EV charging infrastructures in Europe: Business models and financing

Expansive and affordable access to public charging infrastructure is needed for the mass-market switch to electric transport. A growing portion of the investment costs could be financed by debt, as highlighted by the increasing number of debt transactions in progress with varied EV charging business models. 

By Laurent Chabot, Co-Head of the Paris-based infrastructure team, Societe Generale.

Almost 14 million new Electric Vehicles (both BEVs, i.e. Battery Electric Vehicles and Plug-in Hybrid Electric Vehicles) were registered globally in 2023, bringing their total number on the roads to 40 million according to Global EV Outlook 2024. EVs accounted for 18% of all cars sold in 2023, up from 14% in 2022 and only 2% five years earlier. In Europe, new electric car registrations reached nearly 3.2 million in 2023, a 20% increase over 2022. The growth of EV sales has recently slowed down, due notably to the phase-out of purchase incentives in Germany, but remains robust and should accelerate in 2025 and reach 60% of sales in Europe by 2030 based on current policy settings.

The current trend is leaning towards increased adoption of BEVs and uptake is shifting from early adopters to mass market, underpinned by i) Conducive regulations (incentives, penalties, quotas and bans), e.g. the European Union's ban on the sale of new CO2-emitting vehicles from 2035, ii) Increase of product offer, with massive industry investments worldwide towards BEVs, most car makers having set ambitious deadlines for the phasing out of Internal Combustion Engines (ICEs), in the context of EU Regulation and CO2 target evolution (with major steps in 2025, 2030 and 2035) and iii) Lowering of total cost ownership for BEVs vs. ICEs.

The pace of BEV sales is currently higher than the pace of deployment of new EV charging infrastructure. Investment needs are significant: according to various reports, the cumulative investment in Europe needed until 2030 could exceed €80 billion, of which €50 billion is needed for private chargers and €30 billion for public chargers.

The split between private and public chargers is key to understanding the economics of EV charging. Currently, most charging is done on private premises (about 70-80% of charging, overwhelmingly at home, and within the workplaces). Home AC charging is cheaper than public charging and more convenient. This use case is still the most common as most BEV drivers still belong to the “early adopter” segment, with higher disposable income and access to private parking. They often have two cars per household – meaning that long distances are typically covered with an ICE vehicle, with the BEV dedicated to short distance and charged mostly at home. As the fleet of BEVs grows and average battery capacity increases, BEVs will be used as single/main vehicles, leading to the full spectrum of use cases becoming relevant (including long-distance).

Access the full article published in Project Finance International (PFI) here: www.pfie.com/story/4626633/ev-charging-infra-models-and-financing-dylh5drryr