By Adam Healy, Tim Longstaff and Siongkoon Lim

Charge Point Operators (CPOs) have been at the forefront of the public electric vehicle (EV) charging infrastructure drive over recent years, but how can they defend their positions and carve out roles as indispensable service providers as the market matures?

CPOs offer a compelling proposition for freeholders and operators of land, delivering capability and taking on investment and execution risk in a relatively immature domain. They are best positioned to execute in a still nascent market and have plenty of growth ahead. Yet, their business model faces existential threats further out as charger hardware becomes more ubiquitous, as operation and maintenance becomes more quotidian, as front-end software and the user experience (finding, using, and paying for public charging) improves, and as risks related to EV adoption and charging demands reduce.

To date, many landowners/operators have elected to outsource project development, roll-out, and risk, in an activity that sits firmly outside their core capabilities, to CPOs. CPOs have harvested the limited cashflows from their nascent business and pursued a 'land grab' to build out their installed bases as they seek external investment to further fuel their own growth - more locations, more chargers, more users.

In the UK, CPOs who operate their chargers on their own land are mostly also fuel forecourt operators who have developed or acquired their own charger network (e.g., BP, Shell, MFG) or vehicle dealers (e.g., Tesla). Some CPOs have also embarked on their own 'land grab' - Gridserve acquired the Ecotricity estate, and built its first Electric Forecourt in 2020, pledging to build over 100 sites dedicated to EV charging over the next five years - whilst others, such as Raw Charging and Fastned, are opening dedicated hubs for fast and rapid charging.

We believe that in the long-term, some of the larger landowners/operators will not want to give away a share of significant profit pool, and will insource their electric vehicle charging services (EVCS) proposition and capabilities where they have the scale to do so.

In many cases, typically for landowners/operators with smaller portfolios offering On Route or Destination charging, the CPO proposition will always remain relevant - such businesses will likely lack the scale to develop and optimise their own EVCs capabilities. And in other cases, competition-related concerns may require larger operators to offer mutliple charging brands within a site or portfolio of sites - which CPOs will be well-equipped to provide for.

But as EV penetration continues, and as charging demand grows and becomes more certain, the risk profile for investing in EV charging propositions will narrow. Landowners/operators and CPOs will both seek to optimise their share of profits from EVCS in the mid-to long-term, but acheiving this will not be trivial.

• How should landowners/operators position with CPOs? How to navigate investment in chargers and power infrastructure without getting tied up in knots with co-investing CPOs and regulations? How and when should landowners/operators develop their own capabilities?
• How should CPOs position as increasingly indispensable to their customers/partners? Which elements of the value chain should CPOs focus on?
• What contract structures, pricing, and profit/capex/risk sharing arrangements can be atrractive to CPOs, but also deter landowners from cutting them out of the loop?

Bottom line

Lofty CPO valuations are tempered by falling market capitalisations of publicly listed businesses such as Allego, ChargePoint, and PodPoint, whilst the upward re-rating of assets, such as motorway service areas, indicate that the landowner/operator hold many cards with its ability to insource EVCS and take a large share of the profit pool. To capture growth in EV charging demand, CPOs will have to secure valuable locations outright or through long-term exclusive contracts with landowners/operators. But this will come at a cost - the CPO value proposition will shift as deploying chargers becomes less risky and upsides more concrete, and the negotiation between site owner and CPO will rebalance. Yet unless landowners/operators build EV charging capabilities in-house, CPOs remain an important enabler of the transition to EVs, and have an opportunity to cement their role in the value chain making themselves indispensable at the right price. Who takes what share of a large profit pool remains to be seen.