Global Listed Infrastructure
EV Charging Ahead
Peter Meany and Kate Turner
For professional/institutional/qualified investors only

• Electric Vehicles are coming, charging
infrastructure is the real barrier• EV a $US1.4 trillion opportunity for utilities
as grids become more essential• Responsible investors can accelerate
EV uptake and the drive to net zeroFirst Sentier Investors recently presented at the Responsible
Investment Association Australasia (RIAA) annual conference
and hosted a design lab on how responsible investors canshape the future of Electric Vehicles (EV). This paper outlines
the key challenges for EV acceptance, analyses the rollout of
EV charging infrastructure around the world, and considers
practical ideas for investors to super-charge the uptake of EV.

Transport is next focus for net zero

Staying on the path to net zero carbon emissions by 2050 is
critical to limiting the impact of global warming. Utilities havemade tremendous progress in reducing emissions from thepower sector over the last decade, replacing finite energy
from coal and gas with renewable energy from wind and solar.
With this trend well entrenched, transport is now the largest
contributor to carbon emissions in many countries.
With around 75%1 of transportation emissions coming fromroad vehicles, electrification of cars, trucks, vans, buses andmotorcycles is the challenge and the opportunity over the
next decade. Focus shifts to transport.

June 2022

Energy-related CO2 emissions by sector (US) (billion metric tons)
2021

3.0

History

Projections

2.5
2.0
1.5
1.0
0.5
0.0
1990

2000

2010

2020

Transportation

Electric power

Residential

Commercial

2030

2040

2050

Industrial

Source: EIA Annual Energy Outlook 2022, First Sentier Investors

Electric vehicles are coming

Sales of passenger EV globally were 6.6m in 2021 up from 3.2m
in 2020 and 2.1m in 2019, according to BloombergNEF (BNEF).2
The researcher estimates EV sales represented 9% of allpassenger vehicle sales. Leading markets for EV sales included
Germany (26%) and UK (21%).
Most governments around the world recognise the needto accelerate uptake of EV to address the climate impactsof transport. European policies have been particularly supportivewith the region’s largest car manufacturer Volkswagen Group
expecting electric vehicles to represent 70% of sales by 2030
and to stop selling internal combustion engines by 2035.3
EV share of passenger vehicle sales
100%
80%
60%
40%

1. Source: International Energy Agency as at 31 December 2021.
2. Source: BloombergNEF Long-Term Electric Vehicle Outlook 2022.
3. Source: Volkswagen, May and June 2021.
Reference to the names of each company mentioned in this communication are for illustrative
purposes only and are merely used for explaining the investment strategy. Any fund or
stock mentioned in this presentation does not constitute any offer or inducement to enter
into any investment activity nor is it a recommendation to purchase or sell any security.
Companies mentioned herein may or may not form part of the holdings of FSI.
01

20%
0%
2015
Europe

2020
US

2025

2030

2035

Australia

Source: BNEF Long-Term Electric Vehicle Outlook 2022, First Sentier Investors

2040

First Sentier Investors | Global Listed Infrastructure – EV Charging Ahead

Ford F150 Lightning

20

2

15

1.5

10

1

5

0.5

0
2010

2011

2012

2013 2014 2015 2016

EV sales (cumulative)

Millions

Audi e-tron GT

EV sales and public charging infrastructure (global)

Millions

The scale and range of EV availability has been impacted by
R&D lead times, COVID disruptions and supply chain constraints.
Tesla has been leading the charge (Model 3 sold 470k units
in 2021) but a new range of EV from established manufacturers
will be available soon, including the best-selling vehicle in the US
the Ford F-150. Momentum is building.

02017 2018 2019 2020 2021

Public charging (connectors)

Source: Audi, Ford
Source: BNEF Long-Term Electric Vehicle Outlook 2022, First Sentier Investors

EV charging the real barrier

As the new range of EV hit the showroom floor, the real
challenge begins. A Deloitte survey4 found that the number
one barrier to EV adoption was a lack of charging infrastructure(33% of participants). If we add driving range (22%) and charging
time (16%), then it could be argued more than 70% of the
problem is about charging infrastructure.
Barriers to EV adoption (UK)22%

Lack of charging
infrastructure

BEV cost/
premium to ICE

22%
24%

16%
13%

Charging time6%

Battery safety

EV public charging infrastructure by country

16%
12,00012%

Norway9%

1%0%

As the fleet of passenger EV expands, so too will the need for
EV charging. BNEF estimates this investment opportunity could
represent $US1.0–1.4 trillion over the next 20 years, roughly
split evenly between private, public and commercial uses.6
We believe the opportunity is big.

5%

10%

15%

20%

25%

30%

35%

2020

Source: Deloitte 2020 Global Auto Consumer Study, First Sentier Investors

For the conversion to EV to be a positive experience for
consumers, the rollout of charging infrastructure has to leadvehicle sales. While more than 80% of passenger EV charging
is likely to be done at home, addressing the anxiety issues above
will require a significant investment in public charging.

