As it approaches the year 2023, Tesla’s 10,000th Supercharger in mainland China has settled at the foot of the Oriental Pearl in Shanghai, marking a new phase in its own charging network.
In the past two years, the number of EV chargers in China has shown explosive growth. Public data shows that by September 2022, the total number of EV chargers nationwide had reached 4,488,000, a year-on-year increase of 101.9%.
In the construction of EV charger in full swing, we can see the Tesla supercharging station which can run for more than half a day after charging in 10 minutes. We also saw the NIO power changing station, which is as fast as refueling. However, apart from the fact that the personal experience of users is getting better day by day, we seem to pay little attention to the issues related to the EV charger industry chain and its future development direction.
We talked with domestic EV charger industry experts and studied and interpreted the current development of the domestic EV chargers industry chain and its representative upstream and downstream companies, and finally analyzed and predicted new opportunities for the growth of the domestic EV charger industry in the world based on the industry reality and future potential.
EV charger industry is difficult to make money, and Huawei did not cooperate with the State Grid
In a EV charger industry meeting the day before yesterday, we exchanged with a EV charger industry expert about the current profitability model of the EV charger industry, the EV charger operator model and the development status of the EV charger module, a key area of the EV charger industry.
Q1: What is the profit model of electric car charger operators at present?
A1: In fact, it is difficult for domestic electric car charger operators to make profits, but we all agree that there are reasonable operation modes: like the service area of gas stations, they can provide food and entertainment items around charging stations, and provide targeted services according to the preferences of charging users. They can also communicate with businesses to earn advertising fees.
However, providing services like service areas of gas stations requires supporting facilities and related personnel, which is a large amount of support for operators, resulting in relatively difficult implementation. Therefore, the main profit methods are still direct revenue from charging service fees and subsidies, while some operators are also finding new profit points.
Q2: For the electric car charger industry, will companies like PetroChina and Sinopec, which already have many gas stations, have certain operational location advantages?
A2: There is no doubt about it. In fact, CNPC and Sinopec are already involved in the construction of electric car charger and charging stations, and their biggest advantage is that they have enough land resources in the city.
In Shenzhen, for example, because there are more pure electric vehicles in Shenzhen, the quality of profitability of local operators is still very high, but at a later stage of development, there will be a problem that there is a serious shortage of cheap outdoor land resources, and indoor land prices are too expensive, clamping down on the continued landing of electric car charger.
In fact, all cities in the future will have a development situation like Shenzhen, where the early profits are good, but the later is dissuaded because of the land price. But CNPC and Sinopec have natural advantages, so that for operators, CNPC and Sinopec are competitors with natural advantages in the future.
Q3: What is the development status of the domestic mainstream electric car charger module?
A3: There are about tens of thousands of domestic companies that are doing electric car charger, but now there are fewer and fewer manufacturers doing electric car charger module, and the competitive situation is becoming more and more obvious. The reason is that electric car charger module, as the most important component of upstream, has a high technical threshold and is gradually monopolized by a few head companies in the development.
And in enterprises of corporate reputation, influence and technology, Huawei is the best among all electric car charger module manufacturers. However, Huawei’s electric car charger module and the national grid’s standard are different, so there is no cooperation with the national grid for the time being.
In addition to Huawei, Increase, Infypower and Tonhe Electronics Technologies are the main suppliers in China. The largest market share is Infypower, the main market is outside the network, there is a certain price advantage, while Tonhe Electronics Technologies has a very high share in the network, increasingly showing the oligarchic competition.
The upstream of the EV charger industry chain looks at the charging module, and the midstream looks at the operator
At present, the upstream industry chain of EV charger for new energy vehicles is the manufacturer of components and equipment needed for the construction and operation of EV chargers. In the middle of the industry, it is the charging operators. The participants of various charging scenarios in the downstream of the industrial chain are mainly users of various new energy vehicles.
In the upstream industry chain of automobile EV charger, charging module is the core link and has a high technical threshold.
According to the statistics of Zhiyan Information, the cost of hardware equipment of EV charger is the main cost of EV charger, accounting for more than 90%. The charging module is the core of the hardware equipment of EV charger, accounting for 50% of the cost of hardware equipment of EV charger.
