EV Charging Sector Attracts Companies from "Big Oil" and Utilities

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【Summary】EV charging providers are being targeted by investors from "big oil" and utilities, as there are plenty of ways to profit from the service.

Michael Cheng    Feb 13, 2019 7:00 AM PT
EV Charging Sector Attracts Companies from "Big Oil" and Utilities

The rapid growth of the EV industry is becoming too enticing for large companies waiting on the sidelines for opportunities. According to a timely report published by GTM Research, established businesses from traditional oil and utilities are making big moves in the sector.

The report highlighted such investors are fixated on supporting infrastructure-related projects, such as building EV charging stations, to boost adoption. Analysts from Sanford Bernstein, a New York-based global asset management firm, speculate that "big oil" could be pumping money into the sector to stay relevant with fuel trends. 

Why are investors from "big oil" and utilities flocking to EV startups? Find out below.

Following the Trail of Acquisitions

The number of acquisitions and partnerships between oil businesses and EV companies have been increasing steadily in the past few years. The latest comes from Shell New Energies, an active subsidiary of Royal Dutch Shell, which acquired EV startup Greenlots in January. Before the deal, the global oil brand led a Series A round held by Ample, a startup that specializes in charging platforms for electrified units.

"The industry definitely is viewing this as a positive," said Eric Cahill, Program Director at Plug in America.

"You can look at it another way — maybe Shell is purchasing this to shelve the technology — but I don't see that being the case. This is a positive development, a recognition by oil and gas companies that EVs are real and not a passing fad."

It is also important to point out that Shell already leverages more than 30,000 EV charging hubs across Europe, via its undisclosed acquisition of NewMotion. Other businesses in "big oil" are following suit. In order to stay ahead, Chevron and ExxonMobil completed massive investments in EV infrastructure. In 2018, Chevron made a game-changing decision to invest in EV startup ChargePoint (currently valued at $1.5 billion).

Interestingly, utility companies are taking interest in new opportunities within the EV charging space. Notable service providers partnering with EV startups include the following: Pacific Gas and Electric, Southern California Edison, San Diego Gas & Electric and New Jersey's PSE&G.

EV Infrastructure

EV charging providers are being targeted by investors, as there are plenty of ways to profit from the service. Retail products, in the form of common "convenience-store goods" and other non-fuel items, could be offered at charging stations. Moreover, EV hubs in busy locations may display digital ads on panels next to the chargers. Discounted charging rates via membership or subscription can also be offered for exclusivity.

"What we see is that most charging takes place when the car is parked for four hours or more," said Tomas Bjornsson, VP of E-mobility at Vattenfall.

"Essentially at home, at work or at a destination like if you're going to a shopping mall, football game or whatever it could be."

On the utility side, demand for electricity at home is forecasted to surge along with the proliferation of EVs. Power companies may also tap into the market by offering installation services for EV charging hubs to residential communities.

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