The UK public electric-vehicle charging sector is facing a major challenge as electric vehicle (EV) take-up falls short of expectations. But winners and losers may be starting to emerge as charging habits take shape.

In the early 2020s, when EV ownership was surging, the main question for EV charging companies was whether they could roll out enough charge points to keep up.

But recent signs of a slowdown in EV sales growth mean that charge point operators (CPOs) are now conversely faced with the problem that there may not be enough EVs on the road to create sufficient demand for their services.

EV ownership in the UK boomed from 2020, with the proportion battery EVs sold growing from 6.6% in that year to 16.5% in 2023, according to the Society of Motor Manufacturers & Traders (SMMT).

The figure rose to 19.6% last year, but this is some way short of the 22% that has been mandated by the government. This is a concern for CPOs because if they continue their rapid expansion, there is a risk that utilisation rates – a major factor in their path to profitability – will fall.

The slower than hoped for growth in EV ownership has been brought about by multiple factors, the most obvious of which is persistent high costs for EVs, which have failed to fall in line with predictions.

CPOs in the UK and elsewhere are pushing governments to do all they can to support growth in EV ownership. Their UK industry body ChargeUK recently urged the government “not to cave to short-sighted demands to water down the commitment” for vehicle manufacturers to sell a minimum of 80% zero emission vehicles in 2030, rising to 100% in 2035.

Underpinned by the strong growth in EV ownership so far this decade, the number of charge points in the UK has grown to more than 70,000, compared to just under 21,000 at the end of 2020 according to figures from Zapmap, which operates an app to help EV drivers find charge points.

The government’s target is for this to rise to 300,000 by 2030. However, this would require an acceleration in the growth rate even from the impressive levels so far this decade, raising the possibility – if the current slowdown in EV sales growth persists – that supply will far outstrip demand.

Winners and losers

But a report by PwC last year noted that “not all charge point portfolios are the same” and as the market progresses “there will be both winners and losers”.

There are certainly many potential winners and losers to pick from, with the largest player by number of charge points, Shell Recharge, accounting for less than 9,000, or just over 12% of the total, according to the Zapmap report.

Shell Recharge is followed by Aviva Investors’ Connected Kerb with nearly 6,000 charge points and Pod Point, backed by French utility EDF, with around 5,000.

Number of charge points is not necessarily the best indicator of a CPO’s size though, because Shell Recharge, Connected Kerb and Pod Point all to varying degrees operate slower chargers that are used while drivers are parked for an extended period of time, while faster chargers can serve a much greater number of vehicles per day.

Among the rapid (defined by ZapMap as 50 kW) and ultra-rapid players (100kW or more), the biggest players with around 1,700 charge points each are EQT Infrastructure’s Instavolt and – something of a unique operator as it is also an EV manufacturer – Elon Musk’s Tesla.

BP Pulse and Cube Infrastructure Managers’ Osprey Charging also have more than 1,000 rapid or ultra-rapid charge points each, while Infracapital’s Gridserve has nearly 900.

While this section of the market accounts for just over 14,000 or around 20%, of the total number of charge points, it makes up 60% of total capacity.

The fragmentation of the market suggests consolidation could be on the cards.

The PwC report sees this as likely, with stronger operators acquiring rivals that are “sub-scale and/or under financial distress”.

A spokesperson for Osprey Charging meanwhile told Infralogic that it believes consolidation is inevitable and that it is well-placed to play a part in this given its scale.

But given that the EV charging market is still very much in its infancy, a long way off the aspiration of 300,000 charge points by 2030, consolidation will only be a small part of the story of how the market develops in coming years. A more crucial question perhaps is which business models will prosper as the market moves towards this target.

Rapid domination?

One interesting recent development at the rapid/ultra-rapid end of the market that could give a clue on how the market will develop is an apparent move away from the classifications of “destination” and “en-route” charging.

The spokesperson for Osprey said that these definitions are largely misleading in a country as densely populated as the UK, where it is not easy to define if people are “en route” to somewhere or at a “destination”.

This sentiment is echoed by one of the authors of the PwC report, strategy and deals partner Matthew Alabaster. Speaking to Infralogic, he notes that EV charging facilities at locations such as McDonald’s [NYSE:MCD] drive-throughs, despite traditionally being thought of as “destination” sites, can have similar utilisation to “en-route” sites such as motorway service areas (MSAs).

He believes that key to rapid and ultra-rapid CPOs’ success is not which of these categories they fall under but whether they have managed to establish themselves at locations that result in high levels of utilisation, allowing more chargers to be installed as utilisation reaches a certain trigger point.

This blurring of the lines between the two categories in practice appears to mean that CPOs focused on the faster end of the market are likely to dominate “destination” charge points that are largely being used by drivers who are “en route” to somewhere.

One case in particular that may illustrate this trend is Pod Point, which is focused on slower charging and has been active in locations such as supermarket car parks but in November 2023 announced that it would be moving away from public charging.

During 2023 Pod Point, whose main source of revenue is non-public home charging, opened 5,231 charge points through its commercial arm covering destination charging at locations such as Sainsbury’s [LON:SBRY] and Tesco [LON:TSCO] supermarkets and APCOA car parks, down from 5,781 in 2022. This is in contrast to accelerating growth at rapid and ultra-rapid charging specialists such as Osprey.

For comparison, Pod Point offers charging speeds of up to 75kW at Tesco car parks, although the majority of chargers at these sites run at 7kW, while Osprey offers speeds of 300kW, enough to add up to 100 miles of range in around 15-20 minutes, it says.

While supermarkets are technically “destinations”, they are often “frequently co-located on a retail park with coffee and quick-serve restaurants, with easy routing and access from the nearby major road”, lending themselves well to Osprey’s fast charging speeds, notes the Osprey spokesperson.

Nevertheless, there are some destinations that are less well suited to rapid charging, such as golf clubs and theme parks, the spokesperson notes.

If faster charging is likely to dominate locations such as supermarket car parks, one area where there is a relatively high degree of certainty for the future of slow charging is in “on-street” charging.

Players active in this market include Shell Recharge and Connected Kerb, which are counting on the likelihood that on-street charging will be vital to facilitate EV charging for those in residences such as apartment blocks, where home charging is not an option.

As noted in a recent report by MUFG Managing Director Stefan Barrow and Vice President Daniel Jaax, for on-street chargers near homes, “slow charging is absolutely fine as users do not want to unplug their car in the middle of the night anyway”.

A slow 7kW charger costs less than EUR 4,000 to install on a lamppost, while ultra-rapid 350kw chargers can cost up to EUR 150,000 each to install, the report notes, underlining the benefits of slow-charging for uses such as on-street charging.

Continuing appetite for investment in the on-street segment of public charging looks set to be tested this year, with Connected Kerb having recently appointed Cameron Barney for a capital raise.

Public EV charging will continue to evolve in coming years, influenced by factors such as the extent to which EV owners charge in public or at home and the speeds they opt for when they do charge in public.

But the most fundamental question for EV charging in the short-term is whether take-up of EVs will start to pick up again – or sluggish sales continue to cast a shadow over the whole CPO sector.