Charging module not only provides energy and electricity, but also carries out AC-DC conversion, DC amplification and isolation, which determines the performance and efficiency of the EV charger, and can be said to be the “heart” of the EV charger, with a high technical threshold, and the important technology is only in the hands of a few enterprises in the industry.
At present, the mainstream charging module manufacturers in the market are Infypower, Increase, Huawei, Vertiv, UUGreenPower Electrical, Shenzhen Sinexcel Electric and other leading companies, occupying more than 90% of the domestic charging module shipments.
In the midstream of auto EV charger industry chain, there are three business models: operator-led model, vehicle-enterprise led model and third-party charging service platform led model.
The operator-led model is an operation management model in which the operator independently completes the investment, construction and operation and maintenance of EV charger business and provides charging services for users.
In this mode, charging operators highly integrate the upstream and downstream resources of the industrial chain and participate in the research and development of charging technology and equipment manufacturing. In the early stage, they need to make a large amount of investment in the site, EV charger and other infrastructure. It is asset-heavy operation, which has high requirements on the capital strength and comprehensive operation strength of enterprises. On behalf of enterprises have TELD New Energy, Wanbang Star Charge Technology, State grid.
The leading mode of automobile enterprises is the operation management mode in which the new energy vehicle enterprises will take the EV charger as after-sales service and provide the owners of oriented brands with better charging experience.
This mode is only for fixed car owners of automobile enterprises, and the utilization rate of EV chargers is low. However, in the mode of independent pile construction, the automobile enterprises also need to spend a high cost to build EV chargers and maintain them in the later stage, which is suitable for the automobile enterprises with a large number of customers and stable core business. Representative enterprises include Tesla, NIO, XPENG Motors and so on.
The third-party charging service platform mode is an operation management mode in which the third party integrates and resales the EV chargers of various operators through its own resource integration ability.
This model third-party charging service platform does not participate in the investment and construction of EV chargers, but accesses EV chargers of different charging operators to its own platform through its resource integration capability. With the technology of big data and resource integration and allocation, the EV chargers of different operators are connected to provide charging services for C-users. Representative companies include Xiaoju Fast Charging and Cloud Fast Charging.
After nearly five years of full competition, the EV charger operation industry pattern is initially fixed, and most of the market is controlled by operators, forming a tripod complexion of TELD New Energy, Wanbang Star Charge Technology, State grid electric. However, to date, the improvement of charging network is still relying on policy subsidies and capital market financing support, and has not yet run through the profit cycle.
Upstream Increase, midstream TELD New Energy
In the EV charger industry, the upstream supplier market and the midstream operator market have different competitive situations and market characteristics. This report analyzes the leading enterprise of the upstream charging module: Increase, and the midstream charging operator: TELD New Energy, to show the industry status.
Among of them, EV charger upstream competition pattern has been determined, Increase occupies a place.
After the development in recent years, the upstream market pattern of EV chargers has basically formed. While paying attention to product performance and price, downstream customers pay more attention to industry application cases and product stability. It is difficult for new entrants to obtain industry recognition in a short time.
And Increase also in twenty years of development, with a mature and stable technology research and development team, a full series of cost-effective products and channels of multiple and wide coverage of the marketing network, the company’s products have been stably used in all kinds of projects, in the industry reputation.
According to the announcement of Increase, in the direction of electric charging point products, we will continue to implement product upgrades based on the current products, optimize performance indicators such as environmental requirements and output power range, and accelerate the development of DC fast charging products to meet market demand.
At the same time, we will also launch “one EV charger with multiple charges” and improve flexible charging system solutions to provide better construction solutions and products for the construction of high-power DC charging stations. And continue to improve the software construction of charging station operation and management platform, strengthen the integrated business model of “management platform + construction solution + product”, and strive to build a multi-innovation-driven brand as a leading supplier and solution provider in the power electronics industry.
Although, Increase is strong, but in recent years, the buyer’s market trend, there are still market competition risks in the future.