EVs per 100,000 population

Other

2018

33%
26%

Driving range

The global experience to date suggests a ratio of EV to publiccharger at 15:15. This ratio varies widely by country and should
logically correlate with population density. Countries with highdensity like Netherlands, South Korea, China and Italy have ratiosof less than 10:1. Populations with more detached housing like
Germany, US, Sweden and Australia are likely to need less publiccharging with ratios at more than 20:1.

10,0008,000
6,000

Iceland

4,000

SwedenNetherlands

2,000South Korea

0
0

100

200

300

400
400

500
500

600
600

700
700

Public charge connectors per 100,000 population
Source: BNEF, First Sentier Investors as at 31 December 2021

4. Deloitte 2020 Global Auto Consumer Study.
5. Source: BloombergNEF Long-Term Electric Vehicle Outlook 2022.
6. Source: BloombergNEF Long-Term Electric Vehicle Outlook 2022.
Reference to the names of each company mentioned in this communication are for illustrative purposes only and are merely used for explaining the investment strategy. Any fund or stock mentioned in thispresentation does not constitute any offer or inducement to enter into any investment activity nor is it a recommendation to purchase or sell any security. Companies mentioned herein may or may not form
part of the holdings of FSI.
02

First Sentier Investors | Global Listed Infrastructure – EV Charging Ahead

Finding the right business model

There are a number of ways to play the EV theme. Investing in
EV vehicle and battery manufacturers like TSLA, BYD or CATL.
Gaining exposure to key minerals like lithium, cobalt or nickel.
However, manufacturers are likely to face significant competition
over time while commodities could be a wild ride. In this report
we focus directly on EV charging infrastructure.
A number of EV charging infrastructure companies listed
in recent years – ChargePoint, EVgo, Allego, Wallbox, Blink
Charging and Volta. The business models vary but may include
the manufacture and sale of charging hardware, installation andmaintenance of the hardware, a margin on electricity sales, andsoftware for subscription-based access to charging networks.
Initial excitement in the massive growth opportunity has been
overwhelmed by the reality of heavy losses. Our analysis
indicates that the business models deliver low gross margins,
there are few barriers to entry, supply chain issues have delayed
rollouts and the “land-grab” for charging sites is expensive.
The financials of ChargePoint highlight the significant (mis)allocation of capital to research and development, sales andmarketing, and general and administrative expenses.

EV charging stock performance ($/share)
80

60

40

20

0
03/2020 07/2020 10/2020 01/2021 04/2021 07/2021 10/2021 01/2022 04/2022 07/2022

ChargePoint operating loss waterfall ($m)
300

XEL (utility)

241

BLINK

CHPT

EVGO

VLTA

Source: Bloomberg, First Sentier Investors as at 31 May 2022

200

In our view, regulated utilities with electricity distribution
networks represent a more compelling exposure to
EV charging infrastructure. With the right policy and regulatory
settings in place, utilities are well placed to deliver a
coordinated rollout of a consistent product at a reasonable cost.
By including the EV charging infrastructure rollout costs in theregulated rate base, along with the required distribution andtransmission network upgrades, costs can be shared across thecustomer base. We believe utilities are the best play.

100
54
-187
0

-100

-145

-93

-200

-300

Stock price performance of the charging infrastructurecompanies has been dismal and investor capital would havebeen better invested in a regulated utility.

Revenue

CoR

Gross profit

R&D

S&M

-81

-265

G&A

Operating loss

Source: ChargePoint, First Sentier Investors. Year ended 31 January 2022

Reference to the names of each company mentioned in this communication are for illustrative purposes only and are merely used for explaining the investment strategy. Any fund or stock mentioned in thispresentation does not constitute any offer or inducement to enter into any investment activity nor is it a recommendation to purchase or sell any security. Companies mentioned herein may or may not form
part of the holdings of FSI.
03

First Sentier Investors | Global Listed Infrastructure – EV Charging Ahead

Xcel Energy provides a useful case study. Xcel owns electricity
distribution networks in Minnesota, Colorado, Wisconsin and
New Mexico with approved EV programs.The utilities intend
to invest over $US2 billion over the next 10 years to enable
1.5m EV in their service territories. In current dollars that equatesto around $US700 for charger equipment plus $US700 for
installation for each customer.

Type and cost of EV charging infrastructure

Xcel Energy EV Infrastructure Plan
2022–2026

Enabling 1.5 million
EVs by 2030

Hardware and installation cost assumptions in 2020 (US $)2027–2031

Hardware type

4%
17%

49%

~$750 million

50%~$1.7 billion

50%

30%

Hardware cost

Install cost

Total cost

11kW private/home

855

950

1,805

50 kWh charge–

11kW public/work

1,080

3,040

4,120

4h 30min50kW

20,421

16,64637,067

60min

150kW

54,72051,243105,963

20min

350kW

96,39061,161

157,551

9min

Source: Electric Vehicle Council, BNEF, First Sentier Investors

Commecial

Residential

Chargers and programs

Grid upgrades

Public charging

Grid upgrades

Residential• Charger installs and services• Rebates for vehicles andcharger installs (rate based)

