To learn more about the future of EV charging infrastructure, McKinsey''s Tony Hansen and Florian Nägele spoke with Frank Mühlon, president of the e-mobility division of ABB, and Giovanni Palazzo, president and CEO of Electrify America.
Frank Mühlon: If we are to meet the target of 290 million charging points by 2040, we''ll need $500 billion in public–private investment.
Another priority is sustainability. To achieve global targets for emissions reductions as set out in the Paris Agreement, we need clear global standards for EVs, as well as credible solutions to abate emissions across the whole industry. Again, this can''t be achieved in silos but requires public–private joint efforts to create a sustainable EV market.
Overcoming obstacles to expanding EV infrastructure will involve offering financial incentives and regulatory support to drive the transition from internal combustion engine (ICE) vehicles to EVs, including by favoring efficiencies through shared and autonomous EV rides.
Public charging has a significant real-estate component. Charging should be conveniently located both on major interstates and in dense urban areas. Real estate also relates to power availability, especially for fast charging. A location could be great from a utilization perspective, but if there is no electrical-grid capacity, installation could be challenging regardless of the solutions and technology leveraged.
The final obstacle is talent. We have great people working at Electrify America—and, indeed, across EV-charging infrastructure. As the market grows, however, it will require additional talent that is determined to solve complex technological, operational, and consumer-acceptance challenges.
McKinsey: How do dynamics differ in the public-charging sector across the European Union (the Nordic countries and Central, Eastern, Southern, and Western Europe) and the United States?
While at present the United States trails the European Union in prevalence of charging infrastructure, its investor-owned model means the pressure is higher to achieve profitability faster. This push for faster profitability has created a culture among US charging companies of strong operational cost control and more experimentation with different business models.
McKinsey: What are your mid- and long-term views on how the charging-infrastructure sector is changing (for example, the role of software and services, new business models, consolidation, and competition)?
New software solutions are also emerging that are shaping the future of the sector. One cloud-based digital solution aims to optimize the real-time fleet management of EVs and to speed up the electrification of transport fleets by helping operators maintain 100 percent business continuity as they make the transition to being fully electric.
Studies have found that limited public charging and long charging times are now among the top barriers to further EV adoption. We''ve made progress, though: ten years ago, drivers of electric vehicles could usually charge only at home; then came public Level 2 chargers; and now we are starting to see widespread availability of fast-charging options. But there''s still a lot more growth needed.
More dynamic systems will need to be developed in the medium to long term. Today, time-of-use tariffs for EV charging are emerging from utilities. As renewables on the grid increase, energy supply could fluctuate over the course of a day or a year. A more dynamic system could create value, requiring advances in smart energy and grid services and real-time pricing.
In the near term, I could see public fast-charging infrastructure remaining a fragmented market. Over time, though, as with many capital-intensive industries, companies will consolidate regionally or nationally. So in the medium to long term, you will see a structural change in fast charging.
Giovanni Palazzo: Ultimately, charging will ideally become convenient, fast, and seamless. Of course, what might become routine to customers will require hard work from technology experts and a commitment to operational excellence.
When I say "convenient," it''s not just a matter of location; it also means being available and online, which will require predictive maintenance enabled by data science and real-time diagnostics.
Second, I think the five-to-ten-minute charge will be game changing. With 800-volt architectures becoming more common in EVs, five-minute charge-ups may be a reality soon.
Finally, a seamless customer experience is about building on technologies like plug-and-charge solutions and ensuring that electric-vehicle charging is keeping pace as other mobility trends, such as autonomous vehicles, come to market.
Frank Mühlon: The development of vehicle to grid with bidirectional charging is really exciting. The chargers can smooth out each day''s uneven generation of renewable electricity, such as through solar and wind, and enable EV drivers to transfer surplus power back to the grid—with the potential to earn money back.
Convenience is key to EV adoption, and plug-and-charge solutions represent the next significant evolution in fueling our vehicles. Plug-and-charge enables drivers to simply drive to the charger, plug in the connector, and start charging automatically, removing the need for credit cards or payments via a smartphone.
Giovanni Palazzo: There are several key collaborations, such as coordination with utilities companies and technical integration with vehicle manufacturers. Strong collaboration with automotive companies will be necessary to offer a seamless customer experience, such as plug-and-charge solutions—the ability to plug in the vehicle and walk away with no credit-card or app interaction required in that moment.
Furthermore, government commitment at all levels is crucial to accelerating the rollout of charging infrastructure as the market continues to mature. Supporting access to funding, whether at the national level or through locally targeted incentives, could have a significant impact. Government can also reexamine complex permitting and site-development processes.
Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.
All this growth means we need more places to charge EVs—now. Everywhere from homes and workplaces to retail sites, fleet depots, and on-the-go charging sites, the race is on to build enough public fast-charging stations to meet demand, remove perceived inconvenience for those still hesitating to transition to EVs, and ultimately help meet CO2 emission reduction targets. Some actions governments and companies can take include offering incentives to build private chargers, subsidizing public charging, and investing in production capacity and a skilled workforce.
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