and set out ambitious targets to support EV charging. BP’s ever-growing network consists of over 8,000 charging points, branded as BP Pulse.
As BP gradually shifts its focus from oil and gas to electric power, the British operator is turning into one of the largest providers of charging points in the UK via its Chargemaster subsidiary.
Similarly, Shell established a strong position in the EV infrastructure market when it acquired charging specialist NewMotion in 2017.
Earlier this month, Shell opened its first all-electric vehicle charging hub on the Fulham Road, in West London.
The converted petrol station is the first to be transformed into a Shell Recharge site for electric vehicles only – but many more could follow as the move to EV continues. Oil companies already have suitable sites up and running – typically on busy traffic routes – that can be transformed from petrol and diesel forecourts to electric charging points. There are clearly location advantages.
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New players
But the move to electric charging has and will continue to offer opportunities to those outside the oil industry – especially if consumer preference is for home rather than on-route charging.
Shell and BP both offer home EV charging options, but whereas the retail petrol and diesel market was largely sewn up by the oil mega caps, the electric charging market (which is still developing) is not.
US-based ChargePoint was set up in 2007 – well before EVs had established any sort of a presence on the roads. It identified a huge growth market and was one of the first to enter. ChargePoint now has a well-established network of charging stations in the US and is focused on expanding its presence in the UK and mainland Europe.
Clean and cleaner
Rather than a vehicle being charged at home straight from the grid and probably (for now, at least) originating from a fossil fuel source, there are likely to be cleaner options.
Solar and wind power companies have the opportunity to offer homeowners the choice of clean power for their EVs.
Housebuilders, too, can market homes that incorporate solar power in their design that can be used – among other things – to charge the family car.
With a much greater focus on the environment and the 2050 net zero an established and firm target, clean energy credentials represent sound marketing right now.
Danni Hewson, financial analyst at AJ Bell, believes that many companies and sectors are well placed to benefit from the move towards EVs.
“From miners to material manufacturers, house builders to plain old builders, there is a huge amount of business opportunity on the cards as the UK rushes to be ready for the ban on new petrol and diesel cars in 2030.”
However, she argues that the scale of the challenge in meeting the target will necessitate increased involvement by the big oil majors.
“Both BP and Shell have snapped up EV charging network operators over the last year in a bid to dominate the sector in the same way they’ve dominated our past fuelling provisions. Realistically, without their billions, the chance of the UK being ready to support all those EV drivers hitting the roads is pretty slim.”
Driver reluctance
Hewson suggests that range anxiety has been a big deterrent to people swapping their old petrol and diesel cars for shiny new EVs, and until the country is blanketed by a fast, cheap network of charge points, some drivers will stubbornly stick to the devil they know.
“It’s a difficult circle for many people to square, but the manufacture of EV vehicles, the building and operation of charging infrastructure, and the electricity which powers the cars themselves will continue to require fossil fuels for the foreseeable future.”
In an ideal world, she argues, the electricity that powers our green dreams should be green itself, and there is a big push to make those dreams reality.
“Just look at the ‘renewable’ labelling all over Shell’s brand-new EV charging hub in Fulham. As technology advances, more and more charging points will have their own power sources, and EV charging manufacturers like Pod Point are already working with housebuilders such as Bellway and Redrow – ultimately, home charging options should become a standard fixture on any new build.”
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