Introduction

The Electric Vehicle (EV) Industry is undergoing a rapid change. This is primarily owing to increasing investments made by governments across the globe to develop charging infrastructure. Moreover, growing demand for electric vehicles and shifting preference towards promoting eco-friendly and economical mode of transportation, along with increasing environmental concerns are some major factors expected to boost demand for electric vehicles market and electric vehicles charging service market over the next few years. In addition, increasing R&D activities by manufacturers for advanced charging stations with better charging capabilities and less charging time is anticipated to create new opportunities in terms of revenue for players operating in the global market. Additionally, rising investments by major players for the development of charging stations are analyzed to drive the market.

Apart from this, one major factor that will be driving this technological advancement in electric vehicle technology will be the rising industry collaborations. The development of electric vehicles requires elaborate funding. Designing, testing, and manufacturing an electric vehicle is very expensive. Not every automotive company on the market has the capability or funds to develop such a technology. This is especially prevalent among startups who are driving the technology forward. As a result, companies are looking to enter into this innovative field utilizing partnership models. These sort of collaborations between startups and automotive giants will be the backbone that will drive technological innovation in the autonomous vehicle and electric vehicle industry. However, Covid-19 has thrown a hammer into the works and significantly impacted these collaborations. Covid-19 has resulted in automotive manufacturers slowing down research into electric vehicles in order to reduce expenses as demand has been hit significantly due to Covid-19.

Covid-19 Led Research Slowdown

Electric Vehicles development is set to slow down as cash strapped automotive players have looked to significantly reduce R&D and development budgets through 2021 and early 2022.  According to a IHS Markit’s global survey of automakers and suppliers, the Covid-19 outbreak impact on automotive R&D should be concentrated in 2020, 2021 and early 2022, when a major contraction of development and advanced research budgets is expected. Around 92% of the survey respondents indicated that R&D budgets shrunk in 2020 and a further 75% expected no significant raise in R&D budget in 2201, which may result in a series of cost-containment measures being deployed. This will likely delay the electric vehicle development due to the significant decline in research funding on these industries. 54% of these respondents listed tech deployment delays as the main effect of these delays. Although the automotive industry will rebound in the short to mid-term, this impact of research budget reduction will delay the development into electric vehicle market. E-Mobility technology around battery, e-motor and power electronics and autonomous vehicle technology emerge as the areas which will be more negatively impacted by COVID-19 as compared to others.

However, 2021 has been a positive year for the automotive industry. The automotive R&D budgets have seen a relatively significant increase over 2020. 2021 has witnessed an average of 6.5% increase in R&D budgets over 2020 according to IHS Markit. The E-Mobility domain has been one of the primary benefactors with a 23% increase in budget year-on-year. While the Europe market has remained stagnant for R&D investment increase, the Greater China region in particular has witnessed a significant increase in R&D budgets including on Electric Vehicles.  This rebound is not limited to the R&D side of the automotive industry alone. There has been a massive rise in venture capital funding as well as the market recovers from the Covid-19 Pandemic. Electric Vehicle startups raised nearly $20 billion in 2021 almost double of the $10 billion raised in a Covid-19 depleted 2020. This $20 billion figure represents a 10 Year high as the pent-up investment from 2020 is expected to be deployed in the short term. The investment is not limited to startups either, Honda and Sony announced a partnership to form a new company that develops and sells electric vehicles. Many states in the U.S as well as countries worldwide have set EV targets for the number of EVs in vehicle par.  This will drive significant shift to EV technology globally over the next few years. Parch

