The former German government has formulated ambitious goals for the transformation of the transport sector: By 2030, 15 million fully electric vehicles are to be on the roads, flanked by one million public charging points. This target implies a ratio of 15 electric vehicles per public charging point. Tim Deemann, Director Institutional Sales, and Felix Kreppel, Senior Investment Manager Infrastructure Equity, both MEAG, talk about this ambitious but necessary step for climate protection and the energy transition in the mobility sector.
TD: If we look at the target of 15 million electric vehicles by 2030 – where do we really stand today, also in terms of the willingness to invest in the infrastructure sector?
FK: The path to these goals is difficult. Currently, only around 1.79 million purely electric cars are registered in Germany – only about 14 percent of all new registrations are currently electric cars. Although an increase of around 380,000 vehicles was recorded compared to the previous year, this is around 27 percent below the previous year’s level. The main reasons for the decline include the discontinuation of state purchase premiums, continued high acquisition costs and a charging infrastructure that is still insufficiently developed and regionally unbalanced.
TD: And what about the expansion of the charging infrastructure?
FK: The number of public charging points has more than doubled to around 154,000, including 33,000 fast-charging stations. Nevertheless, the expansion varies greatly from region to region. A third of all municipalities do not yet have a single public charging point. If plug-in hybrids are included, there are currently about 17 vehicles per charging station – for fast chargers, the ratio is as high as 82:1.
For many of our customers, it is not only the return on investment that counts, but also the ability to plan.
TD: What specific hurdles prevent insurance companies, pension funds or pension funds from investing more in charging infrastructure?
FK: There are several: The capital requirement is high, but profitability depends on stable capacity utilization. At the same time, public infrastructure is in competition with private charging solutions, which could cover 60 to 70 percent of all charging processes in the future. In addition, there are regulatory hurdles, grid bottlenecks, long approval processes and high operating and maintenance costs.
TD: Many people are talking about the chicken-and-egg problem with charging infrastructure. Why is that?
FK: It’s about interdependence: Consumers only buy electric cars if there is enough charging infrastructure – and investors only invest when the demand for electric cars increases. This dynamic makes decisions more difficult and causes restraint on both sides.
TD: And how is the market for charging infrastructure structured?
FK: Investors usually focus on so-called charging point operators (CPOs). They do not necessarily have to own the infrastructure themselves – rental and lease models are also common. The market is very fragmented, in addition to big names such as Shell, BP or EnBW, there are many regional providers – often already in the hands of investors.
In the expansion of electric charging infrastructure and e-mobility, we are observing a classic chicken-and-egg problem.
TD: Of course, the charging infrastructure plays a central role in the expansion of electromobility. How can the field be structured in a meaningful way – and where are the different forms of charging typically used?
FK: Basically, there are three areas of application:
1. En-route charging (e.g. motorway service stations),
2. On-street charging (public road space)
3. Destination charging (e.g. supermarkets or restaurants)
These can also be differentiated according to charging power: AC charging (<12 kW), DC fast charging (12 to 149 kW) and high power charging (> 150 kW).
TD: For many of our customers, it’s not just the return on investment that counts, but also the ability to plan: Charging infrastructure becomes investable when frequency, location and operator quality interact within a resilient framework. What investment opportunities do you think are currently emerging in this area?
FK: Charging infrastructure is currently not a typical “core” investment, but rather something for opportunistic or value-add strategies. Returns of 15 to 20 percent are realistic, but also reflect the risk – for example due to uncertain capacity utilization, volatile electricity prices or high initial investments. Low-risk models, such as power purchase agreements or lease agreements, are of particular interest.
TD: And which locations and technologies are considered particularly attractive for investors?
FK: En-route and destination locations offer great potential – they have a high frequency and length of stay. Customers can combine charging with shopping or eating. High power charging (> 150 kW) is particularly in demand, because fast charging times are crucial for many users. Technology – for example through 800-volt batteries – is making this increasingly possible.
TD: What should investors look for when acquiring CPOs?
FK: The decisive factor is the long-term safeguarding of strategically favourable locations – for example through framework agreements with supermarkets or petrol stations. The operational performance of the company and the quality of the management also play a central role.
TD: Are there additional levers to increase profitability?
FK: Yes, absolutely. Additional sources of revenue include:
– Advertising
space at charging stations– Parking fees
– Energy management services
– Trading with GHG quotas
– Technological solutions such as stationary batteries or solar systems can also help to reduce electricity costs and increase security of supply. Funding programmes in Germany and the EU also make an important contribution to economic efficiency.
TD: What role does user experience play in the success of charging infrastructure?
FK: A central one. Customers expect intuitive operation, reliable availability, transparent prices and good app integration. Providers with a strong brand, good location distribution and convincing service have clear competitive advantages.
TD: What should institutional investors consider if they want to position themselves strategically in the charging infrastructure market today?
FK: Charging infrastructure remains risky – some CPOs are already struggling with financial difficulties. Nevertheless, those who invest strategically, focus on premium locations and have an experienced management team can be successful.
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