The electric vehicle (EV) boom is coming, and it may be here sooner than you think. You’ve likely seen a few Teslas driving around your neighborhood. Heck, you may even own one. And now, a near-unanimous chorus of analysts and experts are saying that EVs will be all over U.S. roadways within at least the next decade. There are quite a few reasons for this. First, the Biden administration is pushing and heavily investing in EVs, announcing an executive order in August that set an ambitious target to make half of all new vehicles sold in 2030 zero emissions, including battery-electric, hybrid electric, or fuel cell EVs. Biden’s $1.2 trillion infrastructure bill, which passed on November 5th, also earmarks $7.5 billion to create a nationwide network of EV charging stations, among other things.
Global automakers have also doubled down on pledges to offer EVs. General Motors says it will stop selling gas and diesel vehicles by 2035. Honda aims to have 40 percent of its North American car sales electric by 2030. Toyota says it’ll have 70 EV models available by 2025. That’s not even counting EV pioneer Tesla, which dominates the current market in the U.S. and accounts for 66 percent of all electric vehicle sales. Of course, the EV market still has a long way to go; just 7 percent of Americans surveyed by Pew Research Center in June said they currently own an electric or hybrid vehicle. China and Europe far outpace the U.S. in EVs on the road, but many analysts say this will soon change.
Electric vehicles comprised only 1.8 percent of all U.S. new vehicle registrations in 2020, but that number is rising fast. Analysts expect EVs will make up 3.5 percent of all new American vehicles in 2021. A recent IHS Markit study predicts that by 2025, electric cars will command 10 percent of the U.S. auto market.
So, why does this matter for you as a property owner? Well, the function of transportation directly relates to the oldest adage in real estate, “location, location, location.” The value of a property isn’t about where it sits, but where it sits in relation to the migrations of people. Electric vehicles are a new type of transportation, with many implications for how people move about their daily lives. Mass adoption of EVs in the U.S. will depend on building a robust charging station infrastructure nationwide. Much like the now-ubiquitous gas stations that dot our cities, they will soon be part of our urban landscape.
Unlike gas stations, which are primarily confined to their own retail locations, EV charging stations will be part of the conversation for almost every property type. CBRE said in a recent report that EV charging stations would one day be an expected workplace amenity, no different than high-speed internet and free coffee. The same goes for tenants of multifamily properties, who may be more attracted to buildings that offer charging stations. Installing stations at your property can create loyalty for your brand and be part of a larger marketing strategy, especially now when stations aren’t as common. Federal, state, and local tax incentives also make installing EV charging stations more affordable than you may think. Lastly, new technology that enables charging stations to discharge power back into buildings can be especially effective at managing energy use, being part of the broader trend of transforming buildings into their own energy hubs.
Open up a new source of revenue
Being an early adopter of charging stations gives property owners a competitive edge and potentially opens up new sources of revenue. Unlike internal combustion vehicles, electric vehicles take at very least 30 minutes to charge up, meaning customers at retail establishments can spend that time browsing and buying at your store.
As more Americans go electric, an obvious benefit for property owners is that EV charging stations will attract more people and their dollars. An EV charging business strategy works for all real estate sectors, including office buildings, multifamily, hotel and hospitality, and retail store owners. Charging stations are an excellent amenity for commercial real estate that can attract talented workers or better-paying office tenants. Multifamily property owners can draw more tenants, and retail and hotels can advertise charging stations to drum up business. EV owners are typically wealthier, which means property owners can entice a higher-income clientele. Electric vehicle prices will probably come down as a wider variety of new models are introduced by carmakers, but for now, most EVs are rather expensive. Of the 11 new electric vehicle models sold in the U.S. between 2018 and 2020, eight of them were luxury vehicles.
For retail properties, charging stations could bring many potential revenue sources. Retail property owners can capitalize on a ‘charge and chill’ business model and offer discounts and promotions to drivers who use their stations. ‘Charge and chill’ could mean offering deals on food, shopping, or even cinema for movie theaters. Retail establishments can team up with electric vehicle brands or start their own business model to become a one-stop shop for vehicle charging and shopping.
