How can we keep EV charging cheap?
The latest news from the world of EVs
Hello and welcome back to The Fast Charge, a weekly British EV newsletter.
In today’s edition… the iconic Leaf is on the way out, Arrival cuts back, and further down I ponder how we can keep EV charging cheap, including comments from several industry commentators.
As ever, if you have any thoughts or feedback, please do feel free to drop me a line at email@example.com or simply reply to this email.
In the last week…
H2 FUTURE: There has been a lot of talk about hydrogen in the past week. Not only has Hyundai revealed a good-looking ‘N Vision 74’ concept, powered by a 62kWh battery alongside a hydrogen fuel cell, but also Johnson Matthey, a large UK industrial business, announced it was going to build a gigafactory to manufacture fuel cells, mainly for use in commercial transport. Obviously, hydrogen has remained a controversial topic in EV land - Elon Musk calls them ‘fools cells’ - and these recent developments will only divide opinion more. My own view is battery EVs are the way forward for personal transportation, due to their energy efficiency, and are already demonstrating their case. However, H2 fuel may be better placed in logistics. Though, many motorists will continue to disagree, clinging to the hope that H2 fuel will lead.
BLOWN AWAY: According to a report in Automotive News, Nissan is going to phase out its Leaf model. The Leaf is perhaps one of the most famous EVs of them all, having been key to demonstrating the power of EVs around the world. Alas, it may only be around for a few more years. It’s thought that a replacement model will be brought about as part of Nissan’s electrification plans – they want 15 all-electric cars by 2030. Currently, the Leaf is manufactured in Sunderland, presumably, the site will continue to produce EVs. Read more.
CLIMATE PLEDGE: Last week I wrote about what Tory leadership hopefuls think about EVs. Since then, the number left in the competition is just four (Rishi Sunak, Kemi Badenoch, Penny Mordaunt, Liz Truss). At a Conservative environment husting on Monday, all of them pledged to reach net zero. Albeit, Kemi remains the most suspicious. Read more.
ELECTRIC BENEFITS: On Monday the government launched a 12-week consultation that could see electricity decoupled from gas. This would mean greater cost benefits for consumers that use renewable electricity from wind and solar – which in recent years has got significantly cheaper. At the moment, the wholesale price of gas largely determines the price of electricity regardless of how the energy is produced. This move could thus make it even cheaper to charge an EV at home and even using public infrastructure. Read more and see the consultation here.
TOUGH JOB: Arrival, the UK-based electric vehicle start-up, has revealed it’s cutting costs by a third to prevent its cash reserves from drying up. This means up to 800 jobs are at risk. Arrival, which was once valued at more than £9.5 billion last year, is most famous for its unique approach to manufacturing – rather than building a large plant, Arrival is trying to perfect microfactories that can be set up quickly in areas of demand. The company is yet to begin production of its van and has blamed the “economic environment” such as “supply chain issues, an ongoing pandemic, geopolitical tensions and rising inflation”. Read more.
NEW PRICES: Charging network Swarco E.Connect, which runs chargers of varying speeds all over the UK, is the latest operator to increase pricing. As of yesterday, at the sites specified in the link below, the tariffs will increase to 54p/kWh for fast chargers and 57p/kWh for rapid chargers. This is between 10-20 pence per kWh more than previously. Spotted via @ItsBillN.
OLD BOYS: Odd story in the Telegraph about how car insurance for over 50s has increased by 7.8% over the last year, and analysts believe the reason is higher electric vehicle costs, which are a popular purchase by older people, are being passed on. A survey by insurer Saga found 54% of drivers aged 55 and over were now considering switching to an electric vehicle due to cost savings. As there are few garages to deal with EVs now, this is why there is an assumption that insurance rises are linked to insurance. Obviously, has nothing to do with inflation? Read more.
TYPICAL CONTRARIAN: Speaking of doom-mongering, Mail commentator Peter Hitchens wrote on Sunday how he was ‘beginning to loathe the new smugocracy’ of people driving EVs. It’s a bit of a rant at 100mph, but maybe if of interest if not for amusement. Read it here.
JET ZERO: Later today at Farnborough airshow, the government is expected to publish its Jet Zero strategy. This will outline how the UK’s aviation sector will achieve net zero by 2050. The plan is expected to focus on several key areas such as advancements in technology, increasing sustainable aviation fuels, and carbon pricing. POLITICO have a good summary including responses from campaigners.
SAVE THE DATE: This Thursday 22 July, the government will publish the latest quarterly data on EV chargepoints. As I wrote two weeks ago, the new data should reveal the largest quarterly increase in rapid chargers on record. In next week’s Fast Charge, I will of course provide some in-depth analysis.
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How can we keep EV charging cheap?
As well as improving the air quality where you live and enabling a greener, renewable and circular future, EVs also come with major running cost benefits. And for the people who spurn those environmental words in the first sentence, daily price savings will be a big reason they’ll jump in an EV.
But, as demand has risen supremely quickly, already there are a couple of indicators that EVs may not always be the Martin Lewis money-saving mobiles they are now.
Many charging networks have slowly started increasing pricing over the past year. According to the RAC’s Charge Watch, the average cost of using rapid chargers for a standard EV went up between £4-9 in just the past year. And while this may seem low, it’s a worrying trend, especially for those third of households without a driveway.
