Race on electric vehicles

Road transport generated more than 40% of total oil demand in 2019. He has been responsible for more than half of the increase in total oil demand since 2000. 1. It is therefore easy to see why road transport is a major target for decarbonisation worldwide. Electric and hybrid vehicles have been introduced for freight, commercial and private transport to decarbonize road transport.

In 2020, about 3 million electric vehicles were sold worldwide (or 4.6% of sales) [1]. In December 2020, 37,250 electric and hybrid vehicles were registered in France, which is 16.2% of the French market. [2]

This market development is due to a combination of expanding the range of products, public demand for environmentally friendly alternatives to fossil fuels and government policies for a more sustainable future. According to the International Energy Agency, subsidies also contribute to the spread of this technology [3]. Indeed, public concern about droughts, floods, forest fires and extreme weather events is growing and is forcing a sharp reduction in carbon emissions by all possible means. [4].

Sales of electric vehicles are growing significantly, so much so that the International Energy Agency (IEA) calls the 2020s “years of electric driving.” [5]. In 2020, the number of registrations of electric vehicles increased by 41%, despite the global slowdown in car sales due to the pandemic, which led to a drop in sales by 16%.

The rapid introduction of electric vehicles, especially those that require fast charging, is expected to put significant pressure on the electricity grid. Reliability of supply and load balancing is a difficult task. Renewable energy sources play a role, but probably mainly through the grid.

Invest in charging infrastructure for electric vehicles

To support the trend of introduction of electric vehicles, large investments are needed to create a nationwide charging infrastructure [6]. In September 2020, the French government pledged 30 billion euros to decarbonise its economy, accelerating its goal of becoming the first major country in Europe to achieve carbon neutrality by 2050. The money is part of France Relance’s recovery plan. with the economic consequences of the COVID-19 pandemic. [7]

Public funds and incentives are needed to encourage investment, but – with all the other pressures on public capital – this will not be enough to meet demand. analysts [8] Recognize that private sector funding is needed to finance the rapid development of electric vehicle charging infrastructure [9].

Siemens Financial Services (SFS) has published a new study [10] which estimates the “investment gap” needed over the next six years to rapidly deploy electric vehicle charging networks around the world.

This “gap” is the difference between the infrastructure for charging electric vehicles, which is already funded, and the infrastructure, which is still financed by capital expenditures (capital expenditures). The total cumulative amount is almost $ 150 billion.

Obviously, this is a very large investment need, without which the growth of the electric car market will be significantly slowed down. As a result, it may prevent countries from achieving agreed climate goals, given the importance of road transport in reducing emissions. The idea of ​​financing these amounts from public funds or freezing them in the accounts of companies, for the most part, is simply unviable.

So what smart private sector funding is needed to develop electric vehicle infrastructure? Electric vehicle chargers are particularly suitable for new private sector financing models based on usage, performance and results. In fact, paid units generate a potential stream of income over time that can be used to pay for the current value of the investment. The installation provider can then make a number of regular payments that can be flexibly matched to the revenue stream from the chargers. These financing models range from leasing / leasing, which help manage cash flows, to more complex, results-based arrangements that allow X-as-a-Service to access electronic charger technology.

Financing agreements with an expert partner allow technology providers to make capital investments available. They also provide cash flow facilitation for public and private sector organizations wishing to invest in charging stations for electric vehicles and other technologies that support sustainability ambitions. Indeed, reviews that offer smart financing options can often sway investment decisions in favor of the technology provider that offers those options.

By eliminating the need for investment, smart financing allows you to direct limited public and private capital to investments that do not generate such immediate and tangible cash flow.

Conclusions

The projected rapid growth in the number of electric vehicles worldwide, an important factor in achieving the goals of climate change and sustainable development, will not happen if the charging infrastructure of electric vehicles does not develop at the same pace. The scale of investment required to build this infrastructure is significant and cannot be financed by public funds.

Reasonable private sector financing (from technology financiers) is used to reconcile investment costs with cash flows generated by charging stations, making the investment budget neutral. The adoption of these financing options will determine the speed of deployment of electric vehicle charging infrastructure and play a key role in the development of the electric vehicle market as a whole.

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