how to invest in ev charging stations
If you spot a Tesla on the road, you may be impressed by the sleek style of the car, but you may also find yourself wondering: How do you take an electric car like that on a road trip? How do you refuel conveniently? The answer is EV charging stations. As electric vehicles grow in popularity, so does the demand for these stations — making the sector an especially hot one for investors.
If you want expert advice on building an investment portfolio that serves your current and future needs, consider working with a financial advisor.
What Is an EV Charging Station?
An EV charging station is essentially a gas station for electric vehicles (EVs). According to the U.S. Department of Energy, while most EV owners have charging stations at their homes, there are tens of thousands of EV charging stations across the country. Whether these are public charging stations or workplace charging stations, they serve the same purpose of recharging the batteries of electric cars.
While the purpose of an EV charging station most resembles a gas station, the actual process is more like recharging your phone. As you might have a phone charger at home but also carry one with you to the office, if you have an EV, you might be best served by having a residential EV charger while still having access to public EV charging stations or an EV charging station at your work.
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Are EV Charging Stations Good Investments?
how to invest in ev charging stations
EV charging stations can be good investments as the market for EVs and the accompanying infrastructure to power them grows. According to the U.S. Bureau of Labor Statistics, there is increased consumer demand for EVs and many reasons to believe that that interest will continue to grow.
In 2011, electric cars made up 0.2% of all car sales in the United States. By 2021, that number had swelled to 4.6%. Some research projections say that EV sales could make up as much as 52% of all car sales by 2023.
While environmental concerns have been a major concern for EV drivers historically, cost savings also figure prominently in the move to EVs. Studies find that EVs can save their drivers as much as $12,000 over the life of the vehicle, and that fuel savings alone can be $4,700 or more in the first seven years of owning the vehicle.
Further savings are available for EV buyers thanks to government policies. The Infrastructure Investment and Jobs Act allotted a tax credit worth of up to $7,500 for EV buyers until 2032. That same bill committed $7.5 billion to build out national EV charging infrastructure.
Between personal reasons, cost savings and ongoing improvements to the affordability and battery life of EVs, it’s clear why investors would consider EV charging stations a wise investment.
How to Invest in EV Charging Stations
how to invest in ev charging stations
EV charging stations can be a wise investment for business owners. EV charging stations can be expensive to install, but the Infrastructure Investment and Jobs Act has set aside $1.5 billion to help states build and expand their EV charging networks. Look into your state’s EV charging station plan to see what assistance is available to you—for instance, in Illinois, the Illinois Environmental Protection Agency will offer a rebate of up to 80% of eligible project costs.
Once you’ve set up your charging station, you can charge drivers for the electricity they use to recharge their cars, using a business model similar to a gas station. But EV charging can also generate income for your business in less straightforward ways.
Say you own a restaurant and decide to install a charging station. A driver on a road trip looking for a charging station sees your restaurant is nearby and decides to pull in and charge their car. Charging takes between 20 and 55 minutes—the perfect amount of time for that driver to grab a bite to eat as well. This strategy can apply to a variety of retail establishments, including shops, bars, convenience stores and more.
If you’re not a business owner or don’t want to create and maintain your own EV charging station, there are other ways to invest. You can invest in the companies that are creating and selling the charging equipment and technology, such as Tesla, Chargepoint or Tritium, by purchasing stock. You can also invest in EV-related mutual funds or exchange-traded fund (ETFs).
The Bottom Line
As EVs become more popular, the demand for charging stations will continue to rise. Business owners who invest in EV charging stations can enjoy an additional revenue stream as well as the potential for increased foot traffic and a new customer base. Individual investors who see the promise of the sector can buy in via stocks or ETFs.
Tips for Green Investing
Consider talking to a financial advisor about the pros and cons of green investment strategies and how you might implement them in your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Want to take a look at what your portfolio will look like in a decade? SmartAsset’s investment calculator can help you do just that. Enter how much you have invested, how much you’re contributing and what rate of return you expect. We’ll then show you your investment growth five, 10 or even 30 years into the future.
Photo credit: ©iStock.com/Marcus Lindstrom, ©iStock.com/Brothers91, ©iStock.com/Teamjackson
The post How to Invest in EV Charging Stations appeared first on SmartAsset Blog.
Despite new vehicle sales slumping by 20% in the second quarter of 2022, electric vehicle sales soared. Sales of electrified vehicles – EVs, hybrids, and fuel-cell-powered vehicles – reached 442,740 units, a new quarterly record.
Increasing consumer adoption of EVs is partly a response to high gas prices and growing concerns over greenhouse gas (GHG) emissions and global warming. In addition, it reflects moves by automakers to expand the number of moderately-priced passenger EVs on the market to 33 models as of mid-2022.
The demand for EV charging stations is growing rapidly. Many public charging stations are owned or operated by private charging network companies. Recognizing the revenue potential, companies and entrepreneurs are investing in EV charging stations. Related investments include companies operating public charging station networks and manufacturing EV components.
Here are ten reasons to invest in an EV charging station.
