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Happy Monday. Welcome to Electric Avenue, the only e-mobility newsletter that’s a little provocative… it get’s the people GOING!

Here’s what we have for you today:

• ICYMI: Our World Record EV roadtrip 🏆

• Why the MSP is going to be the King of Smart Charging 👑

• 3 Links 🔗

• Meme of the week 🤡

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Let's dive in!

In case you missed it: Our World Record EV roadtrip 🏆

The Electric Avenue team just set a world record for the least charging stops to cross the U.S.!

We drove 2,800 miles from LA to NYC and pushed our Lucid Motors Air GT to its limit.

To find out all the details about the record and what challenges we faced along the way, check out our full trip video on YouTube:

For more nerdy details about the trip and our key takeaways check out our special edition post: ⚡How the Electric Avenue Team set a new WORLD Record 🏆

Today’s edition is sponsored by Cariqa:

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Last year we had a thought-provoking guest post by our friend Michael Clarke on the future of e-mobility service providers (MSPs - see our Glossary of EV terms). We highly recommend reading it if you haven’t yet: ⚡Why MSPs must adapt to survive

This year we’re excited to share another guest post with you, arguing for the other side. Get ready to learn why the MSP may not be threatened by extinction yet!

Why the MSP is going to be the King of Smart Charging 👑

The following is a guest post by Jacob van Zonneveld and Michael Johanns. Jakob was a co-founder of early-gen MSP Plugsurfing and left the company in 2019 after selling Plugsurfing to Finnish energy company Fortum. In 2020 he founded Deftpower, a fully white-label MSP software solution for customers of all sizes. Michael is responsible for smart charging business development at Deftpower and previously worked at TotalEnergies and Elli (VW Group’s charging entity). This post represents their personal opinions and thoughts based on their years of experience working in the European EV charging and energy industry.

6 Key assumptions for the charging market in 2030

1. Range anxiety is a topic of the past. 

2. The majority of MSPs have stopped fixed prices which subsidize expensive CPOs and punish competitive CPOs.

3. The maturity of the market will make it unnecessary to use multiple charging cards.

4. Users will go for trusted brands, combined offers and high-rated apps.

5. Transparent pricing and correct billing will be the standard for all surviving MSPs.

6. Dynamic tariffs will still not be standard and limited to peak (or off-peak) pricing.

INTRODUCTION

Industry experts have had a habit of predicting the death of the MSP since the first charging session ever recorded. More than a decade later the MSP as a player in EV charging is still alive and kicking. And in our opinion, the MSP is going to become the most important value chain player in EV charging by 2030. And it will do so not for its own sake, but for everyone in this market, enabling all stakeholders to become more profitable. From a lower energy bill for the EV driver to higher profitability for CPOs and energy retailers, the MSP is the rug that will tie the room together. How is this possible and what will this look like? Read on and find out. 

What business are we actually in and what is on the table?

This is a purely economic blog post, the massive environmental benefits that come with the solutions described below, are left out of scope. Today, there is one business case in charging: reselling electricity. A driver plugs in and pays with their chosen MSP service, who buys electricity from the CPO who in turn buys it from an energy retailer who in turn buys it on the energy markets. Net margins in this business model are in the range of 2-3 percent, similar to payment providers in other industries, including the fuel card business. On average this comes out to about 25-35€ per EV per year. And this is the business model that has supported the traditional MSPs. 

But there is a second business model in the making: A driver plugs in and sells flexibility. This means the driver gets paid or receives a discount because he is smart charging. Smart for the energy system because they can handle the grids better and smart for the driver because he earns an income for selling his…flexibility. This second business model happens within the same charging session as the first business model.

Now, selling flexibility is going to be more valuable than reselling electricity. If done well, up to 500€ (research varies between 200€ and 2000€) per EV per year can be extracted from the power markets and grid operators simply by changing consumption patterns and, eventually, delivering energy back into the system through V2G. Even by giving the biggest chunk to the owner of the flexibility, the driver or fleet manager, this can easily triple the business case for the MSP.

From our data at Deftpower we know that on AC chargers in peak moments, 70% of charging consumption can be shifted to later moments in time. Many of the charging sessions are either eight-hour sessions from 09:00-17:00 or fourteen-hour sessions from 18:00-08:00. On average a car charges 22kWh per session, which ends up in 3 hours of active charging time (assuming an average charging speed of 7kW). Every session taking longer than this, has a flexibility potential. Alone in the Netherlands, there are over 2200 MWh of public charging consumption every day. Around 1500MWh of this can be shifted. 

In fact, in Europe alone there are currently 5 million EVs untapped to extract this revenue, because the EVs are not embedded into the energy markets. Utilities don't use EVs to optimize their portfolios and grid operators don't use EVs to mitigate congestion and to avoid wasting trillions of taxpayers' euros on perhaps not needed grid expansions. Simultaneously five million people cannot sell their flexibility, meaning their total cost of ownership is higher than it should be. Imagine saving 500€ per year on charging, that can be a 50% reduction in annual charging costs. In a lifetime the savings could add up to the cost of a whole car.

Selling flexibility is so obvious, why is it not happening?

Now, so much flexibility lies on the streets up for grabs and nearly all EVs are standing around 23 hours per day, totally unused. Grid operators and energy companies have been looking full of hope at CPOs for a decade, hoping and waiting that they will somehow magically do the Houdini with smart charging, but they are waiting for Godot.

This is because nobody knows how to access and activate the driver, who ultimately has the decision-making authority to make the flexibility available. CPOs, retailers and grid operators do not know who is charging and whether that person has flexibility to share. That is because they lack information on the state-of-charge and departure times, making it impossible to estimate the flexibility without harming the EV driver’s preferences and consumption needs. And most importantly: they do not have the permission from the driver. 

