Although the United States has long lagged other regions in electric vehicle (EV) adoption, the country is now reporting record growth. EVs represented about 8 percent of all new passenger cars sold in the United States in 2022, up from around 5 percent in 2021.
The United States will need about 28 million ports by 2030 to meet the demand for electricity by zero-emission passenger vehicles (Exhibit 1). Private ports are expected to increase in number from around 2.5 million to nearly 27 million, representing about 95 percent of the total.
There are two types of public charging: direct current fast charging (DCFC), which is used on highways and for fast fill-ups, and slower Level 2 (L2) charging, which is available at places such as grocery stores, malls, car dealerships, golf courses, and banks, where people may park for longer periods. L2 charging may also occur next to sidewalks or near street parking. About 150,000 L2 and DC plugs are now available across the United States, but that number is expected to increase to 1.5 million by 2030, when they will represent about 5 percent of the total.
Currently, most EV owners tend to be home owners with access to a home charger, and they often have a second vehicle for long-distance trips. But even people that fit this profile will sometimes need public charging. For instance, they might forget to charge their vehicle overnight and thus need to charge on the road, or they might find that the slow L2 charger at their workplace parking garage, where they usually connect during an eight-hour workday, is out of commission. Additionally, long journeys—those over 150 to 200 miles—will necessitate public charging.
Recognizing the need for public chargers, many new players are now entering the sphere. For instance, some major automakers are banding together to invest a minimum of $1 billion in a joint venture that will build stations with about 30,000 fast chargers in urban and rural areas of the United States.
Regardless of business model, the up-front capital costs for fast charging stations are high. A 150 to 350kW DCFC charging unit can cost anywhere from $45,000 to over $100,000, and installation costs can range from $40,000 to over $150,000. Additionally, grid upgrade and integration costs can amount to millions, depending on the number of fast chargers installed at the location.
We examined the economics for a hypothetical DCFC charging station with an owner-operator business model in California. In line with typical patterns, we assumed the charging station would have 4 150kW chargers.
Even if fast public charging stations do not receive subsidies or credits, they may still be able to improve their bottom line. We have identified several potential levers for driving improvements that span multiple areas: utilization, electricity cost, electricity price, demand charge cost, lifetime hardware costs, and ancillary revenue (Exhibit 5).
While all of these levers are important, charge-point operators would have to apply them aggressively to make a difference. Consider utilization and competitive pricing, which could potentially drive the greatest gains. Using our example of a typical fast public charging station in California, the owner-operator would break even if utilization increased from 15 percent to 20 percent, or if the price for charging customers increased from $0.45/kWh to $0.53/kWh. Profitability would also be possible in other scenarios (Exhibit 6).
Peter Fröde is an associate partner in McKinsey’s Southern California office, Morgan Lee is a solution associate in the Waltham, MA office, and Shivika Sahdev is a partner in the New York office.
Last year, the average utilization of a US fast-charging station not operated by Tesla Inc. doubled — from 9% in January to 18% in December, according to new data from Stable Auto Corp., a San Francisco startup that helps companies place EV infrastructure. Put another way: By the end of 2023, every fast-charging cord in the country was plugged in for an average of nearly five hours a day.
"There''s been a noticeable increase," said Brendan Jones, chief executive officer of Blink Charging Co., which operates about 5,600 charging stations in the US. "We''re heading into 9% and 10% market penetration [for EVs]. Even if we stay at 8%, we''re still not going to have enough charging."
Rising usage isn''t just an indicator of EV uptake — Stable Auto estimates that a charging station must be pumping electrons around 15% of the time to turn a profit. In that sense, the surging utilization numbers represent scads of stations climbing into the black for the first time, said Stable CEO Rohan Puri.
It''s "a threshold that truly makes my spirits soar," Cathy Zoi, former CEO of EVgo Inc., said on an earnings call in September. "We believe the go-forward picture on network profitability is stronger than ever." EVgo operates about 1,000 stations in the US; in September, almost one-third of them were humming at least 20% of the time.
But even with little of that money distributed to date, America''s electric ecosystem is starting to reach parity between cords and cars. US drivers welcomed almost 1,100 new public, fast-charging stations in the second half of last year, a 16% increase, according to a Bloomberg Green analysis of federal data. By the end of 2023, there were almost 8,000 places to quickly top up an EV (28% of them exclusive to Tesla). Put another way: The US now has one quick-turn EV station for every 16 or so gas stations.
In a number of states, charger utilization rates are already well above the national average. Connecticut, Illinois and Nevada are among those states where fast-charging cords are now plugged in eight hours a day; at 26%, Illinois has the highest average rate of charger utilization in the country.
Critically, these stations grew far busier even as thousands of new fast-charging stations came online, meaning EV adoption is outpacing infrastructure gains. The increased uptime is more notable considering charging networks have long struggled to keep their equipment online and working properly.
There are diminishing returns, though. A charging station may not turn a profit until it''s in use about 15% of the time, but once utilization approaches 30%, the station is busy enough that drivers start to avoid it, according to Jones at Blink. "[When] you get to 30, you start worrying about whether you need another charger," he said. "You start to get complaints."
While the previous dearth of charging instilled a negative feedback loop on EV adoption, the opposite may be happening now. Charging networks, seeing their economics improve and in some cases backstopped by federal funding, will be emboldened to build more stations in more places. More charging stations, in turn, will tip more EV-curious drivers into battery-powered cars.
Stable Auto analyzes 75 different variables in determining whether a site would make a good home for a fast charger, chief among them how many other stations are nearby and how busy they are. Increasingly, its model is giving a green light. "Everyone should be seeing more attractive sites on our platform," Rohan said.
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