Getting to 2030: What CPOs must do to resolve charging ecosystem frictions.

For the US to meet the emissions reduction targets set by the Paris Accords, over 2 million new charge points will be required for the 28 million EVs expected on US roads by 2030.

Charge point operators (CPO's) are doing their best to meet this demand, but they need to dig deep to overcome the frictions that will continue to be a drag to more efficient operations if left unaddressed.

Using the fictional case study of a fictional CPO called "PlentyPower", through the lens of "Teni"; its visionary founder, we’ll go through her challenges and the frictions that arise at each point, using a simple framework that all CPOs should adopt.

Five years ago, Teni had a hunch: by observing the trends and studying the research, she figured that the US would need over 2 million EV chargers for electric vehicle (EV) drivers by 2030.

Having worked across related sectors (e.g., investment banking, energy utilities, and traditional energy – read as oil & gas), she saw that the largest point of revenue will be as a charge point operator (CPO), and that’s where she decided to plant her flag. Committed to doing her part to help usher in the new energy paradigm, she founded PlentyPower to help fleets with their charging needs.

Fast-forward to 2024 and, even though her hunch was right and there have been plenty of tailwinds (e.g., favorable government action, corporate emissions pledges, shifting consumer behavior), there is still a long way to go: Even though PlentyPower now has nearly 4,000 charge points – making them a top 10 CPO – they need to install more than 2-3x of that total every year for the next 5 years if she hopes to retain their market position.

Friction: Inertia needed to install charge points quickly

- The end of 2023 saw nearly 180,000 active charge points in the US, and needs to maintain that growth pace but with hundreds of thousands of installs annually by 2030 - up from tens of thousands in the prior decade.

- At a flat rate, this means the US should see over 400,000 new chargers every year for the next 6 years, but this rapid increase is unlikely given that the most chargers installed in one year was 38,000 in 2021.

As with any technology, Teni recognizes that charging technology is not static; in the past few years, it has gone through continuous cycles of evolution. However, it's safe to say that existing capabilities are sufficient to meet projected needs. Her biggest headaches on this front come from ensuring she can get her chargers online on-time and keeping that uptime at the sweet spot of over 97%, as has become the industry target.

Friction: Effort needed to keep project on budget

• Top features for chargers include charging speed, load balancing, connectivity, V2X capabilities, user experience, and a suite of advanced functionalities. With the right hardware (most of which is currently available), most of it can be optimized with software updates.
• Actually getting the hardware on time, and within budget, is very tough due to bottlenecks with EVSE (electric vehicle supply equipment manufacturers), energy supply (including utilities), access to financing, and reliable/knowledgeable talent.

As more sites came online, Teni observed that her business manager and operations lead kept disagreeing more often. They were at odds due to all the surprises they keep making tweaks for different manufacturers and models, the risks of failing to deliver on their promise to their customers, and the potential impacts to PlentyPower’s growth plans from slowing down (read funding!).

Friction (with fleets): Reactance to new financing, routing, and charging habits.

• Even though EVs promise a lower total cost of ownership (TCO) for fleets, it requires a lot of new capabilities and mindsets to achieve these benefits. The vehicles themselves are currently more expensive and require route optimization planning to make sure the right features are selected before purchase. Room for error is further reduced as ‘top-ups’ are not yet as convenient as with ICE vehicles.

Friction (with maintenance): low morale from continuously evolving issues

• Managing charging for EVs from multiple OEMs introduces complexities in charging infrastructure compatibility (e.g., CCS vs. NACS), charging management software compatibility, necessitating diverse technical training and software adaptations. It demands flexible solutions for maintenance (varying spare parts) and operational efficiency across brands.

At this point, Teni realized that she needed to reduce the impacts of these interruptions as a critical step to the next phase of PlentyPower. She knew there was a lot of potential trapped within what they had built so far. To ensure her leadership team stayed focused, she brought in a consultant to help her assess the situation, starting with a workshop to identify the sources of friction.

• Approach: A full friction analysis between PlentyPower and their stakeholders uses a framework that evaluates inertia (how quickly?), effort (how difficult?), reactance (are they onboard?), and emotion (how do they feel?):

With all the functional leads participating, they found that the utilities, installation & maintenance, OEMs, and fleets saw the most friction due to how quickly these changes are expected to be implemented (inertia), and the effort required to accomplish the ramp-up.

• Inertia: Utilities, OEMs, and fleets, experience the highest frictions due to how quickly they are expected to implement scaled solutions. EVSE and installation come next as they evolve to serve a rapidly growing market
• Effort: Utilities, EVSE, maintenance, and OEMs all must develop new capabilities and capacity to provide mature solutions to the burgeoning industry.
• Emotion: Maintenance and OEM stakeholders don’t seem to be thrilled with the aggressiveness of the situation, even though they have critical roles to play.
• Reactance: Most stakeholders are onboard , but Fleets, OEMs, and maintenance seem to have largely been brought in at the launch phase of most deployments which means they have to learn new behaviors fast which isn’t always pretty

Leveraging this discovery, Teni determined she needed to assemble a working group of utility, OEMs, drivers, and installation/maintenance stakeholders who would help anticipate and overcome obstacles as they occur.

She also refined PlentyPower’s core objectives and operating model with her leadership team to make sure expectations were clear and instilled throughout the company.

Solution:

- Ensuring objectives are both clear, and address business critical dynamics (e.g., profitability, growth, talent, financing) is the starting point for any CPO. This will require a deep understanding of the market conditions, and capability gaps.

- A disciplined operating model which establishes a cadence to delivering results against set metrics needs to be in place. This means that everyone from the intern to the board chair understands what is expected of them and how they are expected to deliver their work.

- To avoid losing their place as a top 10 CPO, PlentyPower must:

o Leverage insights from their friction analysis. Each CPO is unique, and the insights uncovered should drive prioritization and focus for the company. Common examples include utility planning (including substation equipment), rapid ramp up of repair capabilities for new equipment.

o Assemble a working group made of the highest friction stakeholders. For most CPOs, this group should contain maintenance, utility and EVSE as a starting point. But the analysis will help you identify often under-represented groups like OEMs, fleets, and maintenance who are critical to the business.

o Go from a reactive to a proactive stance. The goal of the working group is to validate (& refine) the true sources of friction, then develop action plans to overcome them which they must implement. They will also be critical in times of the inevitable crises to address issues quickly. An example will be including maintenance in the hardware RFP process to ensure they are building capabilities to service the equipment before they arrive.

With this in place, Teni knew she had put together an agile and responsive team that was poised to overcome any challenges in the future. She is confident that PlentyPower would be a top 5 CPO by 2030.

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