State of EV Industry

The Electric Vehicle industry is witnessing significant upward momentum globally. The demand from consumers as well as positive regulatory changes are driving the growth of the industry. In the U.S, rising investments towards electric vehicle programs to advance the adoption of electric vehicles across California has been acting as a major driver to the industry. With growing technological advancements along with rising adoption towards electric vehicles, many of the automotive companies have been leveraging technologies to enhance the charging infrastructure for such vehicles. Deployment of cloud-based platforms have been widely encouraged by the vehicle manufacturers as it helps in improving charging methods with regular monitoring and managing usage of electric vehicles. Usage of such platform services help the customers to keep a track of their charging requirement within minimum efforts through automated processes with compatibility of meeting open charge point protocol standards. Such advancements have been helping in creating a relatively fast and cost-effective means towards monitoring the electric vehicles more efficiently, thus boosting the growth of electric vehicle charging services market. The development of plug-in vehicles in France is seen as a symbolic step towards achieving national goals in the direction of more environmentally friendly transport. An investment plan to support public infrastructure was also announced by the Government. Automakers in the region are struggling to grow their economies as well as investing on new automobiles technologies to gain momentum in the market. Implementation of environmental responsible policy to reduce carbon footprint and supply of vehicles produced by French manufacturers have enabled France to become the largest electric vehicle market in Europe.

The market for electric vehicles is growing all across the globe, however, the electric vehicle market growth in China is quite significant.  China is one of the major producers of automobiles and owing to the increasing environmental concerns, government has undertaken certain initiative on alternative energy based vehicles, propelling the electric vehicles market, thus creating need for charging stations. As stated by IEA, registration of new electric cars was lower than the overall car market in the first-half of 2020. This trend reversed in the second-half as China constrained the pandemic. The result was a sales share of 5.7%, up from 4.8% in 2019. BEVs were about 80% of new electric cars registered.  Moreover, increasing infrastructural developments in various industries have been boosting market growth. In the APAC region the majority of this growth is from the South-East countries which are undergoing a transformational change in terms of both the economic and the infrastructure developments. New investments mainly in China in the sectors of infrastructure and automobile would present high growth opportunities for electric vehicle charging services market in the region. As stated by the Government of India, the automotive industry is the fifth largest in the world and is slated to be the third largest by 2030. Catering to a vast domestic market, reliance on the conventional modes of fuel intensive mobility will not be sustainable. In an effort to address this, federal policymakers are developing a mobility option that is “Shared, Connected, and Electric” and have projected an ambitious target of achieving 100 percent electrification by 2030. Indian automotive sector is estimated to grow tremendously with huge investments from global manufacturers.  India is among a handful of countries that support the global [email protected] campaign, which targets to have at least 30% new vehicle sales be electric by 2030.  India is the world’s one of the promising electric vehicle market despite the higher cost of EV being one of the barrier to greater adoption of electric vehicles. As stated by IEA, India increased electric bus registrations 34% to 600 in 2020 and is projected to rise a further 30% in 2021 and continue with a significant rise through the mid to long term as public transport electrification continues to be driven by government regulations. Such regulations are expected to impact the Electric Vehicle Market globally.

EV Regulatory Scenario

Market dynamics in the Electric vehicle industry are strongly driven by CO2-emission limits, since they encourage OEMs to manufacture more fuel-efficient vehicles. Likewise, government incentives, such as purchase-price subsidies and tax exemptions, have a major effect on consumer demand. The COVID-19 crisis has led to regulatory changes related to both emission regulations and incentives for electric vehicles. For instance, many local and federal governments have increased consumer incentives for Electric Vehicle purchases, often as part of stimulus programs designed to soften the economic impact of the pandemic. In Germany, for example, purchase-price subsidies for new Electric Vehicles can amount to more than $10,000 per vehicle. In China, the purchase-price subsidy currently ranges from approximately $2,350 to $3,265 by car, depending on its range.

Government incentives for electric vehicles have been established across countries to support policy-driven adoption of electric vehicles and the shift away from Internal Combustion engine vehicles. These incentives mainly take the form of purchase rebates, tax exemptions and tax credits, and additional perks that range from access to bus lanes to waivers on fees such as charging, parking and tolls. The financial incentives vary across countries and typically depend on vehicle battery size or electric vehicle range. Often hybrid electric vehicles are included. Some countries even include fuel cell vehicles and electric vehicle conversions in this incentive list. More recently, some government have also established long term regulatory signals with specific target timeframes such as ZEV mandates, national or regional CO2 emissions regulations and stringent fuel economy standards. There are also plans from a number of countries to phase-out internal combustion engine vehicle sales. For instance, Norway has established a policy to convert all new car sales by 2025 to zero emission vehicles (either electric or hydrogen fuel cell). Other countries have also announced similar targets for the electrification of their vehicle fleet, most within a timeframe between 2030 and 2050.