1. Consumer demand for EV charging continues to grow.
Without widespread public charging stations, EVs could use only the power available from their batteries, severely reducing range. Charging stations allow owners to charge their electric vehicles while running errands, at work, or traveling. For entrepreneurs and business owners, this presents an opportunity.
The most common reason (58%) that American car buyers cite for not buying an EV is fear of not having enough range, i.e., running out of power before they can find a convenient charging station. However, new EV models offer more range, superior technology, and zero emissions, and consumers like what they see.
Even before the current administration introduced substantial tax credits for EV purchases in 2022, 42% of Americans surveyed by the Pew Research Center said they would consider purchasing an electric vehicle. The breakdown by age group ranges from 31% among those aged 65+ to a whopping 55% of those aged 18-29.
The electric vehicle charging station market was valued at $5.86 billion in 2021 and is expected to reach $53.25 billion by 2027.
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2. Governments and Utility Companies are offering generous rebates and incentives.
The federal government has dedicated $5 billion in funding over the next five years to build a national network of EV charging stations. In addition, there are over $2 billion in utility rebates and government grants to help business owners and entrepreneurs get started (see some of the top available incentives by state).
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3. An on-site EV charging station can help drive customer visits and increase revenue for your business.
One thing holding many back from switching to EVs is the need for more convenient places to charge their cars. Entrepreneurs and business owners can install chargers at existing businesses to give EV drivers more options.
This can be particularly beneficial for businesses where customers typically stay for a half hour or longer, e.g., restaurants, bars, clubs, entertainment venues, shopping malls, retail centers, hair and nail salons, fitness gyms, and workplaces.
Installing an EV charging station at a location can drive business and revenue. Digital maps such as Google Maps now offer options to search for charging stations, while apps like Plugshare exist specifically to locate public charging stations.
4. The cost of installing an EV charging station may be less than you think.
The cost of starting an EV charging station business will vary based on location, station size, and the type of charging components offered. In general, expect to invest an average of about $4,700 to $6,900 per port for a commercial Level 2 charging station. This covers equipment and basic start-up costs like marketing.
If you have to buy or lease the land on which the station will sit, the total cost can increase to between $10,000 and $50,000. However, adding a charging station can be very lucrative if you own the property.
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5. Installation requirements are straightforward and simple to complete.
The primary requirement for installing an EV charging station is an easily accessible location with a reliable electrical power source.
Check with your utility commission to determine if there are any regulations governing the EV charging industry in your state. Beyond that, there may be some minimal local regulatory requirements, such as obtaining a business permit from your municipality, but the overall process is well-documented and straightforward.
5. Turnkey franchise investments are available.
There are several EV charging companies that offer turnkey EV charging solutions. These include the EV charging station, charger installation, permitting, charging station system design, and charger software.
WattLogic and Energys are examples of companies providing turnkey EV charging station franchises. Energys provides a website tool to help you calculate the profit you can make from owning an EV charging station franchise.
6. Return on investment is high.
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The EV charging station business can be lucrative. Although the amount of money you can make depends on factors such as location and size, the owner of an EV charging station can generally expect a profit margin of 25-50%.
In other words, for each dollar you charge a customer to use your charging station, your ROI (profit after paying actual and allocated business costs) is between $0.25 and $0.50.
Your ability to monetize your investment depends on the number of EVs in your area, location quality, number and location of competitors, and more.
For more information on what to charge and how much you can make by owning an EV charging station, see this article at Evbox.com.
7. Opportunities to own charging stations abound.
To find an EV charging station investment opportunity, start with businesses already in the industry. For example, large companies like ChargePoint are always looking for new locations to install their charging stations and may enter into a partnership to use your available property.
Next, look to public places, such as airports, hospitals, and shopping malls, that currently need an EV charging station on site. There is an ever-increasing demand for EV charging stations in high-traffic public locations such as these.
Last but not least, talk to business owners, local governments, and other organizations to see if they are seeking investors or public-private partnerships to add EV charging stations to their facilities.
8. Investing in EV charging stations shows your commitment to sustainability.
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Surveys show that 57% of consumers are willing to change their shopping habits to reduce their environmental impact. Apartmentdata.com found that 61% of renters will pay more to live in an “eco-friendly” apartment building. (There are a lot of other benefits of adding an EV charging station to your MUD.) These highlight a broader trend of people wanting to live, work and shop at environmentally conscious properties. Installing an EV charging station is one way your business can demonstrate a commitment to sustainability and appeal to eco-conscious individuals.
9. Alternatively, you can invest in companies with charging networks.
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Buying stock in companies that own charging networks, like Tesla (TSLA) or ChargePoint (CHPT), can give you a piece of the massive growth in charging infrastructure expected to take place over the next decade.
To gain exposure to the entire market, look at ETFs such as Ultumus that have holdings in companies like Tesla, ChargePoint, Nio (NIO), Albemarle (ALB), BYD, Rivian (RIVN), Lucid (LCID), Aptiv (APTV) and more.
Are you interested in learning more about investing in EV charging infrastructure? Join us at the upcoming EV Charging Summit & Expo!
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