McKinsey & Company: How charging in buildings can power up the electric-vehicle industry

More than 50 million electric vehicles could be sharing roads in the next five years. Updating charging infrastructure is key to scaling the industry

E-mobility has reached a tipping point. More than 250 new models of battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV) will be introduced in the next two years alone, and as many as 130 million EVs could be sharing roads the world over by 2030.1 To support these numbers, significantly expanded charging is required—and it will not be cheap. In fact, an estimated $110 billion to $180 billion must be invested from 2020 to 2030 to satisfy global demand for EV charging stations, both in public spaces and within homes.

While EV charging stations in private residences are quite common today, on-site commercial charging will need to become a standard building feature in the next ten years to meet consumer demand. Across the three most advanced EV markets—China, the EU-27 plus the United Kingdom, and the United States—charging in residential and commercial buildings is the dominant place for the foreseeable future and will remain key to scaling the industry. Yet without upgrading buildings’ electrical infrastructure, there simply will not be enough accessible EV chargers to satisfy demand. Further complicating matters, EV charging at scale requires careful planning of a building’s electrical-distribution system as well as local electric-grid infrastructure.

To make EV chargers more accessible and affordable, urban planners, building developers, and electrical-equipment suppliers must integrate charging infrastructure into standard building-design plans. In this article, we detail the effects of expanding EV charging on infrastructure planning cycles and adjacent services. Our resulting considerations and recommendations can inform the decision making of four distinct groups of influencers: developers and property owners, urban planners and regulators, grid operators, and electrical-equipment providers.

How to integrate electric-vehicle charging into existing building and grid infrastructure

Initial attempts to mass-market EVs in the early 2000s faced technological limitations, particularly limited driving range, and ultimately failed. Today’s EVs have a range of 150 to 300 miles per charge, making them more than sufficient for the 95 percent of vehicle trips that are less than 30 miles.2 Today, the potential bottleneck is deploying charging infrastructure to service the projected density of EVs.

Over the next five years, EV sales are expected to at least quadruple in the EU-27 plus the United Kingdom and more than double in the United States, resulting in the adoption of more than 50 million passenger vehicles and more than four million commercial vehicles in China, the EU-27 plus the United Kingdom, and the United States combined. As EV prices decrease and more models become available, EV ownership will reach a broader swath of the vehicle-owning population, encompassing more than 10 percent of sales by 2025 and 20 to 30 percent of sales by 2030.

Additional regulatory support may accelerate these trends. In recent months, Denmark and the United Kingdom announced bans on sales of gasoline-fueled vehicles after 2030, while California has set a similar target for 2035. Some cities are going even further, with plans to ban gasoline- and diesel-fueled vehicles entirely over the next decade. For example, Amsterdam is already implementing a requirement that all commercial vehicles within the city center produce zero emissions by 2025, and all traffic throughout the city, including passenger cars, must produce zero emissions by 2030.

In terms of electricity distribution, a vehicle fleet this size would drive additional annual power demand from 180 to 235 terawatt hours (TWh) by 2025 and 525 to 770 TWh by 2030 across China, the EU-27 plus the United Kingdom, and the United States. Meeting this demand will require property owners to deploy portfolios of dedicated charge points—AC level 2 chargers3 and DC fast chargers (DCFCs)4 —across their facilities over the next decade. We estimate that 22 million to 27 million combined charge-point units will be needed in China, the EU-27 plus the United Kingdom, and the United States by 2025, and upward of 55 million charge points will be needed by 2030 (Exhibit 1).

Where charging occurs and how much electricity is used depends equally on driving patterns and the availability and accessibility of infrastructure. Charging from home is currently the most prevalent option in both the EU-27 plus the United Kingdom and the United States due to the low cost of residential retail power and high rate of home ownership among affluent early adopters of EVs. Notably, those EV owners are also willing to pay for the necessary home electrical upgrades that can add $500 to $1,000 to the cost of a home AC charge point.

As EVs are increasingly adopted by less affluent buyers and those who live in multiunit housing (with limited access to home charging), public charging stations in workplaces, as well as dedicated EV charging hubs, will become more commonplace. This is especially true in China and the EU-27 plus the United Kingdom, where the sparsity of single-family homes with in-home parking has resulted in a higher ratio of EVs to charge points than in the United States.

Put simply, the location of charge points will continue to expand beyond single-family homes to affect a wide range of building types. This is especially true of areas that attract large numbers of vehicles, such as apartment complexes, offices, fleet depots, parking lots, and commercial centers.

AC level 2 charge points will constitute the majority of passenger-car charging stations, as they are typically tied to homes, workplaces, and temporary destinations such as stores or street parking. While a full vehicle charge could require anywhere from two to eight hours on an AC level 2 charger, it is rare for an EV battery to be fully depleted outside of long-distance trips. Even so, the amount of time a car is parked at any of these locations, whether it be overnight or during work hours, is adequate to constantly maintain a full charge under all use cases. Supporting passenger EVs will require more than 50 million AC level 2 charge points in homes, workplaces, and other temporary destinations by 2030 across China, the EU-27 plus the United Kingdom, and the United States.

On the commercial side, major fleet operators will accelerate their depot electrification as EVs become cost competitive for an increasing share of routes. Local and regional routes will likely be the first to electrify by utilizing vehicles such as delivery vans that can be charged overnight using AC power. Thus, AC level 2 chargers will drive most of the three million commercial charge points by 2030 in China, the EU-27 plus the United Kingdom, and the United States. Only toward the end of the decade do we expect a significant increase in commercial DCFCs, driven by the large batteries required for electric heavy-duty transport.

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SOURCE: McKinsey & Company

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