This guide outlines the various commercial EV charging business models for electric vehicle charging and costs to consider.
EV Charging Business Models
Electric vehicle charging points have a variety of different business models that can be implemented, depending on the business goal. They include:
- Loss leader; free charging to get more drivers.
- Cost recovery; charge a fee for use so that you recover the cost of your chargepoints.
- Charge — make a profit; establish a usage fee that encompasses your expenses + profit.
- Fully funded; a network operator pays for the installation of your chargepoints, with stipulations on how they operate.
As we think about an EV charging business model, we need to understand which EV charging models will be most effective for the type of visiting driver and the type of locati0n/business at which the EVs will be charging stations along with the type of costs incurred typically.
However you choose to approach this, flexibility and scalability are essential for a sector so young and fast moving.
It’s important to collaborate with a charging provider willing to assess the specifics of your locati0n and offer a comprehensive recommendation on what chargepoints and business model will be most suitable for you.
note: There are all the business models discussed in this guide steps available through Luxman Energy and a list of charge points that provide flexibility to our customers: Solo, Twin, Media and Rapid chargers. The options available to you are always open for discussion with our expert Jack.
Commercial EV Charging: What are the business/monetisation models available?
Loss leader model
This business model means EV charging is given free to gain market share as customers are onboarded and retained, while the costs are offset due to the additional revenue generated via other business activities.
A free top up is the smallest of changes but can be the tipping point for a driver deciding the where to base their patronage and the expenses involved to provide say, 7kW, in order to entice such drivers are comparatively trivial.
So the first question for you as a business should be, can you offer charging free at the point of use, to maximise the number of drivers that will come to your site, build brand loyalty and drive on-site spend.
| Pros | Cons | Typically suited to |
| ✔ Capture and retain more EV charging customers than paid for models. | ✘ Responsibility for the payments for the electricity and the chargepoints. | Businesses who make more than c.£1 an hour of margin from customer attendance. |
| ✔ Better suited for media chargers | ✘ Not the best fit for fast charging locations. | Businesses with average customer dwell time of ~c.45+ minutes. |
Analysis:
For most businesses where visitors arrive by car, the electricity cost is a negligible blip compared to the revenue generated by an EV-driving customer visiting their business. So it can make sense to swallow these costs rather than charge a fee that could dissuade drivers from coming.
Note: With your chargepoint provision, Luxman Energy suggest that to maximise your chargepoint is ” -Reliable (multiple chargepoints, clearly labelled for your customers) -Smart (to ensure it is scalable and future proofed) -Simple (ease of use and helpful signage)
It is also known as operational cost or total cost recovery.
This model also charges drivers for using the chargepoints. Because this is an operational cost and, for total cost recovery, an adjustable margin is added to return back hardware and installation costs.
EV drivers are growing accustomed to a fee to charge their car, but will most likely weigh the cost against the price of their home electricity rates. As long as chargepoint hosts set their prices within the range of what drivers are willing to pay, it may still be possible to generate a revenue stream.
| Pros | Cons | Typically suited to |
| ✔ Win and keep more EV charging customers than profit making models. | ✘ Not as attractive to customers compared with a loss leader model. | Businesses whose customers will have to or choose to charge and who can afford to pay something for the service. |
| ✔ Allow your chargepoint to cover its own electricity and/or capital cost | ||
| ✔ More compatible with fast chargers |
Analysis:
Overall, the less you charge for EV charging stations the more drivers you will draw. But the need-state of your driver is also worth considering. For example, there are differences in how willing a driver will be to pay to charge on short journeys compared to long journeys.
If a tariff is introduced, the billing method (e.g. apps and contactless payment cards at rapid chargers) must be made comprehensible and accessible.
Profit making
With this model, drivers are charged a higher fee to use the chargepoints. This cost ranges to operational, hardware and installation fees and gives a profit-oriented up sales stream on the top.
| Pros | Cons | Typically suited to |
| ✔ Still get some customers who want to charge their electric vehicle. | ✘ Lower customer attraction than competitively priced offerings. | Businesses whose customers have little choice when it comes to where they can charge. |
| ✔ Make your chargepoint self-funding and profitable. | ||
| ✔ Better suited to rapid chargers. |
Analysis:
Profit making models have generally similar limits to the cost recovery models but with more favorable financial where there is no alternative for drivers to charge. As the price gets higher, however, this incentive for drivers to opportunity charge becomes more and more acute.
Another concern is reputational damage, if your business appears to be unfairly exploiting drivers by charging too high a tariff.
Note: In some circumstances, customers will pay a premium for charging, above the cost of electricity to run the chargers, especially when they have no other options available to them or need to charge quickly.
