Free Electricity Is Problematic for Electric Cars

By · February 13, 2013

Electric car charging in Germany

Electric car charging in Germany

There's something great about gasoline: the business model. Oil companies are making fat profits, and small shops take a fair cut when they sell gasoline to drivers. This is one of, if not the most, successful businesses there is. It has been consistently profitable for more a 100 years.

Many people wonder if Apple can still be a great company without Steve Jobs, but nobody doubts that Exxon will still be making big money in 10 years. If only producing and selling electrical energy was as lucrative. The question gains importance in Europe as politicians have called for the installation of thousands of charging stations in every country.

Electric car charging in France

Electric car charging in France

There are some chargers already in the ground and providing juice. Some have been installed by restaurants or hotels. They provide a slow charge and are free to use. It's working now with very few EVs on the road, but it would be a totally different affair if there were millions of EVs everywhere.

On the other side of the spectrum, there are the superchargers from Tesla, which are fast charge and also free to use. Better than that, they're green since they use solar energy. Solar economics say a large investment is needed upfront and that the return will take many years. But if the electricity is given away for nothing, there's no return. The superchargers idea may be nice, but it doesn't scale (even though it might help Tesla sell cars).

Assuming a Tesla Model S has an electrical consumption of 300 Wh per mile, that will make 30,000 kWh after 100,000 miles. That's close to $5,000 of electricity where this writer lives. Tesla has probably set aside some money, even if not this exact amount, for its customers' free electricity. But the point here is that as long as there's free electricity for EVs drivers, there will be no private investors creating networks of charging stations.

Electric car charging in the Netherlands

Electric car charging in the Netherlands

Vast plans are being drawn today, but they'll only get real with public funds. It could happen as planned and be good, or not. Gas stations are great here because they offer a choice of suppliers. If a driver doesn't like one specific oil company, there's another gas station a block or two away. It's much more difficult to shop around for electricity. It will likely be even harder if charging stations have been paid for by public money. A deal will be signed with the local dominant utility, and drivers will have no choice. There may also be an issue with confidentiality. Oil companies have issued their own credit cards, but few drivers use them, and in most gas stations, it's still possible to pay cash, with nothing recorded. With public chargers, will the detail of charging sessions just get handed to the government?

Here's the conclusion: the current free situation cannot last because it can't scale, and actually, public chargers might not be a good solution. Maybe EV enthusiasts shouldn't brag about how great it is to charge for free, or for very little money. Instead, the argument should be made that electric cars will have more of a future if charging stations owners can make a decent revenue from their operation. Even if a large majority of EV drivers charge at home, there is a need for a sustainable business case to support public charging stations.

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