【EV charging】In the $200 billion EV charging pile market, which companies can grab a piece of the pie?
On August 18th, in order to boost consumption, cultivate new growth drivers, and promote the consumption of electric vehicles and the upgrading of related industries, the State Council executive meeting decided to extend the policy of exempting vehicle purchase taxes for new energy vehicles until the end of next year.
(1) Policy encouragement and promotion effects
Additionally, exemptions from vehicle and vessel taxes, consumption taxes, road tolls, and license plate fees will continue to be provided. There will be a major effort to construct charging piles, with support provided through policy-driven developmental financial instruments.
With the anticipated continuation of the exemption of electric vehicle purchase taxes, the emphasis on the significant construction of charging piles at this meeting was somewhat beyond expectations.
China Everbright Securities noted that the cost recovery period for charging piles is relatively long, and there are high requirements for deployment and operational capabilities. The meeting proposed to “vigorously promote the construction of charging piles and include them in the scope of policy-driven developmental financial instruments support,” indicating that on one hand, the construction of electric vehicle charging piles will be further accelerated, and on the other hand, that support through policy-driven developmental financial instruments will effectively alleviate the capital investment required for early-stage deployment of charging piles by enterprises, thereby stimulating their enthusiasm.
(2) Issues and Solutions Faced
The issue of electric vehicle charging is considered the “last mile” of electric vehicle promotion and is crucial for the widespread adoption and development of electric vehicles. In 2020, charging piles were included in the government work report for the first time as supporting facilities for the promotion of electric vehicle vehicles and were incorporated into the concept of “new infrastructure,” becoming one of the seven major industries.
Since the second half of 2020, the Chinese electric vehicle market has maintained rapid growth, with the electric vehicle vehicle sales expected to exceed 5 million units in 2022 and possibly approaching 10 million units by 2025. With the rapid development of the electric vehicle market in recent years and the rapid growth in the number of vehicles, the demand for electric vehicle charging continues to increase.
(3) The Current Situation of Chinese piles Enterprises
As of the end of 2021, the national stock of electric vehicle vehicles stood at 7.84 million units, with 2.617 million charging piles, resulting in a ratio of 3:1 between vehicles and charging points, indicating a significant gap. According to estimates by CICC Consulting, by 2030, China’s stock of new energy vehicles is expected to reach 64.2 million units. Based on the target construction ratio of 1:1 between vehicles and charging points, there will still be a gap of around 63 million charging piles in China over the next decade, forming a market for charging pile infrastructure construction worth 1.0253 trillion yuan.
According to data from the China Electric Vehicle Charging Infrastructure Promotion Alliance, the scale of China’s charging pile market was only 7.2 billion yuan in 2017. Driven by both market and policy factors, it reached 41.9 billion yuan in 2021, with a compound annual growth rate (CAGR) of 55% from 2017 to 2021. Zhejiang Securities (601878) forecasts that by 2025, the global addition of charging piles is expected to reach 13.99 million units, corresponding to a market space of 196.3 billion yuan, with a CAGR of 65% from 2021 to 2025.
From the perspective of the industry chain, the new energy charging pile industry chain consists of upstream charging pile component manufacturers, midstream charging pile operation service providers, and downstream support segments. Among them, equipment component manufacturers (equipment end) and charging pile operators (operation end) are the main segments of the charging pile industry chain. Zhejiang Securities pointed out that in the charging pile industry chain, upstream equipment competition is sufficient, midstream operations are concentrated among top players, and downstream service models are still being explored.
The technological threshold of upstream equipment is relatively low, with a high degree of product homogeneity (resulting in lower profitability). Currently, there are over 300 companies in the domestic charging pile equipment production field, indicating a fairly competitive market. Major enterprises include WOER (002130), Aotecar (002227), State Grid Corporation of China (600406), Kstar (002518), Shenghong (300693), Kelu Electronics (002121), Xuji Electric (000400), Heshun Electric (300141), Siyuan Electric (002028), Zhongheng Electric (002364), Juhua Technology (300360), EasyET (300376), Wanma (002276), and Yingkoray (300713).
In terms of midstream operations, the market participants mainly consist of third-party professional operation companies, with some involvement from automotive manufacturers and energy/grid companies in charging operation services. In 2021, the top 5 public charging pile operators included Star Charge, TELD, State Grid Corporation, YUNFAST, and Southern Power Grid. There is a clear concentration of leading charging pile operators, as by June 2022, the top 15 operators nationwide managed over 14,000 charging piles, with the top fifteen operators accounting for 92.5% of the total.
(4) The development and status of the industrial chain
Regarding downstream services, charging piles will be closely integrated with advanced technologies such as smart grids, the Internet of Things, 5G communication, cloud computing, big data, artificial intelligence, and vehicle networking. This integration will extend the industry chain and expand into new value-added service areas to enhance the utilization and profitability of charging piles. Specific profit models are still under exploration.
Currently, the momentum of new energy vehicles is strong, and their penetration rate is expected to continue rising in the future. To better support the promotion of new energy vehicles, the urgent need to accelerate the construction of supporting infrastructure such as charging piles and battery swapping stations has become increasingly evident.
