The EV industry has been witnessing growth over the past few years to reach $561.3 Billion USD in 2023 and a CAGR of nearly 10% over the next five years [1]. The growth is fueled by market, technology and policy forces that are further amplified by consumer demand. The charging infrastructure is integral to the growth of EVs, as per estimates the current number of charging locations per 100 KMs (in 2021) is highest in South Korea at 75.2 locations, whereas the US is at 0.8 locations [2]. In general, there are three types of EV charging which are widely used in the market today for consumers as shown in the figure below.
- Home charging can be convenient and cost effective for people who can afford to charge their vehicles while being parked at home. These can be fast or slow chargers depending on an individual’s propensity to pay.
- Enroute charging is like gas stations targeted towards people who are traveling from Point A to Point B and would like to recharge before they reach their destination. These typically are fast chargers that help customers charge for some time before they can resume their journey.
- Destination charging is allowing for customers to charge their vehicles while at work, shopping, or other recreational activities. These can be a mix of slow and fast chargers depending on the destination and traffic patterns.
Setting up enroute and destination charging are dependent on several factors such as real estate availability, traffic volume and patterns, population density, grid capacity, existing infrastructure, and EV adoption projections. The retail stores have a clear advantage over newer facilities since parking space is available, and there is a captive market of shoppers who can use the charging infrastructure. The retail business will benefit from establishing the EV charging infrastructure in the following ways.
- Expanding the customer base to include EV drivers who may have been skeptical given the lack of charging availability at the store.
- Addressing the sustainability initiatives within the organization by providing charging capabilities to its customers.
- Driving an additional revenue stream by assessing a user fee for charging, thus contributing to indirect source of revenue
- Increasing in-store sales through higher dwell time in the store, while the vehicle is charging.
- Providing an integrated experience by integrating to the enterprise systems such as CRM, loyalty management and potentially up-selling and cross-selling.
It is apparent that retail stores have a key role to play in addressing the charging infrastructure gaps, there are two main models through which a retail store can start providing Charging As A Service. The retailer can install, own, and operate the charging station, or leasing it to a 3rd party operator who installs, owns, and operates the charging facility. In the second model, the retailer provides the real estate to 3rd party operator – the nuances of both the models are shown in the figure below. As shown it is a spectrum, there are opportunities to evolve a model.
The number of retail establishments were nearly 1.05 million in just the US [3]. E-commerce contributes to 15% of all retail sales, and 80% of shopping happens in stores. The role of physical stores is evolving, and EV charging can significantly boost the overall customer experience. Retail stores have an integral role in addressing range anxiety and the gap in charging infrastructure.
Co-authored with Gagandeep Singh Pahuja <gagan_sp@infosys.com>
References
[1] https://www.statista.com/outlook/mmo/electric-vehicles/worldwide
[2] https://www.statista.com/statistics/1226432/charging-locations-per-hundred-kilometers-of-roadway/
[3] https://nrf.com/research-insights/state-retail
