A First Shot at Pricing EV Charging: 50 Cents a Kilowatt Hour
When people talk about charging EVs, they often cite a breezy two cents a mile, using a calculation based on low-priced grid electricity. But public charging will often have a profit built into it, and consumers will have to get used to paying more for an on-the-road "fill up" than they'll pay at home. The all-in price for consumers will vary according to regional electricity costs and other factors, but an entrepreneur in the space told me it could average around 50 cents per kilowatt hour.
That may be the first consumer price quoted from a charging company, and has a decided "whoa" factor, since it's so much higher than consumer grid pricing. (New Yorkers pay a dime for a kilowatt hour at night, and 25 cents during the day.) It was quoted to me by Michael Farkas, CEO of the Car Charging Group (CCG), which has just signed a deal to put 220-volt Level 2 chargers in lots and garages run by Icon Parking, which has 200 such facilities in the New York area. In the deal, Icon (which just provides the space, with CCG paying for installation and maintenance) is likely to get around seven percent of the revenue. So this deal, and presumably many more like it, will have a fair amount of overhead, upfront costs and other expenses.
Is 50 cents a kilowatt hour in line with what others will charge? Probably, but it's still very early to say definitively. "The industry is still in a nascent stage, still jockeying for position and working out pricing," said Michael Lew, a research analyst at Needham and Company. "This will firm up next year, as the cars start to roll out."
The situation is complicated by the fact that many states (with the notable exception of California, which just revised its regulations) don't allow charging companies to do the logical thing and actually charge by the kilowatt hour -- that's reserved for utilities. That means charging by the hour, which is a bit awkward when EVs charge at different rates. CCG plans to charge $3 an hour in those situations, but Lew said he'd also heard much higher figures quoted, anything from $5 to $10.
Rachel Carroll, a communications vice president at battery company Ener1 (which supplies packs to Think and to Volvo), pointed out that "this is one of the first conversations that monetizes the financial side of charging." Armed with 50 cents a kilowatt hour, her company ran an analysis of the numbers, and concluded that a Think City (a small, two-seat battery car) would still be operated at 12 cents a mile, versus 17 cents for a 20-mpg gas car. "So it's considerably cheaper," she said. The EV is 68 percent of the gas car, in that analysis.
Yes, but home charging will be much less. According to Richard Steinberg, BMW of North America's manager of electric vehicle operations (the company operates a fleet of Mini Es and has several EVs pending), "I don't really have a context yet to know if that is the appropriate amount or not. Residential remains the top priority with us, but public charging makes sense at museums, stadiums and places like that. Whether it will be free [as many early public chargers are] or at a rate like that is not something we have a strong opinion on."
For Jeff Taylor, chief operating officer at fast-charging (480 volts, Level 3) company Aker Wade, the important thing is not the kilowatt-hour charge, but how quickly the "tank" can be filled. "The price will be variable depending on how it's delivered," he said. "Paying 50 cents a kilowatt hour for a 20-minute charge is one thing, but having to wait eight hours for the same amount of electricity makes it a lot less valuable." Fast charging does have other issues, however, including whether an attendant will be needed to "man the pumps."
He has a point there. EV charging is likely to be all over the map because of factors like these. As many of you know, there are three levels of charging, from house current (Level 1) to home- and public 220 (Level 2) and the 480-volt charging (Level 3) that will never be located in homes, but confined to big-box parking lots and other such spaces. So 50 cents a kilowatt hour is an interesting shot across the bow, but full engagement is yet to come.
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Photo: Car Charging Group