We have seen futile attempts where QR-codes or additional apps ask the driver to manually put in his state-of-charge and opt in or opt out for smart charging per charging session. We see in the Netherlands even grid operators, through the CPOs, simply stealing the flexibility by forbidding charging at all between 16:00 and 21:00, simply because they face congestion as a result of being asleep for the last 15 years. And why pay when you can get something for free. No information about the driver and no permission from the driver is a very weak fundament for smart charging.

Hence the charging station socket is currently not a bridge but rather a wall between the EV driver, energy markets and grid operators. It is the EV and the driver that are the central focus point to extract flexibility. This is because the driver and his EV are mobile and drive from A to B, charging at different sockets managed by different CPOs, some in public, some at work and some at home. The EV driver will hence never reach a uniform user experience and selling opportunities for flexibility across the board, which leads to very suboptimal economics. 

The Triangle of driver, energy market and grid operator

Put very simply, there is a battery owned by someone and the energy market or grid operator wants to decide when that battery gets charged and is willing to pay for that. They only need to ask the owner of the battery if they may. Who you gonna call? 

The missing link to unlock all this flexibility is the MSP. The MSP is the only value chain player that has a direct interface with the EV driver as well as payment information on file, regardless of where he or she is charging. At home, at the office, in public in its home country, or even abroad, every charging session starts with the charging card (or app) provided by the MSP. There are 5 million EVs in Europe but 15 million charging cards from hundreds of MSPs. Literally every charging session starts with the MSP. Even with Plug ´n Charge, it is the MSP that starts the charging session.  

Now, a mature MSP in a maturing market obtains automatically the state-of-charge (from the OEM backends) and the departure time from the driver (forecasted and confirmed by driver). They also have the bank account details from the driver and the consent to sell the flexibility. This is crucial to pay EV drivers their income for selling flexibility. Because MSPs have all those ingredients we expect that the MSP can monetize up to 95% of the potential flexibility.

There are many business cases possible once the flexibility is unlocked. We have calculated that for public CPOs a smart charging agreement with an MSP can save up to 30% of the electricity costs for that CPO, by simply shifting load to cheaper moments in time on its spot-price contract. And with every solar panel and windmill added to the system, the price fluctuations increase and with them as well the value of smart charging.

The MSP however does not need to be limited to working out smart charging revenue with CPOs. The energy markets are dynamic in nature, somebody in the chain always has the potential of making gains by shifting flexible consumption into hours when electricity is less in demand. And that is just one use case, with further value stacking on intraday markets, imbalance optimization, balancing, congestion management, etc. this value can be increased significantly. And we didn't even start speaking about bidirectional charging…

The MSP of the future will offer the unlocked flexibility on behalf of the EV driver to either CPOs, who deal with the grid operator or energy retailer, or directly to the energy markets and grid operators. After all, this market becomes most profitable and EV driver-friendly if the gap between the EV battery, the electricity market and the grid operators is as small as possible.

Enabling EV drivers to recover their investment in the car whilst making CPOs and utilities more profitable is the most important role of the MSP of the future. But it is also just one of many more problems the MSP is solving. Think of price transparency, correct invoices (8% of CPO CDRs are simply wrong or missing), home reimbursement, route planning, finding a charging point and many more. It is all simplified in one app and that is both from a convenience and economical point of view the best situation for the whole triangle. 

Now, imagine starting your charging session with your credit card at a charging station with a payment terminal and see how much value evaporates because the triangle got jammed again.

3 Links 🔗

• Tesla ramps up NACS production🔌: The opening of Tesla’s Supercharger network for 3rd party auto brands has been slow these last months, after CEO Elon Musk laid off a large part of Tesla’s charging team. But now we have some positive news that should lead to more access: Tesla’s Gigafactory NY team announced that they are now producing 8,000 CCS-NACS adapters per week in-house. Currently five automakers are listed as “coming soon” on Tesla.com/NACS, but even more than that have signed agreements with Tesla to get access eventually. (Link)

• TMH restructures for V2G growth📈: Munich-based TheMobilityHouse has been active in EV charging for over a decade. From wallbox e-commerce, to semi-public and depot charging, to V2G pilots and managing of stationary battery assets - the company has been doing a lot. Now that smart charging (V1G) and bidirectional charging (V2G) finally seem ready to become mainstream, the company is restructuring is its business into four specialized business units. (Link)

• Germany doubles down on mandatory chargers for gas stations⛽: Back in May Germany’s government mandated that gas station operators with >200 locations should install at least one charger with 150kW+ by Jan 1st, 2028. Oil industry lobbyists have since tried to push back that deadline to 2030 or even 2032, but to no avail it seems. The mandate is expected to bring up to 8,000 new high power chargers online. (Link)

Most-clicked link last week: Was the new “Charging Wallet” feature in the My BMW app which allows European EV drivers to compare prices between different MSP services (Link).

Meme of the Week 🤡

Reader Review of the Week

Selected ⚡️⚡️⚡️⚡️⚡️ Freakin’ awesome on⚡EV Slope of Enlightenment - Are we there yet? and wrote:

“We’re definitely in the Trough of Disillusionment, especially in the US. We need significant efforts invested in our charging infrastructure to “cross the chasm” to mainstream adoption”

That's a wrap for this week! Let us know how you feel and leave some feedback (We read every single one of these 🙂 ):

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DISCLAIMER: None of this is financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. The Electric Avenue team may hold investments in or may otherwise be affiliated with the companies discussed.