In addition to instituting these incentives and subsidies for electric vehicles, several governments are investing in charging infrastructure as part of their economic-stimulus programs. These include direct investments for public charging stations as well as subsidies for the installation of private charging stations at homes and workplaces. For example, China committed more than $1.4 billion in April 2020 to subsidize the construction of charging stations, on top of existing programs that promote the sale of EVs. However, the infrastructure is significantly limited in South East Asia and India which has limited the adoption in the sector, despite government regulations and investment.

Country Wise Key EV Regulations, 2015-2021

Country

Major Recent Electric Vehicle Regulations

China

China passed measures to greatly increase the number of electric vehicles on the road. Original policy declared that companies with vehicles sales of over 30,000 vehicles must comply with new rules around NEVs. Each company was required to fulfil a number of NEV credits, as much as 8% by the year 2018. This target was later pushed to 2019, with a requirement of 12% by 2020. In February 2018, to further promote energy-efficient electric vehicles, China raised subsidies for electric vehicles meeting additional range requirements. Electric vehicle incentives for cars with at least 400 km of range increased from $6800 to $7700. However, a 2021 study found that China's subsidies for fuel efficient vehicles was not welfare enhancing, as "the marginal cost of the program exceeds the marginal benefit by as much as 300 percent. This can lead to significant reduction in positive regulations in the country.

India

India is regarded as a country providing the least subsidies, compared to other major markets, to renewable energy in electric vehicle and that may hamper the government target of achieving the entire electric target by 2030. Although, there are local sourcing norms of 30% for automotive manufacturers, electric vehicle entrants have been exempted.

Japan

The Japanese Government established the "Green Vehicle Purchasing Promotion Measure". The program established tax deductions and exemptions for environmentally friendly and fuel efficient vehicles, according to a set of stipulated environmental performance criteria, and the requirements are applied equally to both foreign and domestic produced vehicles. Subsidies for purchases of new environmentally friendly vehicles in the case of owners scrapping a 13-year or older vehicle are $2,700 for the purchase of a standard or small car, $1,300 for the purchase of a mini or kei vehicle. Subsidies for purchasing trucks and buses meeting the stipulated fuel efficiency and emission criteria vary between $4,300 and $19,000.

South Korea

In July 2016, the Ministry of Trade, Industry and Energy announced a plan to make electric car batteries run longer, build a network of charging stations and make electric car purchases and ownership more affordable. The government expects that the current and future policy programs will help increase the electric car market share in South Korea to 0.5% in 2017, up from 0.2% in 2015, and to achieve 5.3% in 2020, with the country reaching 8% EV share in 2020.

The U.S

As of November 2014, 37 states and Washington, D.C. have established incentives and tax exemptions for BEVs and PHEVs, or utility-rate breaks, and other non-monetary incentives such as free parking and high-occupancy vehicle lane access. All states are eligible for the $7,500 income tax credit.

Canada

The Government of Canada introduced a federal Incentive for Zero Emission Vehicles (iZEV) program on May 1, 2019. Under iZEV, the purchaser or lessee is entitled to a rebate of up to CA$5,000 on the after-tax cost of an eligible new electric- or hydrogen-powered vehicle in addition to any provincial incentive programs. The amount of the rebate is determined by Transport Canada based on the vehicle's battery capacity and electric range, and all eligible vehicles must have a list price of CA$45,000 or less

Mexico

Mexico has set a minimum goal of clean energies as part of the electric power generation mix in for the next years (25% in 2018, 30% in 2021 and 35% in 2024)[235] as a strategy to reach Greenhouse Gases (GHG) emission cuts. In Mexico, there are several existing incentives regarding Plug-in Hybrid Electric Vehicles (PHEV) at a federal level. Fiscal incentives for end-consumers include higher daily lease tax deductions per car ($285 versus $200 MXN), higher tax deduction caps per car ($250,000 versus $175,000 MXN), and fiscal credits for up to 30% of investments for charging stations located in public places.

