Am I right to think it's practical start a commercial electric vehicle charging station?
August 17, 2011 2:03 AM Subscribe
I just bought an electric car -- Nissan Leaf -- and I am curious about what it'd take to start a commercial quick charging station in my area (Santa Monica, California). How do I best frame my thinking and analysis?
Physically, a "DC fast charging station" is a box installed in the the ground next to a parking spot, which allows cars to park, plug in, and the drive away a half an hour later having replenished their battery.
Very naively, it seems like all one would need would be a) start-up funds to purchase and install a charging unit, b) a lease on some land for charging parking spots in a correctly-zoned area, b) time and money to secure appropriate permits for all this work. Dig a hole, plug in a box, profit.
Less naively, this seems like a serious business venture with serious risks and dubious potential returns. Land is expensive; hardware and installation is expensive. Permits are tough to get and are probably expensive. Electricity is very cheap, and thus you can't really charge a lot for it. It's hard to "make it up in volume" when there are fairly few electric cars, and everyone charging is bound to spend a good chunk of time using the spot. And of course capital expenditures go up if you want to have two or three charging slots. Finally, marketing costs time and money, even if there aren't other quick charge stations in the LA area.
Given just the financial aspects (high initial cap ex, high variable costs -- rent etc, low price point) which point to very slow returns over the long haul, this seems like it's only workable if there's serious government involvement in providing subsidies to offset this risk. I shudder at the thought of having to deal with government entities on a regular basis to make this happen.
So, help set me straight. Is it foolish to think that this can be a low-involvement project where a small group of investors can make a reasonable return over time by going low-fi and doing the minimum necessary to make a charging station work?
(As an aside: I am thinking about this from a principled position -- if small entrepreneurs don't start building infrastructure, it may never get built. So beyond wanting to build a successful business, I also want to help build a successful business ecosystem.)
Physically, a "DC fast charging station" is a box installed in the the ground next to a parking spot, which allows cars to park, plug in, and the drive away a half an hour later having replenished their battery.
Very naively, it seems like all one would need would be a) start-up funds to purchase and install a charging unit, b) a lease on some land for charging parking spots in a correctly-zoned area, b) time and money to secure appropriate permits for all this work. Dig a hole, plug in a box, profit.
Less naively, this seems like a serious business venture with serious risks and dubious potential returns. Land is expensive; hardware and installation is expensive. Permits are tough to get and are probably expensive. Electricity is very cheap, and thus you can't really charge a lot for it. It's hard to "make it up in volume" when there are fairly few electric cars, and everyone charging is bound to spend a good chunk of time using the spot. And of course capital expenditures go up if you want to have two or three charging slots. Finally, marketing costs time and money, even if there aren't other quick charge stations in the LA area.
Given just the financial aspects (high initial cap ex, high variable costs -- rent etc, low price point) which point to very slow returns over the long haul, this seems like it's only workable if there's serious government involvement in providing subsidies to offset this risk. I shudder at the thought of having to deal with government entities on a regular basis to make this happen.
So, help set me straight. Is it foolish to think that this can be a low-involvement project where a small group of investors can make a reasonable return over time by going low-fi and doing the minimum necessary to make a charging station work?
(As an aside: I am thinking about this from a principled position -- if small entrepreneurs don't start building infrastructure, it may never get built. So beyond wanting to build a successful business, I also want to help build a successful business ecosystem.)
Think not of the value provided to your EV customers, think of the value of an EV station to a nearby business as a draw.
Why not partner with a local organic grocery store, offer to maintain and operate the station for free use of space in their parking lot. The grocery store "sacrafices" a few parking spots (but it's not even a sacrafice as the EV drivers are likely customers) and you simply maintain the equipment for the nominal monthly fee covered by the charging.
Starbucks has been known to charge building owners for the privilege of having a Starbucks coffee shop in their building.
I think this should be your approach, see if you can get someone to pay you to open your business on their property. It's worth a shot, and at least is a good spot to start negotiating from. (you can always take your charging apparatus to the organic grocery down the block)
You are providing a valuable service to businesses that are near your charging station by drawing EV drivers (ie, people with money) to their location and keeping them there for 30min or more.
Similar concept example: my local gas station has an air hose / vacuum station. I lost my 50 cents in it and I went into the station to complain. But they didn't own it, some other 3rd party did and just used space in their station. You had to call a toll-free number to get your change back or report a problem. Outsourced!
Now maybe the gas station takes a royalty or a monthly fee, but I can't imagine it would be very much if anything at all. But you get the idea.
If you can pull that off, I think you could make it work.
If you have to lease actual land and pour a concrete slab I doubt you could sustain any sort of profit.