‘Charge and chill’ makes sense because, well, there’s a lot of time to chill while waiting for EVs to charge up. ChargePoint, an EV charging infrastructure company, said in a recent report that charging stations increase customer ‘dwell time.’ In the instance of one business, charging stations increased dwell time at the store by 50 minutes. Over the course of nine months, the business had recorded 1,134 unique charging sessions. As customers hung around for a longer time, they spent more.
Another potential source of revenue is selling advertising on EV charging displays, which could work for all property types. Volta Charging, a provider of EV charging stations nationwide, offers public stations which are free to use because the advertising revenue offsets the costs. Volta’s charging stations have 55-inch digital displays and are currently spread out in 200 cities in 23 states. Some of the brands that have been advertised on Volta’s charging displays are GM, Hulu, and Unilever.
Building owners can draw more business with charging stations whether or not they charge a fee for their use. On the other hand, charging customers and tenants for EV charging is another possible option that creates a new revenue stream. Like charging for dedicated parking spots, property owners can monetize the investments by charging between $25 to $50 per month per dedicated EV charging space. You could also charge for each use and, for multifamily property owners, build in the stations’ price as part of standard maintenance expenses and then offer their use for free.
Grab tax incentives while you can
Installing and maintaining EV charging stations isn’t cheap. The costs depend on the type of charging station, which is broken down into Levels 1, 2, and 3. For example, the average installation cost of a Level 1 station is $3,000, while Level 3 installation costs can run to around $50,000. The higher price tag is because Level 3 stations provide what’s known as DC Fast Charging, the highest charging speeds. After installation, you also have to factor in maintenance costs. For Level 3 stations, maintenance can range between $2,000 and $3,000 per year. Level 1 and 2 stations have maintenance costs of about $300 annually.
So, charging stations are an investment, and there can understandably be a bit of sticker shock. However, remember that, for now, there’s a wide assortment of tax incentives and rebates at the federal, state, and local levels that can make charging stations surprisingly affordable. For example, the feds offer a tax credit known as the Alternative Fuel Infrastructure Tax Credit for equipment and installation. The federal tax credit covers up to 30 percent of commercial installation and equipment costs, or up to $30,000. The rebate was extended and runs through December 31, 2021, and it can be made retroactive to any installation going back to 2017. Take advantage of this one now, as a new credit in 2022 may not offer as much.
On top of the federal tax rebate, you can also add state, local, and utility (which are especially good to work with) credits. Some utility incentive programs will cover as much as 100 percent of installation costs, a pretty sweet deal. State agencies and county and local agencies also offer great rebate programs. For example, the New Mexico Environmental Department provides funds for eligible installations of up to 100 percent of the cost to purchase and install stations. Your best bet is to check for these incentive programs now as federal, state, and local agencies look to ramp up EV charging infrastructure nationwide in the next few years. Many of these programs have deadlines, and if you take a wait-and-see approach to install stations, you could potentially miss out.
Increase brand loyalty
The U.S. currently only has 104,000 EV charging stations available today, and just 18 percent of them are Level 3 stations that charge up EVs in less than an hour. If this electric vehicle thing is going to work, America will need way more stations. President Biden wants the U.S. to have an additional 500,000 charging stations available to support his ambitious electric vehicle goals. So, for now, EV charging stations are rare; only 9.7 percent of households in U.S. cities have access to one within a quarter of a mile. Many EV owners have a station at home, but renters and those in multifamily properties may not have easy access.
This is where commercial property charging stations can come in. Installing one at your property, whether it’s a retail or multifamily building, can grab a share of the EV charging market while stations are still scarce. Forty percent of electric vehicle owners are willing to return to properties with a charging station on at least a weekly basis, according to a report by The Institute for Transportation Studies at the University of California, Davis. The implications are the same for hotels and hospitality, as EV owners would undoubtedly be more likely to choose a hotel that has charging stations so they can plug in over the course of a road trip.