Germany

As a result of the economic impact of the COVID-19 pandemic, the government approved in June 2020 an economic recovery plan with a budget of €130 billion, which included €8 billion to promote electric vehicle adoption and deployment of charging infrastructure. Also, the purchase bonus for plug-in electric cars was raised by temporarily doubling the federal contribution of the environmental bonus until the end of 2021. The so-called "innovation bonus" increased the subsidy for new cars costing less than €40,000 from €6,000 to €9,000 for fully electric cars, and for plug-in hybrids from €4,500 to €6,750.

France

The French government has cancelled any bonus for car price above €60,000, For cars below €45,000 that bonus will be €4000 in 2020.  For the car that cost between €45,000 and €60,000, the bonus is reduced by 50%. Foreign manufacturers such as Tesla have been targeted by this regulation.

The UK

All-electric vehicles (BEVs) and eligible plug-in hybrid electric vehicles (PHEVs) qualify for a 100% discount from the London congestion charge. The Plug-in Car Grant started on 1 January 2011 and made available across the UK. The program reduces the up-front cost of eligible cars by providing a 25% grant towards the cost of new plug-in cars capped at GB£5,000 (US$7,450).  From 1 April 2015, the purchase price cap was raised to cover up to 35% discount of the vehicle's recommended retail price, up to the already existing GB£5,000 limit. This change means electric cars priced under GB£20,000 will be able to take advantage of most or all of the £5,000 discount.


Current Limitations with EV Charging Infrastructure

High cost and infrastructure limitation is the major hurdle that hampers the electric vehicle adoption. The cost of establishing charging infrastructure is quite high. This hampers the market growth. Charging cars require fixed space and an individual for maintenance the charger and space. This cost becomes the major issue as it makes the station finance unviable. The government of various countries have imposed certain restrictions on the per unit price that can be charged to the customer. This has been hampering the condition for charger owners. In the rural areas, the set of charging stations and its services has not been implemented. The charging stations are supposed to be communicating with a central server throughout its operation, but at certain areas and location chargers are not able to communicate with the server because of network issues. This is set to restrict the charging station service market growth. Additionally, investments on electric vehicles is an expensive technology compared to fuel-based vehicles which restricts the implementation of charging stations set to hamper the electric vehicle charging station market growth. However, with increasing production of electric vehicles and stringent government regulations to reduce carbon emissions has been providing opportunities for the Electric Vehicle charging station market. The EV infrastructure is rather dire, especially in developing countries around the world.

For example, as per a MarketWatch report, India would need around 4 lakh charging stations to accommodate the demand for 20 lakh EVs on the roads by 2026. Currently, the country has 1,950 charging stations as of 2022. An independent study by CEEW Centre for Energy Finance indicates that it would need around 29 lakh public charging stations by 2030 to support EV adoption under the base case target of NITI Aayog. Of these, about 21 lakh (71 percent) of chargers would be low capacity chargers used for supporting two-wheelers and three-wheelers. Besides setting up more charging stations, the lack of space is also a hurdle since people need a place to charge their EVs. Such challenges are present, not just in India, but across the world – In Latin America, South East Asia, Eastern Europe and even developed nations such as Australia, Finland, Canada, Spain, Italy and the U.S. This limitation however, is expected to massively change over the next few years.

Future Changes to Infrastructure Implementation and Impact on EVs

This demand for Electric vehicles has led to rising investments for the development of charging infrastructure in several countries. Governments of several countries have been planning to invest heavily for the development of charging infrastructure. In 2020, U.K. government has committed to invest more than $400 million in electric vehicle (EV) charging infrastructure across the country by 2026. South Korean government has targeted the deployment of 10,000 fast chargers by 2022. Similarly, India has plans to install 2,700 charging stations by 2023 in cities with more than 4 million residents.  in the U.S., the California’s Executive Order includes the proposal to invest $900 million for deploying 250,000 charging points by 2026. In addition to the investments made by governments, several companies are also planning to deploy charging stations by 2026. For instance, Tesla is planning to spend about $220 million building out its Supercharger network of over 800 stations. ChargePoint, Inc. has 38,000 chargers and plans to add 2.5 million globally by 2026. Similarly, Electrify America is investing $2 billion in Zero Emission Vehicle infrastructure by 2027. In addition, Volkswagen is driving expansion procedure of electric vehicle charging stations network and will be installing approximately 4,000 charging stations at Germany site by 2026. According to the report given by UK Electric Vehicle Supply Equipment Association U.K. needs about 1.25 million public chargers to fuel 20 million electric vehicles by 2030.