The thing I would worry most about would be people leaving their cars there for several hours, blocking other people from using the charger.
posted by j03 at 4:34 AM on August 17, 2011 [4 favorites]
Why not partner with a local organic grocery store, offer to maintain and operate the station for free use of space in their parking lot. The grocery store "sacrafices" a few parking spots (but it's not even a sacrafice as the EV drivers are likely customers) and you simply maintain the equipment for the nominal monthly fee covered by the charging.
Starbucks has been known to charge building owners for the privilege of having a Starbucks coffee shop in their building.
I think this should be your approach, see if you can get someone to pay you to open your business on their property. It's worth a shot, and at least is a good spot to start negotiating from. (you can always take your charging apparatus to the organic grocery down the block)
You are providing a valuable service to businesses that are near your charging station by drawing EV drivers (ie, people with money) to their location and keeping them there for 30min or more.
Similar concept example: my local gas station has an air hose / vacuum station. I lost my 50 cents in it and I went into the station to complain. But they didn't own it, some other 3rd party did and just used space in their station. You had to call a toll-free number to get your change back or report a problem. Outsourced!
Now maybe the gas station takes a royalty or a monthly fee, but I can't imagine it would be very much if anything at all. But you get the idea.
If you can pull that off, I think you could make it work.
If you have to lease actual land and pour a concrete slab I doubt you could sustain any sort of profit.
The thing I would worry most about would be people leaving their cars there for several hours, blocking other people from using the charger.
posted by j03 at 4:34 AM on August 17, 2011 [4 favorites]
What you want to do is lease space at a gas station. Not land, just space. Think of it like a vending machine. Costs are minimal, and people already think of going to a gas station to "refuel." They're also pretty ubiquitous, so setting up a franchise agreement with an entire chain should be pretty easy.
posted by valkyryn at 4:58 AM on August 17, 2011
posted by valkyryn at 4:58 AM on August 17, 2011
If it takes 30m to refuel a car, better make sure those drivers can do something while they're waiting. Public library? Grocery store? Hardware store? Starbucks? Restaurant? Picnic tables (since I presume there's no nasty smell)?
How about pagers for 'your car's done now'? Oh, so 80s. Make that a mobile app. Where they can pay for their fueling. And work with the above-mentioned partner for deals or other fun stuff. And remote access to a security camera pointed at their car while they're inside.
Don't completely turn up your nose at your local government (probably the city). They might just be waiting with baited breath for someone like you to encourage this sort of thing. There are cities which are starting to provide stations, but I bet they'd prefer to have a business bringing in sales tax.
Maybe talk to the electric utility in your area. They might be interested in promotions, and might have some idea of where those cars are getting parked at night.
posted by ES Mom at 6:21 AM on August 17, 2011
How about pagers for 'your car's done now'? Oh, so 80s. Make that a mobile app. Where they can pay for their fueling. And work with the above-mentioned partner for deals or other fun stuff. And remote access to a security camera pointed at their car while they're inside.
Don't completely turn up your nose at your local government (probably the city). They might just be waiting with baited breath for someone like you to encourage this sort of thing. There are cities which are starting to provide stations, but I bet they'd prefer to have a business bringing in sales tax.
Maybe talk to the electric utility in your area. They might be interested in promotions, and might have some idea of where those cars are getting parked at night.
posted by ES Mom at 6:21 AM on August 17, 2011
Definitely talk to an electric utility representative if you are serious.
It seems to me the best way is to manage it with a surface (or other) parking lot because you are going to have to potentially deal with a large influx of vehicles at one time. Where will you put them? Leasing the space from a surface parking lot will be the ideal partnership.
The second major issue is that a half hour is not quick in today's world. To make it attractive you are going to have to provide transportation options during that charging period. A couple electric cars ferrying people to and from errands or work may be necessary. Maybe make it a valet charging service where you pick up the car, charge it and bring it back?
posted by JJ86 at 6:35 AM on August 17, 2011
It seems to me the best way is to manage it with a surface (or other) parking lot because you are going to have to potentially deal with a large influx of vehicles at one time. Where will you put them? Leasing the space from a surface parking lot will be the ideal partnership.
The second major issue is that a half hour is not quick in today's world. To make it attractive you are going to have to provide transportation options during that charging period. A couple electric cars ferrying people to and from errands or work may be necessary. Maybe make it a valet charging service where you pick up the car, charge it and bring it back?
posted by JJ86 at 6:35 AM on August 17, 2011
A lot of these comments are right on. My thoughts:
1. Find a place where your charging infrastructure will be a value-added service. Perhaps then you can even offer free charging to customers and the business will pay you a monthly fee, helping derisk your financials. Think anywhere people are parked for 30 – 60 minutes. Private parking lots, doctor's offices, cafes, grocery stores, gyms.
As far as brainstorming, the key to charging points is a network effect. If you could place them along a common route, chances are your business case gets much better. I'm thinking the restaurants and cafes up PCH, for example.