Fully funded
In some cases provided free of charge as a service the installation of charge points for a business on charging infrastructure providers. While this can be very useful, you must look long term and ensure that what you’re offering is mutually beneficial to yourself and your customers.
| Pros | Cons | Typically suited to |
| ✔ Continue to draw and keep some EV charging customers. | ✘ Suppose you have to stop control over the pricing. | Companies with limited concern for their brand experience and ability to control pricing or revenue at their chargepoints. |
| ✔ It cost you no capital or operational cost. | ✘ No control over charging experience. | |
| ✘ Suggested charging solution probably doesn’t fit your site/business. |
Analysis:
While the advantages of a fully funded model are evident, it is essential to appreciate the limitations. Prevention of short term spending capital expenditure, could come at long term risk.
- Price: A third party can set high prices that impact your clients’ opinion of your business in a negative way. It might even discourage drivers from going to your locati0n in the first place.
- Chargepoint suitability: Third parties may install chargepoints not appropriate for your business. For example, a single rapid charger installed at a hotel would use up a certain amount of available electrical capacity that could otherwise be used to power a lot of lower cost 7kW chargers allowing more guests to charge at the same time overnight.
- One fast charger risks being able to service only a single guest in a night (unless they and the subsequent guest were willing to wake up in the middle of the night to unplug so the next guest could plug-in). With 7kW chargers, several guests could keep their cars plugged-in overnight, waking up to fully charged batteries.
- Charging experience: The charging point itself is often the first thing a customer encounters when they arrive at your business, so don’t underestimate its value. Losing control of the appearance and usability, and the pricing of this is a cost to a business. Make sure you are comfortable with that and/or your branding is comfortable, good fit with chargepoint operators approach.
Note: Flexibility is key to all charging business models, but none more so than fully funded models. It is critical to carefully consider the term lengths of the contractual obligations and the opportunities to change them.
How much does it cost to charge a commercial EV?
To be able to estimate the costs, it is first important to understand that charging infrastructure deployment is not just about the chargers themselves. These split between:
Chargepoint hardware costs
The hardware can differ enormously based on the power that the chargepoints can deliver to the metal and the features and build quality that they utilize.
Only data up to October 2023 has been inputted to your training.
Installation costs will depend on:
- The electricity needed to operate the chargepoints.
- Where the chargepoints are to be installed (mounting to the wall is cheaper than concreting in bases).
- The distance from the chargepoint to the point of connection.
- The degree of fixity required in route to the chargepoint (e.g. if trenching through hardstanding and burying cable that is a hell of a lot more expensive than clipping to a wall).
Grid reinforcement costs
Where a supply to a site does not need to be upgraded, it will always cost less to install charging points At the most basic level it may be possible to ask your District Network Operator (DNO) to fit a larger fuse to increase the capacity of a site but costs for this option upwards (for example uprating the local substation) are often substantial.
Note: The cost of installing commercial EV chargepoints varies by the locati0n of installation, but as a purely rough guide an installed 7kW chargepoint will set you back between about £1,000 to £4,000, whilst a simple installed 50kW chargepoint will run to ~£20,000 to £40,000. These costs will increase from electrical upgrades, major groundworks, signage etc.
Ongoing electrical costs
The electricity costs are determined bywhatever you are being charged in per kWh (typically between 10p – 15p) multiplied by the total KWh that run through a unit. As average costs, they should probably be:
| Charger power rating | kWh added per 30 minutes charging | Gallons of fuel added per 30 minutes filling for idealized 80kWh BEV | Electricity cost (assuming business pays 12p per kWh) |
| 7kW top-up charging | 3.5kWh | 12.5 | £0.42 |
| 50kW rapid charging | 25kWh | 87.5 | £3.00 |
| 150kW en route charging | 75kWh | 262.5 | £9.00 |
On top of the electricity used to charge the vehicles, EV chargepoints use a small draw for standby (lighting LEDs etc). The standby draw will be significantly below power output for charging so it is just worth checking the standby draw is sensibly low (For reference, the standby draw of e.g. Pod Point Solo charger is 0.003kW, Pod Point Twin 0.006kW)
Ongoing maintenance costs
That means some servicing will likely be needed to keep the charging infrastructure operational. Most reputable providers offer some maintenance and/or extended warranty combination.
Tip: It is critical you understand the basics of where and when cars charge and how your chargepoints will integrate into drivers’ charging ecosystem when looking at which charging infrastructure is suitable for your business. When recommending which chargepoints suit your use case, your chargepoint provider should inform you of this.
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