From the demand side, in recent years, the upstream market of domestic electric charging points presents a buyer’s market situation with fierce competition. At the same time, the development direction of electric charging points has also shifted from the initial construction end to the higher quality operation end, and the EV charging power supply industry has entered the stage of industry reshuffle and intensification.
In addition, with the basic formation of the market pattern, the current players in the industry have deep technical strength, if the company’s new product research and development can not be successfully developed on schedule, development of new products do not meet the market demand and other problems, it will be quickly replaced by peer companies.
To sum up, Increase has been deeply engaged in the market for many years, has strong competitiveness, and is also trying to create a characteristic business model. However, if the future research and development cannot be timely followed up, there is still the risk of being eliminated, which is also the microcosm of upstream enterprises in the whole electric charging point industry.
TELD is mainly focused on redefining “charging network”, releasing virtual power plant platform products and making efforts in the midstream of the charging pile industry chain, which has a deep moat.
After several years of market competition, the midstream market has formed a tripod complexion of TELD New Energy, Wanbang Star Charge Technology, State grid., with TELD ranking first. As of 2022 H1, in the public charging field, the market share of DC charging points is about 26%, and the charging volume exceeds 2.6 billion degrees, with a market share of about 31%, both ranking first in the country.
The reason why TELD is firmly at the top of the list is that it has developed a huge scale advantage in the process of laying out the charging network: the number of electric charging points landed in a specific area is limited because the construction of charging assets is restricted by the site and regional grid capacity; at the same time, the layout of electric charging points requires huge and lasting capital investment, and the cost of entering the industry is extremely high. The two together determine the unshakeable position of TELD in the midstream operation end.
At present, the operation cost of electric charging points is high, and the charging service fees and government subsidies are far from enough to support the profits of operators. In the past few years, related companies have been exploring new ways to make profits, but the TELD has found a new way, out of a new road.
Yudexiang, chairman of the TELD, said, “With electric vehicle charging and discharging, distributed new energy, energy storage system, adjustable load and other resources as the carrier, coordinated optimization of energy use, ‘charging network + micro-grid + energy storage network’ is becoming the new main body of virtual power plant, is the best path to achieve carbon neutrality.”
Based on this opinion, the business model of TELD is undergoing a profound change: charging fees, the main source of revenue for operating companies today, will be replaced by dispatching fees for converged virtual power plants in the future.
In 2022, H1, the TELD are connected to a large number of distributed photovoltaic and distributed energy storage, opening up the power dispatching centers of many cities, and building multi-type virtual power plants based on rich application scenarios such as orderly charging, off-peak charging, peak power selling, micro-grid photovoltaic, cascade energy storage, and vehicled-network interaction, thus realizing value-added energy business.
The financial report shows that the first half of this year achieved revenue of 1.581 billion yuan, an increase of 44.40% over the same period last year, and gross profit increased by 114.93% over the same period last year, indicating that this model not only works, but also can achieve good revenue growth now.
As you can see, TELD, as the leader of the operation end, has a powerful strength. At the same time, it relies on complete charging network facilities and access to power generation and energy storage systems around the world, finding a better business model ahead of others. Although it is not profitable yet due to the initial investment, in the foreseeable future, TELD will successfully open up the profit cycle.
Can the ev charger industry still usher in new growth?
In the domestic EV charger upstream and midstream market competition pattern is gradually fixed, each EV charger enterprise is still expanding the market through technology iteration and upgrading and going abroad to seek incremental methods.
Domestic EV chargers are mainly slow charging, and users’ demand for high-voltage fast charging brings new opportunities for growth.
According to the classification of charging technology, it can be divided into AC charger and DC charger, which is also known as slow EV charger and fast EV charger. As of October 2022, AC chargers account for 58% and DC chargers account for 42% of public EV charger ownership in China.
In the past, people seemed to be able to “tolerate” the process of spending hours to charge, but along with the increase in the range of new energy vehicles, charging time is getting longer and longer, charging anxiety also began to surface, and the user’s demand for high-voltage high-power fast charging is rapidly increasing, which greatly promotes the renewal of high-voltage DC EV chargers.
In addition to the user side, vehicle manufacturers are also promoting the exploration and popularization of fast-charging technology, and a number of vehicle companies have entered the mass production phase of 800V high-voltage technology platform models, actively building their own charging network support, driving the acceleration of high-voltage DC EV charger construction.