The rapidly evolving electric vehicle (EV) market is driving innovation in EV technology and associated infrastructure. Electric vehicles offer multiple advantages such as reduced fuel consumption and decreased emissions from tailpipes, which significantly boost their demand across the globe. This in turn is expected to escalate the need for charging stations for electric vehicles, thereby driving the market growth. Charging stations are being developed as a part of government initiative programs and EV manufacturers are being involved in the development of charging spots in the parking locations. EV manufacturers are focusing on the establishment of charging stations for electric cars to enhance the sales of electric vehicles. Many companies have started preparatory actions to ensure the availability of a public charging infrastructure by 2020 in both developed and developing economies and because of which, the market is gaining the momentum. Basic charging infrastructure is available all over Finland and is considered as a convenient test laboratory for electric cars. In the future, a charging system allow electric cars in charging the batteries and in feeding energy back into the power grid and helping to stabilize it.

Several automakers are focusing on introduction of new plug in hybrids and electric vehicles across the globe. Increasing focus on reducing greenhouse gas emission and providing better quality air, the government is facilitating funds to develop new electric vehicles charging station networks. In 2020, the Government of India had planned to provided subsidies to set up 5,000 electric charging stations in cities and highways of India. Currently, India has around 150 charging stations. The main aim of the subsidy program is promoting India’s plan to shift 40% fleet to battery operated vehicles. Increasing investments and government initiatives is set to push the wireless charging market. For instance, in 2020, the government of India has sanctioned 2,636 charging stations in 62 cities across 24 states and union territories under the initiative FAME-II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles). In 2020, New York Governor Cuomo had also announced about the initiative to expand electric vehicles in order to combat climate change. New York public service commission had approved “EV Make Ready” initiative to accelerate the deployment of more than 50,000 charging stations by 2025 and in production and sale of electric vehicles. Many companies have been adopting product launches and acquisition strategies for profitable margin in the market. For instance, in 2019, WiTricity, a venture capital (VC)-backed startup which develops wireless charging technology for electric vehicles had acquired Qualcomm’s EV wireless charging unit Halo. This acquisition had made the company in modernizing the technology development that enables automakers to deliver an electric vehicle charging experience that is seamless and efficient. In 2019, BMW had launched its wireless electric car charging system. This system allows the vehicles in order to park over the inductive charging station followed by a simple push of the Start or Stop button to initiate the charging. Many companies have been focusing towards investing in EV charging service market.

Conclusion

The development of electric vehicle charging stations for electric vehicles has gained significant momentum over the past decade. Adoption of charging station services for electric vehicles help in reducing the pollution in large population centers, increase customer loyalty, and attract new customers, thereby driving the market growth. According to International Energy Agency (IEA), the number of battery electric vehicles have been increased from 1.19 million units to 6.5 million units during 2016-2021 period at global level. Growing adoption of EV charging stations with increasing usage of electric vehicles is set to fuel the market growth. Furthermore, increasing demand for autonomous vehicles will create ample opportunities for the EV charging station services, thereby driving the market in near future. Government of various countries have started raising funds for the adoption of electric vehicles. For instance, in 2020, Nottingham city in U.K. had received $4.4 million grant from its government to trial wireless car charging for its taxis. This propels the market growth. In 2019, Norway had planned to install the world’s first wireless electric car charging stations for Oslo taxis in order to make zero emission cab system by 2023. Such developments have been raising the potential for the deployment of Electric Vehicles. The growing Electric Vehicle Infrastructure networks alongside positive regulations to drive the Electric Vehicle segment will significantly drive the adoption of Electric vehicles over the long term.

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