“If we ever found ourselves in the unlikely circumstance where EV charging became as or even more expensive than fuelling an ICE vehicle, it would have a terrible impact on the cost-saving incentives that have driven rapid growth in EV sales in recent years,” explained a spokesperson for FairCharge, the EV campaign group founded by TV presenter Quentin Wilson.
FairCharge told me that a recent study they undertook found that drivers without driveways are 9% less likely to purchase an EV than those with home charging. “These drivers are already unable to access low-cost off-peak charging tariffs but on top of this, are paying four times more tax to charge their vehicles,” a spokesperson added, highlighting the VAT disparity for those without a driveway.
Even since starting this newsletter in January 2021, two of the largest businesses in energy, Shell and BP, have upped their network prices by 41% and 87% respectively*. And before you start thinking to yourself that this is linked to the energy crisis, this started long before then – I first wrote of Shell price rises in March 2021 and BP’s in June 2021 (when they upped fees twice in 24 hours).
It sounds negative but the good news is, even with these rises, charging an EV today is still about 50% cheaper than petrol or diesel. However, as we race towards 2030, I predict it will get tighter. And perhaps not by charging costs going up, but also as oil prices come down. Notably last year, Wood Mackenzie, an Edinburgh-based global research firm, suggested if governments push to reduce fuel consumption against net zero plans, oil could drop to around $40 a barrel in 2030 due to reducing demand. By comparison, oil is currently over $100 per barrel.
While by this point, hopefully, the vast majority may have opened their garage up to electric in some form – either fully or via a hybrid – it is essential running costs for EVs are kept low, as ideally, it shouldn’t cost more to do the right thing.
What’s the best approach?
The first thing to say is, naturally, millions of motorists should be getting highly reduced rates at home to charge their car. At present, using an off-peak tariff can make it nearly ten times cheaper to juice your EV than using public networks. But it’s expected nearly all people will have to engage with shared infrastructure in some form.
The government considered this question in their EV strategy this year proclaiming “there will be vibrant competition across the charging sector with choice in provider and type of charging, and open data on pricing and availability.” In reality, this may mean all networks, and their pricing, being listed in one online location.
Ben Nelmes, Co-founder and Head of Policy at New AutoMotive, believes this would be the right way forward, saying “EV drivers could save more money if prices at public charging stations were easier to compare; this would help drivers find the best value chargers and increase competition between chargepoint operators to offer the lowest prices possible.”
This harks back to a central belief by the government that EV infrastructure will be ‘market led’, though they will introduce regulation to enforce transparent pricing later this Summer. But will leaving it to the sector be enough?
When I spoke to James Court, CEO of EVA England, two weeks ago, he expressed a hope to me “that when the cost crisis goes down, we are not going to be in that situation we see at forecourts where prices rise very quickly then fall like a feather.” James said if this happened, “I would hope that we don’t need legislation on that.”
The business case
Driving to a cleaner, cheaper future is the dream, but ultimately it all comes with a cost, and if consumers are not going to pay, someone else will. In this debate about charging pricing, it’s easy to forget the networks that run them. While some are huge multinationals, other public networks are smaller, local enterprises.
The biggest network in the UK, ubitricity, which is owned by Shell, is investing huge sums in boosting its network from 5,000 to 50,000 by 2025. When I previously spoke to Toby Butler, their UK managing director, he suggested pricing was an area where our thinking needs to evolve as more people get into EVs, as there has perhaps been an assumption that it should be almost free in the past years. “I feel now the industry has to find its feet and to find the right pricing levels to cover costs, to run the business, and to be fair to consumers.”
Who is in control?
As has been evident by the recent energy crisis, price is determined by a huge swathe of factors, not all often in the control of suppliers. Ultimately, it’s likely a deciding factor will be how the market looks in 2030.
At the moment, there are five networks that control about 50% of all public chargers, with only a third being run by micro-networks. When you single this down to rapid chargers, 75% are operated by just 8 networks. And while this may sound plentiful to provide price competition, we cannot forget that chargepoints are in fixed positions. So, while you may see network A is much cheaper than network B, it’s not as simple as swapping out Heinz Tomato sauce for Sainsbury's Ketchup.
If charging networks end up consolidating further, as is widely expected by those in the industry, it could further put the pricing ball in the business's court, rather than with consumers.
The ideal scenario
A few weeks ago, I was standing on a London street filled with lamppost chargers. Some belonged to ubitricity, others belonged to SureCharge. At the top of the street, Liberty Charge has installed a 22kW charger. And not far away, there were both several ESB rapid chargers and a Source London location. That’s five choices within a few minutes of each other, and this is the dream.
How local authorities sprinkle chargepoints will determine the literal competitive landscape both government and campaigners want to see. While networks themselves I’m sure would prefer to dominate an area, it will not enable a strong environment on pricing, nor create quality competitiveness – the latter of which becoming increasingly important without government regulation on slow charger reliability.
While much of what I’ve written about today has centred around competitive pricing, it’s worth remembering that some people are willing to pay a premium for ease of use instead. Notably, Bonnet, an app that is becoming increasingly popular as it allows people to pay across several EV networks at one tariff. This can save you from having several apps downloaded.
In a similar vein, Electric Juice, part of Octopus Energy, is a similar multi-network card that allows you to access several hundred thousand chargers across Europe through it.
As these network conduits become more popular, perhaps the government will need to keep an eye on them. Though, for now, both they and the charging networks are providing a cheaper price compared to petrol and diesel - which is all that matters.
By Tom Riley