According to the forecast of Guohai Securities, assuming that 45% of new public ev chargings and 55% of new private ev chargings will be added in 2025, 65% of DC chargers and 35% of AC chargers will be added in public ev charging, and the average price of DC chargers and AC chargers will be 50,000 yuan and 0.3 million yuan respectively, the market size of ev chargings will reach 75.5 billion yuan in 2025, compared with 11.3 billion yuan in 2021, with a 4-year CAGR up to 60.7%, there is a huge market space.
In the process of domestic high-voltage fast ev charging replacement and upgrade in full swing, the overseas ev charging market has also entered a new cycle of accelerated construction.
The main reasons that drive the accelerated construction of overseas ev chargings and domestic charger enterprises to go to sea are as follows.
1. Europe and the United States tram ownership rate is rapidly increasing, ev chargings as supporting facilities, the demand increased.
Before the second quarter of 2021, European hybrid car sales accounted for more than 50% of the total sales ratio, but since the third quarter of 2021, the growth rate of pure electric vehicle sales in Europe has increased rapidly. The proportion of pure electric vehicles has increased from less than 50% in the first half of 2021 to nearly 60% in the third quarter of 2022. The increase in the proportion of pure electric vehicles has put forward a rigid demand for ev chargings.
And the U.S. new energy vehicle penetration rate is currently low, only 4.44%, as the U.S. new energy vehicle penetration rate accelerates, the growth rate of electric vehicle ownership in 2023 is expected to exceed 60%, is expected to reach 4.73 million new energy vehicle sales in 2025, the future incremental space is huge, such a high growth rate also drives the development of ev chargings.
2. Europe and the United States car-charger ratio is too high, car more than charger, there are supporting rigid demand.
As of 2021, Europe’s new energy vehicle ownership is 5.5 million, public ev charging is 356,000, the public car-charger ratio is as high as 15:1; while the U.S. new energy vehicle ownership is 2 million, public ev charging is 114,000, the public car-charger ratio is up to 17:1.
Behind such a high car-charger ratio, is the status quo of serious shortage of ev charging infrastructure construction in Europe and the United States, rigid supporting demand gap, contains a huge market space.
3. The proportion of DC chargers in European and American public chargers is low, which cannot meet the needs of users for fast charging.
The European market is the world’s second largest ev charging market after China, but the construction progress of DC charging in Europe is still in the initial stage. By 2021, among the 334,000 public ev chargings in the EU, 86.83% are slow ev chargings and 13.17% are fast ev chargings.
Compared with Europe, DC charging construction in the United States is more advanced, but it still cannot meet users’ demand for fast charging. By 2021, among 114,000 ev chargings in the United States, slow ev chargings account for 80.70% and fast ev chargings account for 19.30%.
In overseas markets represented by Europe and the United States, due to the rapid increase in the number of trams and the objectively high ratio of car-charger, there is a rigid supporting demand for ev chargings. At the same time, the proportion of DC chargers in the current ev charging is too low, resulting in users’ iterative demand for fast ev chargings.
For enterprises, because the European and American automobile testing standards and regulations are more stringent than the Chinese market, the key to short-term “going to sea” is whether to obtain standard certification; In the long run, if a complete set of after-sales and service network can be established, it can fully enjoy the growth dividend of overseas ev charging market.
Write at the end
EV charging as a new energy vehicle supporting the necessary equipment, the industry’s market size and growth potential is undoubted.
However, from the point of view of users, ev chargings are still difficult to find chargers and slow to charge from the high speed growth in 2015 to now; and enterprises are struggling on the edge of loss due to the large initial investment and high maintenance cost.
We believe that although the development of the ev charging industry is still facing many difficulties, but with the reduction of upstream manufacturing costs, midstream business model gradually mature, and enterprises to open the road to the sea, the industry will enjoy the dividends will also be visible.
At that time, the problem of difficult to find ev chargings and slow charging will no longer be a problem for tram owners, and the new energy vehicle industry will also be on a healthier path of development.
Post time: Jan-11-2023