Potential business models for recharging infrastructure and their implications for plug-In electric vehicle adoption

Abstract

Plug-in Electric Vehicles are more efficient, have lower operating and maintenance costs, and emit fewer local air pollutants than conventional internal combustion engine vehicles. Despite these advantages, the customer adoption of plug-in electric vehicles has been slow due to their high purchase costs, limited driving range, and long recharging times. Construction of a ubiquitous network of high-power recharging stations has often been suggested as a solution to promote their adoption. Although many governments around the world are currently funding the construction of public recharging infrastructure, they cannot continue to provide support indefinitely. This necessitates a private sector-led effort to expand public recharging infrastructure for plug-in electric vehicles to become competitive with conventional vehicles.

Unlike gasoline stations, public recharging infrastructure service fewer cars in a day, and hence, the traditional ancillary revenue based gasoline station business model will not be applicable. So, new, innovative business partnerships are required in the near term to support the construction of public recharging infrastructure until the demand from plug-in electric vehicles becomes significant enough to generate high revenues. Using a System Dynamics modeling approach, we modeled and simulated the electromobility eco-system comprising of electric vehicles and various types of public recharging infrastructure to determine the factors that influence the infrastructure's financial viability. We then conceptualized two business models that affect these factors to improve the cash flow and net income of public recharging infrastructure.

Data from literature was used to calibrate one of the two business models, and we were able to prove that public recharging infrastructure can be constructed in a profitable way if the provider partnered with a taxi fleet. Once the business model was validated, we introduced it in the electromobility eco-system simulation to estimate its impact on the adoption of Battery Electric Vehicles. With the business model in action, the public recharging infrastructure expanded by 14% from earlier and resulted in a 7% increase in the adoption of plug-in battery electric vehicles by 2050.