The real cost of an EV charging station
There are 35 different charge point operators in India setting up low cost AC chargers and Fast DC chargers. Let's look at the math behind making a charging station profitable.
More units dispensed = More money
There are two types of charging stations in India, AC chargers (slow charging and cheaper) and DC chargers (fast charging and expensive). Apart from the cheaper vs expensive debate, another thing that matters here is the number of units that your charger can dispense. The more number of units (i.e. Energy) that your charger dispenses the more revenue you generate. I have covered this in my previous insight here as a metric that matters in the EV charging world.
For example: If 1 unit (i.e. 1 kWh) equals 17 Rs, then a 15kW DC charger can dispense 15 units in one hour compared to a 3.3kW AC charger that can dispense only 3.3 units in one hour - A 4.5X more units and earning potential.
With this in mind, let’s dig into how much would you need to price a single unit for a DC charging station and an AC charging station.
Sidenote: If you like to get more such detailed insights about the EV market in India, feel free to subscribe to our insight series.
DC Charging Station Deep Dive
Cost of setting one up:
The most profitable type of DC charging stations today in India are the DC001 stations, these are used predominately in the fleet operator business like BluSmart, Tata tigor’s, 3W EVs, etc. Below is a breakdown of the costs you would incur if you decide to setup a DC001 charging station in Koramangala, Bangalore and use it for 3 years (assuming 3 years since it’s the typical lifespan of a DC001 charger).
Apart from these costs, there are taxes and charger efficiency losses that you incur on a recurring basis. Charger efficiency loss is the % delta between how many units did the charger need from the grid to offer 1 unit to your customer. A DC001 charger has a Charger Efficiency Loss of 7%. (i.e. It will cost you ₹6.4 to deliver ₹6 worth of energy to your customer).
Now let’s include all these costs and map out what is the minimum you should charge your customers based on the amount of traffic you get at your charging station.
What do you need to do to breakeven on a 15kW DC001 charger deployed in Koramangla, Bangalore?
For our model above, we assumed that you got a EV meter for your charging station that costs you ₹6 per unit. Now, If you have less than 25% utilization then you need to set the per unit pricing at ₹31. However, this does not work out for a customer. It becomes more expensive for them to charge at your charging station compared to using their petrol vehicle. The ideal price point as per our customer research is ₹13 to ₹11 per unit, this is threshold at which driving an electric vehicle becomes cheaper compared to an ICE vehicle.
Where is the profit here?
You can clearly see even at 70% utilization you need to charge customers a minimum of ₹11. This is why private charging station operators typically price their charging station prices between ₹20 to ₹15 per unit. However, most public stations today run less than 25% utilization, which means even the ₹20 per unit price point is ₹11 less than the bare minimum pricing to breakeven. Resulting in a loss today.
We at Pulse Energy offer charging station operators (CPO) a way to identify locations that offer greater than 50% utilization. This will ensure that you as a CPO make a sizeable profit from your investments. Drop us a note at firstname.lastname@example.org if you want to partner with us.
AC Charging Station Deep Dive
Cost of setting one up:
AC chargers are cheaper, however your earning potential is 4.5 times less compared to a DC charging station even at equal utilization. Below we shall look at the cost of setting up an AC charging station at a location.
What do you need to do to breakeven on a 3.3kW AC charger?
Looking at the graph above, it definitely seems that AC chargers are way more cost efficient both for the CPO and the customer. i.e. You can charge users at the price point they prefer even at 5% utilization. However, the right question you should ask is - What kind of chargers make more money in the long run with adequate utilization (~50% utilization rate)?
The right question.
Ultimately we are all here to make money. The answer surprisingly is a DC charger. Positioned at the right place with the right density of electric vehicles, a DC charger will yield a higher return compared to a single AC charger.
The Eternal Debate - AC vs DC
Peppering AC chargers across all destination sites will still make less money compared to DC chargers. For example: As the number of AC chargers in a location increase, a CPO will incur additional costs like upgrading the grid to a sanctioned load, land rental and security deposit, increased charger efficiency losses, etc. This will reduce the margins you get from AC chargers even further. At this point, it might as well make sense for a CPO to put a DC charging station versus an AC. More over, as per the graph above, A DC charger needs to just run at 50% utilization to churn out profit equivalent to an AC charger running at 100% utilization. The final verdict in my eyes is that DC charging station operators will generate copious amounts of profit in the long run, while AC charging station operators will need to diversify to other streams of revenue to increase their margins (like charging for parking, showing ads on chargers, etc.).
Sources and disclaimers:
Excel sheet with the costing, breakeven model and profitability model
If you are reading this and feel that we have made some inaccurate assumptions please reach out to me at email@example.com, happy to stand corrected.
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