By Richard Stubbe, Bloomberg NEF editor. This article first appeared on the Bloomberg Terminal.
The global fleet of electric vehicles is expected to grow to 4 million this year, and the network of public charging stations to keep those vehicles moving has increased significantly as well, to almost 600,000. In the U.S., there were 730,000 EVs on the road at the end of 2017 serviced by 68,000 outlets, according to Bloomberg NEF.
About one-third of those belong to ChargePoint Inc., operator of the world’s largest EV charging network, which builds stations for homes and businesses and then connects drivers using a mobile application. Chief Executive Officer Pasquale Romano, who answered questions from Bloomberg NEF this month, said the world’s trends are moving in his company’s direction.
Q: Your business is speeding up?
A: It’s overwhelming. The growth rate is so high in this industry right now. So business is actually quite good. For us it’s never been bad. And it’s getting better by the moment. It’s showing no signs of deceleration whatsoever.
Q: So what worries you?
A: It depends on the region. Are you talking about the U.S. or Europe?
Q: The U.S. Are the policy changes by the Trump administration slowing the trend of electric vehicles?
A: We’re not seeing any evidence of that. Even before, we didn’t see any correlation to oil, for instance, in our business.
Even with the relaxing of the EPA regulations, you still have manufacturers in the balance of the globe having to conform with standards that are being set for them elsewhere. If you’re going to sell globally, you’re going to have to dump most of your money into electric vehicles. And I think that’s what you’re seeing with most big global auto manufacturers.
Q: What other trends are you seeing?
A: Battery prices are about $154 per kilowatt-hour, and that’s gotten there dramatically faster than anyone predicted. Once you get down to the magic number of $100, we can see electric vehicles reaching price parity with a gasoline car. Every country except the U.S. has either local or macro-level regulations pushing for the electrification of transportation. And in major cities, for air-quality reasons, we’re talking about close-in bans on internal-combustion vehicles. That sounds pretty good to me.
Q: How do autonomous vehicles fit into your planning?
A: I worry a little bit about transportation network companies starting to eat into unit volume. When we go over the top of peak car by unit volume, then the global manufacturers may go into consolidation mode, if we go into cyclical decline on the number of cars sold. That’s one tangential macro-level trend that we’ll have to deal with.
If everything were perfectly autonomous overnight, the U.S. would go from 250 million vehicles to 30 million to 33 million. If no one owned a car, then the number of cars needed to serve the current population would be around 30 million. So we’re betting heavily on the fleet space in addition to the current space. We’re not abandoning passenger cars; we’re making a happy living at that.
Q: One of BNEF’s forecasts is for big movement to electrification by buses and delivery vehicles. How do you see that happening?
A: That’s return-to-base charging, with a little bit of en route for outlier routes. That’s exactly the way that’s going to work. It’s not a game changer, it’s an addition. For the foreseeable future, it’s going to co-exist with a pretty healthy electrification of passenger cars until such time as Level 5 autonomy [complete automation] is upon us and then we’ll start to see an accelerated shift away from car ownership.
Q: How much difference does this shift make to you and your business?
A: It doesn’t. In 10 years, we’re going to start to see these technologies come together where we can start the orderly march to a real transformation of how we are transported. Electrified transportation doesn’t change how we’re transported. It just means we’re not driving a gas car anymore. But if someone else is driving for me, that changes how I’m transported.
Q: As long as the cars are traveling the miles, it doesn’t make much difference to ChargePoint who’s driving them?
A: Bingo. Removing the driver is just a cost reduction.
Q: The U.S. has many more charging spots in the past seven years. It now looks like you could go anywhere without range anxiety — is that so? Where do we go by 2025?
A: Coverage is different between everyday charging around town and long-haul fast charging. You don’t need a lot of long-haul chargers, relative to the number of chargers you need in cities.
The gas-station model is dead and buried. As long as there are public charging areas and reasonable spacing on highways so you can go on a long trip beyond your battery range, you’re set.
Q: Are you saying the current network of charging stations is very nearly sufficient?
A: You have to split it into two parts. For the charging that’s going to put energy in your car most of the time — parking, apartment complex, and condo — you only need to put that stuff where the cars are going to spend their time. If a workplace has 50 EVs in the parking lot and they’re going to have 100 over the next two years, they need to plan for capacity expansion.
Home takes care of itself. Multifamily is starting to take care of itself. For fast charge, you have to have the minimum number of points at about 75 miles spacing on all long-haul corridors. For non-Tesla drivers, there’s a shortage of organized fast-charge infrastructure for long hauls, but that’s coming.
Q: So what’s good for EV development is good for ChargePoint?
A: If you look at what moves the macro needle, we are hitting on everything. You’ve got battery prices falling and the physical size of the battery packs staying inside 250 or so miles of range.
One easy way to think about ChargePoint is we represent charging in general and we’re one of the leaders in charging. Although we’re not public, we’re a way to bet on the entire EV segment without betting on a technology or a geography or a manufacturer.
Q: How important is China in this global math?
A: What I say on panels, which does not make me popular with a lot of automobile manufacturers, is thank God for Tesla and the Chinese. They’re forcing reconciliation with the transition from a very efficient gasoline-drivetrain industry to this new industry. If you didn’t have those folks, new models would be coming out much more slowly, and there would be no voice from an automobile vendor to governments and policy makers saying, “You should lean into this, the tech’s ready.” The legacy-based ones have an incentive to not move as fast.
Q: What other governments are putting helpful policies in place?
A: In India, they’re pushing it now. In Europe across the board. Even in Germany, where they have multiple huge auto manufacturers that have been around for a hundred years, that government is pushing for it. In the developed world, everywhere but the U.S., and as a result the U.S. is getting dragged along. Also, because the U.S. is a republic and the states have a lot of rights here, one modifier to what I said before is thank God for Tesla, the Chinese and California.
California is saying they don’t care about federal policy, this is what they’re doing. California is being looked at as a world leader in policy. Other governments aren’t saying to look at the U.S. They’re saying to look at what California has done as if it were a country.
Q: Are you happy with what utilities are doing? Are they prepared for the transition?
A: In most of the U.S., most consumers and businesses have to buy their energy from a single party. Given that it’s a highly regulated space, the art is to figure out how to get utilities involved in the space in a big way but not let the slowness of the regulatory environment impede the evolution or prevent business models.
We’ve had some successful utility progresses in California. They’ve been able to marry both sides of that equation very well, and there are countless examples across the country that have emulated them. So we’re heading in the right direction. It’s a very deliberate industry. It has to be. It takes a while to get the policy right.