With the low supply of charging stations and high demand, properties that offer install stations can position themselves excellently to EV owners. Many owners today report having ‘range anxiety,’ meaning they fear their battery power will run out before they can find a charging station. Installing a station at your property can, quite literally, put you on the map. A quick search for stations on Google Maps displays stores and other locations with stations, and popular third-party apps like PlugShare and ChargeHub allow EV owners to search for stations close to them. Apps like PlugShare also filter results for stations with the highest ratings and stations with amenities like free Wi-Fi. Being part of the charging network locally and nationally could draw tenants or customers to your property who may not have found you otherwise.
Lastly, think about the impact of EV charging stations on your business’ brand. More people than ever today are looking to do business with companies that care about sustainability and doing their part in fighting climate change. Installing charging stations highlights a property owner’s commitment to the environment, as they do their part to expand the nation’s electric vehicle adoption and charging infrastructure. Having a socially conscious brand can help all types of property owners, from office buildings that want to attract better employees to multifamily properties that aim to lure higher-earning tenants. Retail properties with green-friendly brand images gain an edge, too. Eighty-seven percent of consumers said in a 2017 Forbes survey they have a more positive image of a company that supports social and environmental responsibility.
Power up your property
Perhaps the most significant benefit of adding EV charging stations to your property is the potential of vehicle-to-grid (V2G) technology. With this new tech, researchers have shown that energy taken from idle EVs can be pumped back into buildings and the power grid while enhancing vehicle batteries’ lifespan. In addition to charging vehicles, EV car batteries can discharge energy into commercial buildings that could, for example, help power garage lighting or air conditioning. This vehicle-to-building tech thereby decreases the total energy consumption and balances the energy needs of a building.
V2G technology is already possible for single-family homes and commercial buildings and, in the commercial sector, it is part of an overall effort to turn buildings into their own energy storage hub. Power management company Eaton, for instance, has launched a new suite of hardware and software services called ‘buildings-as-a-grid’ that combines local power generation, energy storage through EVs, and renewables like solar panels and energy management. The ample benefits of programs like this could be huge for building owners: from lowering carbon footprint, reducing energy costs even as energy demands increase, and selling excess electricity back to utilities.
V2G tech helps offset energy consumption spikes, as buildings can draw power from charged vehicles and reduce energy needs from power grids. Adding up all these benefits, in addition to the rising consumer demand for electric vehicles, shows that property owners may want to consider adding charging stations.
For now, the clichéd EV owner is a rich, middle-aged dude driving a Tesla, but that perception will likely change very soon. Some property owners may want to take a wait-and-see approach, but that runs the risk of snooze-and-you-lose. The number of EVs on U.S. roads was about 1.5 million in 2020, and a recent study by The Brattle Group estimates that number will skyrocket to between 10 million and 35 million in 2030. Government-led green initiatives are pushing EV adoption hard, including those from the Biden administration. It appears like it’ll only be a matter of time before EV charging stations aren’t encouraged but actually mandated.
Consider gaining a competitive edge now and jumping on the EV bandwagon. You might want to scoop up those tax rebates while they’re still available. Smart building owners can capitalize on the surge in interest in electric vehicles while potentially adding new revenue streams, increasing brand loyalty, and adopting exciting new tech-like vehicle-to-buildings that could go a long way toward managing energy consumption. The staggering amount of investment from governments and automakers in electric vehicles and EV charging stations at the moment has some analysts predicting the electrification of our automotive fleet will be like a tsunami in the coming years ahead. Current tax incentives offer great deals for property owners, sometimes covering the total cost of charging station installation, but those incentives won’t last forever. Many people say the electric vehicle boom is coming, and it may be here faster than you think. Building owners can cash in on this potential boom now or risk letting the opportunity escape.