Changing role for governments amid EV tech push
In the second part of inspiratia’s conversation with three leading authorities on the EV charging sector, government intervention, international comparisons and new alliances between companies all come to the fore. Discover more at EVS Whistler in November
Following on from last week’s article documenting some of the key discussion points from inspiratia’s recent roundtable with Pinsent Masons partner Peter Feehan, Zouk Capital partner Colin Campbell, and Dominique Houde, partner at Drake Star Partners, we drop in once again with the three.
After chewing over some of the leading trends in the market around charging hubs, fleets and specialisation last time round, attention on this occasion was turned towards matters both close to home and further afield for the panellists.
First up on the agenda was the role governments can play to nurture the sector, being as it is an area where most politicians now talk of the need to be ready for the electric mobility transition by ensuring enough charging options are available to consumers.
Different jurisdictions have implemented various schemes to get EVs off the ground, from grants and tax breaks of varying sizes, to loans, guarantees and equity investments in vehicle manufacturers and charging providers.
Last week’s article touched upon Zouk’s Charging Infrastructure Investment Fund, which is one example of state intervention in the sector, albeit one which is operated on a commercial basis. Then earlier in July, the UK’s Department for Transport announced almost £40 million in funding for EV infrastructure across the country in a parallel strategy aimed at helping achieve a fully electric car fleet by 2050.
While the recipients of grant funding will naturally extol the benefits of this kind of support for their projects, this approach lacks consensus as to whether it is the best long-term option for the industry, as well as whether it can distort the market in unforeseen ways.
“If you’re going to put grant funding into a market you have to be very strategic in terms of how you place that funding and how you get the maximum return in terms of government intervention in the market,” said Pinsent Masons’ Peter Feehan.
“If we’re going to have grants and subsidies my sense would be that schemes like Birmingham and Bristol where councils are seeking to create area-based schemes is probably best where those grants and subsidies lie,” continued Feehan.
While in the UK at least, funding these days seems to be directed towards helping newer technologies get off the ground. Innovate UK has been awarding funding to proposals fitting this bill, such as the vehicle-to-grid trial undertaken by the V2GO consortium featuring Zouk investee EO Charging. However, this approach has not always been the case, as Zouk’s Campbell explained.
“Where it’s targeted for a specific reason to push and get innovation through, I think it’s a very useful way of stimulating the market and stimulating UK interest in those technologies very early on in their commercial viability.
“The side I think is not helpful and probably didn’t do the sector much use was a lot of the grant-aided early chargers that went in which weren’t maintained, were poorly thought through, and probably didn’t give the EV charging community a great name in terms of reliability.”
Campbell further pointed to government-funded charge points in places like Scotland which have the effect of crowding commercial propositions out of the market as the latter would otherwise be competing against projects with an advantage in terms of their revenue generation requirements.
While Drake Star’s Dominique Houde agreed that careful consideration needed to be made in terms of how grants are wielded, he pointed to another area where they could be used for the greater good.
“In areas where we recognise it’s a little more difficult to be commercially viable initially but it’s necessary for the future, having a grant in that area if it’s proportionate can make sense.
“Some examples that we are seeing in the EU, for instance, on long distance charging have worked reasonably well because you do have to make networks which you will not have otherwise, and that helps to sell the cars and make the transition happen but it has to be really carefully judged,” said Houde.
Aside from government intervention in the sector, another ever-present factor now is the need for companies to partner up on projects and charge point roll-out programmes.
The European market is littered with examples, such as the aforementioned V2GO consortium which featured EO Charging partnering with EDF Energy, Oxford University, and Upside Energy, among others. Meanwhile oil major Shell – owner of NewMotion – has previously gotten into bed with Allego on EV charging projects and is now targeting corresponding moves into collaborations with auto manufacturers.
“Large energy players see the strategy of having best-friends relationships with entities in alliance arrangements and joint ventures, while moving towards acquisition as a way they want to proceed,” said Feehan.
“And the reason why it’s quite favourable is it allows you to look at a market segment quite closely without getting too embroiled in it into a position where you’ve created a business strategy that you actually find in 18 months’ time that you need to move away from.”
The rapid changes in market development that Feehan alluded to was a point that was taken up by Houde, as he described one possible scenario he foresees for the future of the sector.
“There has traditionally been a necessity to get some form of market share or technical advantage, but I think we may see a shift going forward to projects or assets being purchased and therefore creating a new M&A market.
“That’s probably some way ahead but I think it’s an interesting way of how the market will go and I think you will see that when it comes we will have more business-to-business type large projects that can be asset financed or infrastructure financed,” said Houde.
Houde added that the quicker developing markets would undoubtedly be those where the uptake of EVs is higher, pointing to Norway and the Netherlands as the current leaders on that count. The UK too would soon follow suit but was still a way behind on the key metric of the share of EVs in total new car sales; in 2018 only 2.7% of total sales in the country were plug-in EVs.
Italy is another European country that is widely considered as somewhat less developed when it comes to EVs, but it is a market that Zouk entered earlier in 2019 with its acquisition of local specialist charging provider BE Power.
Campbell described how he believes the company, which operates charging stations through its 100% owned subsidiary BE Charge, is ideally placed to challenge Enel as the leading EV infrastructure provider in the country and possesses prime locations across Italy to do so.
Of the move into the country, he said, “We’re realistic about how quickly it catches up and we do believe it will be a player. It was interesting for us because it wasn’t an overpopulated territory to go and play in and we found a very good team we wanted to back.
“So that combination is why we’ve done the deal and we’re happy with it; it’s a very exciting, young company, and we want to create the leading brand in Italy for their customers.”