Commercial• Charging equipment/installs
for cities, schools andbusinesses• EV purchase rebates(rate based)

Public• Stations in major corridors
and underserved
communities

Source: Xcel Energy, First Sentier Investors

This capital investment will add to rate base growth, which in turnwill add to earnings growth. Xcel is targeting 5–7% EPS growthwhich should be sustainable over the long-term.
Xcel is not alone. Across the US there are now 60 electriccompanies in 35 states or territories with regulatory approvals
for EV programs7, including PG&E/Edison/Sempra in the west,
ConEd/PSEG/Avangrid/Eversource in the north-east and Duke/
NextEra in the south-east.
The investment opportunity could be materially higher if
customers demand faster charging. While a home AC installationfor overnight charging should price below $2,000, a fast DC
charger that gets you back on the road in 20 minutes could costmore than $US100,000.

EV charging will have secondary effects on utilities. EV will likely
represent 10–20% of electricity load over the coming decades.
Ten years ago there were fears that conservation/efficiency
measures and distributed generation would render the grid
redundant. Now the opposite is true, with electrification of transportand heating, datacentres and even bitcoin mining creatingstrong growth in volumes. The grid looks set to become evenmore essential.
Global electricity demand by EV segment (TWh)10,000

8,000

6,000

4,000

2,000

0

2020

2030

2040

2050
Net Zero Scenario

Private cars

Shared cars

Robotaxi

LCV

MCV

HCV

E-bus

2/3W

7. Source: First Sentier Investors as at 31 May 2022.
Reference to the names of each company mentioned in this communication are for illustrative
purposes only and are merely used for explaining the investment strategy. Any fund or
stock mentioned in this presentation does not constitute any offer or inducement to enter
into any investment activity nor is it a recommendation to purchase or sell any security.
Companies mentioned herein may or may not form part of the holdings of FSI.
04

Source: BNEF Long-Term Electric Vehicle Outlook 2022, First Sentier Investors.

First Sentier Investors | Global Listed Infrastructure – EV Charging Ahead

Global electricity demand with EV (TWh)EV smart charging with solar power (TWh)50,00025

40,00020

30,00015

20,00010

10,000
5
0

2020

2030

2040

2050
Net Zero Scenario

EV demand

General electricity demand

0

0

1

2

3

Solar power

4

5 6

7

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

EV V2G smart charging

Source: BNEF Long-Term Electric Vehicle Outlook 2022, First Sentier Investors.

Source: First Sentier Investors. Simplified model

Customers may also want to ensure that the electricity for EV
charging is from renewable sources. We believe this will leadto additional investment in solar and wind generation andassociated transmission lines.

Investor-led solutions

EV charging may also stimulate demand for smart grid solutions.
A growing challenge for electricity grids is that renewable supply
peaks during the middle of the day, whereas demand peaksin the evening. Significant development of solar capacity has
resulted in summer days where power supply is well in excess
of demand. Grids are forced to reject or curtail solar energy tomaintain balance in the system.
Electricity demand/supply by time of day (TWh)
50

30

10
10

0

1

2

3

Base units

4

5 6

7

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Peak units

Solar power

DemandSource: First Sentier Investors. Simplified model

Most EV spend 80–90% of the time parked. Vehicle-to-grid(V2G) bi-directional charging could allow the EV fleet to act asa network of batteries, charging from the grid during the solar
peak and releasing to the grid in the demand peak. V2G charging
could (1) reduce renewable energy curtailment, (2) help grid
operators manage peak demand and (3) offer a peak/off-peakprice arbitrage. International Renewable Energy Agency (IRENA)
estimates that V2G charging could reduce peak load by 4% andenergy costs by 13%.
05

2. Lobby energy regulators to include EV charging infrastructure
plus associated electricity distribution and transmission
network upgrades in the rate base to encourage investment.
Multi stakeholder engagement with utilities, regulators andindustry bodies could be a useful tool

4. Explore opportunities for toll road companies to develop
EV fast charging and recreation areas on vacant land along
suburban or intercity roads

20

0
0

1. Allocate investor capital towards electric utilities which haveregulatory approval to rollout EV charging infrastructure

3. Real estate investors require minimum 1-in-5 vehicle parking
spaces to be EV ready for new or re-developed office,commercial, housing projects

Curtailment

40

We believe EV charging is an enormous investment opportunity
with numerous challenges. So how can Responsible Investors
contribute to accelerating the uptake of EV? Below are a few
ideas worth considering:

5. Challenge integrated oil companies to transform retailfuel sites into EV fast charging centres
6. Allocate higher risk capital to supply chain solutions
including rare metals mining, semi-conductors andbattery manufacturing. Allocate capital to the manufacture ofcomponent parts such as semiconductors
7. Allocate your personal capital to an EV

Peter Meany is the Head of
Global Listed Infrastructure
at First Sentier Investors

Kate Turner is the Deputy Global
Head of Responsible Investment
at First Sentier Investors

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