Charge that Vehicle! Electric Vehicles--A New Market

LONDON--June 14, 2011: The electric vehicle (EV) charging environment represents a diverse set of market opportunities, although significant risks remain, according to new report, Beyond the plug: finding value in the emerging electric vehicle charging ecosystem, released today by Ernst & Young.

The research analyzed 143 companies in the EV charging ecosystem and, from this analysis, identified five emerging business strategies offering distinct value propositions in the future EV charging market. These business strategies are at different levels of complexity within the EV value chain and consequently, bring different risks and rewards to the participants, as analyzed in the report.

Jean-Francois Tremblay, Ernst & Young Advanced Powertrain Team Leader says: "The rise of EVs will stimulate the development of a vast amount of new infrastructure, particularly charging stations, and will provide the platform for innovative services and business models. Although the deployment of this infrastructure undoubtedly represents a market opportunity, commercial viability of the charging infrastructure and support services industry is vital to a sustainable EV market."

The current state

The charging infrastructure necessary to stimulate widespread adoption of EVs in the marketplace remains to be built. Governments, for example those in Germany, China and the United States, are increasingly making funds available for the development of charging infrastructure. The 36-month "EV Project" in the United Sates is one of the largest initiatives to date supporting vehicle electrification and charging infrastructure. A European Commission  "Green eMotion" project, is working with 42 partners from industry, the energy sector, EV manufacturers, municipalities, universities and research institutions, to develop a commonly accepted framework consisting of interoperable and scalable technical solutions in connection with a sustainable business platform.

Risks remain

Although opportunities are evident, the report also identifies a number of risks. A key risk is that, while most companies advertise that they offer solutions for a wide range of customers -- from utilities to car rentals, to hotels and home users -- many lack a differentiated solution raising questions about the sustainability of competitive advantage and convincing revenue models.

It is also apparent that, while being a fast-mover is critical, this does not necessarily secure market share. For instance, manufacturing charging hardware will rapidly become a high-volume, low-margin business. In addition, several players have not considered the role vehicle manufacturers and energy utilities will play in this emerging ecosystem, and until these two central stakeholders decide where they want to sit, a stable value chain is unlikely to emerge.

Jeff Henning, Ernst & Young Global Automotive Markets Leader comments: "Government and industry players both see scale and interoperability as a key to a successful roll out. However, to implement an appropriate EV charging infrastructure does not necessarily mean mandating an outlet at every street corner. It means creating an industry where the economics are profitable and self-sustaining to justify the investment as the market develops."

Looking forward

Henning concludes, "The growth of the EV charging infrastructure is set to be an exciting chapter in the vehicle electrification process. We're committed to analyzing the transformation as the market evolves and supporting our clients as they assess the risks and rewards."

Insights from Beyond the plug will be a part of the dialogue at Ernst & Young's 2011 Global Cleantech Ignition Sessions, a series of executive roundtables hosted by the firm's Global Automotive and Global Cleantech Centers that focus on the actions necessary to accelerate a broad adoption of EVs. The US event takes place tomorrow, Wednesday, June 15 in Detroit, Michigan.