2. My company is working in this space in the UK and EU and one of the great ideas I have seen is mobile charging stations for concert venues/temporary fairs/etc. Basically, 1MW+ in a truck that can be driven to remote sites and parked to charge cars. Genius!
This idea was extended to corporate executive parking lots, where a small charging vehicle would roll up and charge exec cars on demand.
3. As far as the government incentives, there will be some available, you just have to find them.
The opportunities are really limitless. There are 170,000 gas stations in the US at the moment. Thus, way over 500,000 'gas points' and that is not counting private gas pumps (car rental agencies, fleets, etc.)
posted by nickrussell at 6:42 AM on August 17, 2011
1. Find a place where your charging infrastructure will be a value-added service. Perhaps then you can even offer free charging to customers and the business will pay you a monthly fee, helping derisk your financials. Think anywhere people are parked for 30 – 60 minutes. Private parking lots, doctor's offices, cafes, grocery stores, gyms.
As far as brainstorming, the key to charging points is a network effect. If you could place them along a common route, chances are your business case gets much better. I'm thinking the restaurants and cafes up PCH, for example.
2. My company is working in this space in the UK and EU and one of the great ideas I have seen is mobile charging stations for concert venues/temporary fairs/etc. Basically, 1MW+ in a truck that can be driven to remote sites and parked to charge cars. Genius!
This idea was extended to corporate executive parking lots, where a small charging vehicle would roll up and charge exec cars on demand.
3. As far as the government incentives, there will be some available, you just have to find them.
The opportunities are really limitless. There are 170,000 gas stations in the US at the moment. Thus, way over 500,000 'gas points' and that is not counting private gas pumps (car rental agencies, fleets, etc.)
posted by nickrussell at 6:42 AM on August 17, 2011
Note that the 30-minute charger has a significant negative impact on battery life, and regardless of cost they should not be considered for regular use. So, if you only have one of these, you won't have regular customers, unless your regular customers don't care about early battery replacement/voiding their battery warranties.
At the very least, then, you'll also want to have 240v chargers on-site, for people who need a partial battery boost during the day without the battery impact of the fast chargers. Which means your targets are:
1. Regular customers who often find themselves in your area, and far enough from home that they need a partial recharge (which implies a heavily-frequented shopping district, which already have 120/240v chargers generally);
2. Emergency customers who find themselves so far out of range that they need a quick charge at the expense of battery life.
So I don't want to be a buzzkill, but it isn't much of a business proposition -- especially considering that subsidized charger rollouts are going to eat your lunch on the regular customers anyway.
Now, if you wanted to have a truck with a quick charger, that you could roll out on demand to rescue customers without the associated land expense...that might be something worth considering. However, chances are AAA and dealerships are going to eat that lunch sooner or later, too.
posted by davejay at 10:12 AM on August 17, 2011
At the very least, then, you'll also want to have 240v chargers on-site, for people who need a partial battery boost during the day without the battery impact of the fast chargers. Which means your targets are:
1. Regular customers who often find themselves in your area, and far enough from home that they need a partial recharge (which implies a heavily-frequented shopping district, which already have 120/240v chargers generally);
2. Emergency customers who find themselves so far out of range that they need a quick charge at the expense of battery life.
So I don't want to be a buzzkill, but it isn't much of a business proposition -- especially considering that subsidized charger rollouts are going to eat your lunch on the regular customers anyway.
Now, if you wanted to have a truck with a quick charger, that you could roll out on demand to rescue customers without the associated land expense...that might be something worth considering. However, chances are AAA and dealerships are going to eat that lunch sooner or later, too.
posted by davejay at 10:12 AM on August 17, 2011
Response by poster: Thanks for the feedback, everyone! This definitely helps me direct my thinking about this project.
posted by haykinson at 8:33 PM on August 17, 2011
posted by haykinson at 8:33 PM on August 17, 2011
This thread is closed to new comments.
The number of compatible electric cars on the road within reasonable distance of your charging station is the most crucial big-picture variable for your planning. Do you have a good figure/ projections for it?
I understand the relevant technology isn't really settled down yet. How sure are you that the technology you invest in will not be obsolete or virtually unused five years from now? Think of the video format wars, are plug-in electrics past the VHS vs Beta stage yet?
Who will you be buying the power from, and under what terms? How much power will you use, and what will your consumption time profile be? These things can have a drastic effect on the cost of energy. I'm guessing a fast charging station will need quite a bit of power at peak load, and with a few cars on the road will only see intermittent use - from a power utility perspective you're a pretty lousy customer, their pricing may be structured to punish you for this.
What is the legal situation for providing this kind of service? Will the law consider you an electricity supplier or a fill-up station? What will your legal/tax obligations be?
posted by Dr Dracator at 2:49 AM on August 17, 2011