According to Google Maps, the Mobil gas station located at 8489 Beverly Blvd in West Hollywood is surrounded by charging stations for electrical vehicles. This isn’t surprising, because the number of EVs in California is increasing, and this particular area is ideally located at the intersection of two main arterial roads in Los Angeles: Beverly Blvd and La Cienega Blvd. This image raises an important question: are these charging stations competing with gas stations?

Bhulu Ahmed, the Mobil station’s owner, said that he hasn’t seen any change in his business over the past few years. “To be honest,” he added, “I do not see many EVs around here.” He explained that he has been working in the area for almost thirty years and, although the number of EV drivers has increased, he still serves the same number of customers as usual.

Perhaps the reason why Ahmed hasn’t experienced significant changes is related to the clouded business model behind charging stations. Indeed, it is still unknown whether EV charging stations will replicate the gas station’s business model, or whether the electricity offered for free by many plug-ins’ owners could prevent entrepreneurs from opening stations where drivers must pay to charge their vehicles. This current situation is a combination of two main factors.

On one hand, the state of California has set ambitious targets for EVs and made automakers commit to putting EVs on the market. Lisa Chiladakis, manager at Veloz, a Sacramento-based non-profit organization dedicated to increasing awareness about EVs, pointed out that the government’s goal is to have 1.5 million EV drivers by 2025. But people will not buy more EVs if they do not see an increasing number of charging stations, and the state will not provide more charging stations if the number of electrical vehicles does not increase. On the other hand, there are neighborhoods, such as Beverly Hills, that  offer power for free, as an incentive to attract shoppers. Accordingly, a new set of free-electricity providers has evolved; as stated by PlugShare’s chief executive Brian Kariger, some malls, supermarkets, and stores have chosen to offer free electricity because “some businesses install charging stations to attract customers.” This type of free-electricity business model makes it tough to see how EV charging stations could become the gas stations of the future.

Sorean Kim, a woman I interviewed at The Grove, said that she was taking advantage of the free charging station while shopping: “I found free places near my work and my home and actually my commute is not so far, so I do not have to charge my car very often.”

 

It’s Complicated

According to PlugShare, one of the most popular apps that allows users to find and review charging stations, none of the five charging stations close to Ahmed’s Mobil station has the same connector type or charges the same price. The closest one, at the Sofitel Hotel, has two J1772 EV plugs that cost $18 to use, once under six hours of parking is purchased. Another charging station in the area, at the Elan Hotel, has a Tesla plug type and the J1772. Unlike the Sofitel, the Elan does not require parking payment, just charging payment. Nearby, between Burton Way and La Cienega Blvd, there are also charging stations at Trader Joe’s; there, drivers do not pay for parking, but they have to pay a fee for the charge through Blink, a network of charging stations for EVs. From this, it is easy to see that all these places, within just a few miles, are assigning different values for the same product.

“The cost of the electricity is determined by the owners of the charging equipment. Some choose to charge. Some offer free charging as a customer incentive. Some fold the cost of the charge into parking or HOA fees,” stated Jennifer Allen, the supervisor of the zero-emission vehicle and infrastructure office within the California Energy Commission’s Fuels and Transportation Division. Moreover, the owners determine prices according to the type of charger level; a level 2 usually requires between $1 and $5 per session, while the DC fast-charging plug-ins require drivers to pay higher prices for the convenience of charging their cars in a very short time.

Kariger explained how payment methods work in EV charging stations: “Station owners and operators choose pricing. For example, if you own a parking lot you could choose to purchase a charger from SemaConnect, one of our partners, and once it was installed in your lot, you’d log into a website to set pricing as you see fit. Your station would then appear in PlugShare, and drivers would enter their credit card information into the app to pay and be on their way.”

 

Not Yet Defined

Might the free charging station model endanger the emergence of other models as well as the expansion of EVs? When I asked my interviewees if they see a potential long-term business model based on charging EVs with free electric power, each of them answered that it is unlikely.

Allen, of the California Energy Commission, stated that there are even gas stations selling electricity for electrical vehicles right now. Indeed, even though it seems that the free charging station model is still growing, “free stations aren’t always the best option.” Indeed, from its data analysis, PlugShare found that drivers are willing to pay for features like faster charging and for being able to plug in at convenient locations along the highway during a long-distance trip.

Yet business models are being developed, even though there are free charging stations available. They range from the home-model; the networking-model pursued by companies such as ChargePoint, Blink, SemaConnect, and eVgo; and the super-fast-charging-model. As Kariger pointed out, “one of the effects of having all of these less expensive, and in some cases consumer-owned, distributed energy resources is that it is opening up the energy business to more open models; for example, peer-to-peer energy trading. Electric vehicles themselves are mobile energy resources, and there are already pilot programs underway in which utilities and grid operators pay EV drivers for sending energy back into the grid. So not only will EV drivers be able to get reduced rates or free electricity, they will be able to sell energy to others as well.”

Overall, it seems that electrical vehicles are slowly reshaping the gas station business model that we are used to. We do not know yet which model will be the winning one, but surely many others are yet to come as the industry continues to evolve.