Page views VS Conversion rate VS Average order value for the EV charging world
Is having 10K chargers deployed a good representation of a successful EV charging business? Let's dive in to understand what metrics one should measure to evaluate a successful EV charging startup.
Below are some news quotes from a 2012 Mint article titled “E-commerce firm face survival tests”. It was an outcome of the e-commerce rush in India lead by Flipkart in 2008.
Quote 1: “A lot of these sites have dead inventories and the 20-30% discounts are not helping them cover their costs,"
Quote 2: “Of the 379 technology product start-ups launched until October, 193 were e-commerce firms, and 87 of these, including Shopveg.in, Taggle.com and Letsbuy.com, have ceased to exist”
Quote 3: “Startups used to tell us how many site visits they got, what their daily active users are. But at the end of the day two metrics that mattered to us VCs are conversion rate (How many visitors are buying from your website?) and average order value (How much money are they spending per order?)”
Reading these three quotes reminds me of the gold rush we see with EV startups today. From the freshly minted BITS Pilani graduates to the seasoned entrepreneurs that’s looking at EVs as the inevitable future of the automotive industry in India, everyone wants a piece of this EV cake. However, the metrics that the industry collectively look at when evaluating a successful EV charging and swapping startups are heavily skewed and often times just wrong. In this series I shall dive into the different metrics that matter for a successful EV charging startup.
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Metrics that matter
Utilization Rate: A 15kW EV charger can potentially dispense 360kWh of energy in 24 hours. If this charger has only dispensed 30kWh of energy during the entire day then the charger’s per day utilization is 8.3% (i.e. 30/360 * 100%). Majority of public charging networks deployed in India has less than 5% utilization rate.
Why does this matter? This metric shows how often are chargers on a particular charge point operator’s (CPO) network being used by it’s users. If the charger is simply deployed and not being used then it’s a dead asset.
Energy Dispensed: Since EV charging is priced per unit (i.e per kWh), the most important output metric to measure is “how much energy has a particular CPO’s network dispensed in a fixed period of time”. For example: The InstaCharge roaming network that we are building for Log9 Materials has dispensed 10MWh of energy in the past 30 days with just 2 DC chargers. While as two 3.3kW AC slow chargers even at 100% utilization can only dispense 4.7MWh of energy in 30 days.
Why does this matter? Ultimately we are all here to make money, in the CPO world money comes in for every kWh of energy that you give out. More energy dispensed the more revenue you have generated from a single charging point. It’s always good to measure how much energy have they dispensed from their network during the past 7 day or 30 day period.
Profit margin from a single unit: The cost of revenue for a charging station does not just involve the charger cost, it also includes the land rental cost, the security deposit for the land rental, the cost required to upgrade the electricity load for that location and the civil work involved in setting up the charging station. These extra costs may not exist if it’s simple low cost AC charger (i.e. costs less than 10K). The profit margin will be the pure profit that the CPO gets for every single unit of energy sold. A simple equation for this will be like the one below.
Profit margin from a single unit = Cost to customer per unit - (amortized charger cost across 3 years + amortized land security deposit + amortized electricity upgrade cost + monthly land rental cost + cost of electricity from Discom + amortized cost of civil work + monthly cost of CMS and app).
In a majority of the cases all chargers are running on losses across India, either because the utilization is low (in case of DC chargers) or the energy dispensed is low (in case of AC chargers).
Metrics that don’t matter
Number of chargers: Having 1,000 chargers across India is good PR, but not good for your balance sheet. This is a vanity metric to help put a potential EV buyer at ease. The anxiety that an EV buyer is washed down by an EV vehicle salesperson when they quote the number of chargers available to them in a city.
What can a CPO do to increase their utilization and energy dispensed metrics?
At Pulse Energy, we have been working closely with CPOs and EV owners to understand the demand and supply cycle. If you are a CPO, then drop us a note at email@example.com. We can help you increase your utilization and the energy dispensed metrics for your CPO network.
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