With the growing demand for electric vehicles (EVs) and the rapid growth of the electric car market, knowing how commercial ev charging stations work is crucial if you’re considering a franchise. In order to meet your business goals and your budget, there are several ev charging business models for electric car charging stations.
Operating Commercial eV Charging business model
As per your budget and business objectives, you need to determine which model works best for you. Choosing the right business model is key to your success. Here’s an overview of four common models:
1. Loss leader model
It may seem counterintuitive, but free charging may increase foot traffic and loyalty to your business if the station is located in a retail or hospitality establishment.
Expert tip:
This model is often used by large retailers (e.g., Walmart) to keep customers on-site longer.
This model guarantees increased footfall, more dwell time, and increased loyalty among customers. Due to these factors, your revenue rises manifold and is offset by the cost of installing and operating the station.
2. Cost recovery model
Set your pricing according to local home charging costs to ensure yours remains competitive. Charge drivers a basic fee to cover operational costs.
Real-world example: Many public charging networks like ChargePoint use this model, charging drivers based on kWh consumed or by time spent charging.
As a result of this model, more profits will be earned, which will allow for the recovery of installation costs and hardware equipment costs.
You need to set a price within the expectations of drivers, keeping in mind that most of them are comparing the price with their home charging costs.
3. Profit-making model
You can justify higher fees if you install rapid chargers in areas with limited charging options, especially if you offer fast charging for an additional fee.
Case study:
Tesla’s Supercharger network, for instance, offers premium charging at competitive rates, and they prioritize high-speed charging locations.
The fees cover all the costs associated with the installation, equipment, and operation of the charging stations. As a result, the charging station owners can maintain a consistently profitable revenue stream.
You should choose this model if you own a business that has very limited options for charging customers’ vehicles. You also need to install advanced rapid chargers to make sure your customers are justified in paying you more.
4. Fully-funded model
Install and maintain the charging station with the help of an infrastructure company. In exchange, you receive lease payments and could receive additional income through advertising or increased traffic from your customers.
Consider working with companies like EVgo or Blink Charging that offer turnkey solutions.
As well as the lease fee, you also receive additional income from the charging stations as a result of an increase in customers or an increase in their spending during their stay.
Why Electric Car Charging Stations Are a Profitable Opportunity
The rise of EV adoption makes charging stations a lucrative business opportunity. Here’s why:
1. Growing demand:
According to the International Energy Agency (IEA), the global electric vehicle (EV) sales are expected to reach 17 million in 2024, which is a more than 20% increase from 2023. This would mean that more than one in five cars sold globally will be electric.
2. Environmental awareness:
Sustainable practices are increasingly valued by consumers, and charging stations support that philosophy.
3. Potential for repeat business
As electric vehicles require frequent charging, customers are provided with a steady flow of products and services.
4. Competitive advantage:
Electric vehicle charging stations are in high demand, but there are not enough of them on the market. Early adopters have a competitive advantage due to the lack of conventional charging stations.
How To Earn Revenue from an EV Charging Station Franchise?
Getting a reliable charging company is essential for generating revenue from EV charging station franchises.
EV charging station franchises in the USA need to be offered by companies that provide seamless installation services. To minimize your EV charging station franchise cost in the USA, you need to find a company that will provide every assistance you might need.
Hardware and other charging equipment should be procured, electricians trained for the job should be hired, permits should be obtained, the station should be designed, the site should be prepared, the station should be installed, and maintenance software should be deployed.
If you partner with such a company for an EV charger franchise, you don’t have to worry about a thing. From installation to operation, their competent team will handle it all. Once the station starts earning revenue, your income will be increased as well.
There are several revenue streams that will generate revenue from your electric charging station franchise, regardless of how much it costs.
- Car charging fees from drivers
- Fees from the EV charging company for rent/lease
- Your business gets more customers
- When customers wait for their vehicles to be charged, they spend their extra time buying more
- There may be an additional fee to host promotional displays for local companies or brands.
Cost Breakdown For a Commercial EV Charging Station
The first thing you need to consider when starting an EV charging station business is the startup costs. Understanding all types of costs is crucial to choosing a profitable business model. Here, we break down all the costs for you.
1. Infrastructure costs
Your startup costs can be based on the cost of installing conduits, transformers, and site preparation. You may also have to upgrade existing electrical systems, and these costs can differ based on your location.
Expert Tip: Work with utility companies early to determine connection costs and any potential rebates for renewable energy usage.
2. Charging equipment costs
The fastest charging times are offered by Level 3, which is expensive (up to $50,000 per unit). These chargers are essential for high-traffic commercial areas, where they provide the fastest charging speeds.
There are three kinds of chargers you can choose from- Level 1, Level 2, and Level 3. With each level, charging capacity and speed increase. In a commercial public station, where cars will continue to flow in continuously, we would not recommend installing Level 1 chargers. In homes or single apartments, they are ideal for overnight charging.
Depending on how much load you expect to handle on a daily basis, you need to buy Level 2 or Level 3 chargers. Compared to Level 1 chargers, Level 2 chargers are priced between $700 and $2000, while Level 3 chargers can charge a car fully within an hour! Level 3 chargers are the highest specification chargers and are therefore expensive.
3. Indirect costs
You will need to install protective bollards that protect the charging equipment, which will cost about $400. Soft costs include the miscellaneous costs associated with securing and decorating the EV charging station to make it look professional. It is also necessary to place parking blocks to ensure 2-3 cars can park safely without ramming into each other when charging.
Lastly, you may need to employ a security guard or operational staff to supervise the EV charging station during work hours. The salary of the individual will be another cost to you.
4. Software costs
Data analysis can help you reduce costs by adjusting pricing and peak-hour strategies. Advanced software helps owners monitor usage patterns, track consumption, and optimize operational efficiency.
Miscellaneous Costs For Operating EV Charging Stations
The installation costs are not the end of the story. Once your EV charging station has been operational for some time, there are a few more costs to consider.
1. Cost of integrating data management
Identifying the peak time at your station when it needs the most power can help you save money over time. You can analyze your energy consumption and use power wisely in order to save money over time. Afterwards, you develop strategies to reduce peak electricity demand and save money.
The cost of doing all of that is, however, associated with the power management resources you will have to have.
With the aim of optimizing electricity consumption at a variety of stations, an EV charging company offers franchise opportunities to businesses. The franchisees are required to deploy a robust data management application for that purpose. We also do the same!
With this interface, we can monitor charging sessions, building management, security cameras, and lighting, among other things. It is our intention to share those insights with you soon or to send real-time alerts, which will help you to lower your electricity consumption.
2. Insurance costs
It is generally required to purchase liability and property insurance. Expect to pay $250 to $1,000 annually, depending on the location and size of the station.
Conclusion
As the auto industry transitions to electric vehicles, you can gain market share by choosing the right business model and managing costs efficiently.
