The Exchanges

Q Northern California where I think there's pretty good, you know, public charging available for the road trips I'd want to take. I suspect I get DC fast charger. So that's not a big issue for me, but I guess the question is for, for the average consumer or for the second wave consumer that we're talking about, like, what is it that makes us confident we're behind on that rollout?

A Yeah, it's a good question, because we don't know, there's no magic number that can be proven to be the right number of, you know, public fast chargers, public level two chargers, what have you. We can look at it a few ways. So one thing that I like to look at is where is EV adoption the highest, and what is their ratio of, let's just say, public chargers to EVs, and then where are we at in the U.S. today, and that could be one metric, because Presumably, if penetration is a lot higher in another country, then something is working on the charging side. So if you look at the U.S., we're at about a 120, 125 EVs per public fast charger, and China is at 15, and China has much, much higher penetration of EVs. So that's one metric. I don't have the metric offhand for Europe, but the, you know, it would be a much, Much lower ratio of vehicles per fast charger. So that's one way that we know we can say behind, that we're behind. The, the OEMs also seem to have a lot of their own internal metrics of where they think the industry should get to in terms of public charging infrastructure or fast charging infrastructure per EV. Again, I don't think that we know that those are the right numbers. To me, the number one most important thing is what are consumers saying? Because whether or not there's some magic number for charging infrastructure that in reality would make this whole system work…

AI assessment note: “we're at about a 120, 125 EVs per public fast charger, and China is at 15”

Q has taken altogether too long to have you on the podcast, but, uh, nevertheless, there's a lot to talk about in EV charging world. So let's start with kind of the lay of the land. Um, where would you put us in the sort of EV adoption cycle and particularly the, the, I guess the pace of rollout of EV charging so far, like where are we in that trajectory?

A Yeah, it's a really good question. I kind of think about it in three different waves, and so the first wave was when we were super early adopter days on EVs. The idea was just, let's get the infrastructure out there. Let's learn from it. You know, no one really knows how EVs work. No one really knows how EV charging works, where it should go, how fast it should be, and it was a lot of learning, and, you know, that super early adopter phase, and I think there was a fair bit of Room for error in that phase, because those first consumers, you know, were folks that really wanted to go electric, and there was a lot of understanding from those people on where and where charging infrastructure would be and where it wouldn't be, and I think we're firmly out of that wave. It depends a little bit on the geography. You know, we're almost up to thirty-ish percent of New vehicle sales in Europe are EVs. We're more kind of five, six percent in the U.S., but I would argue we're still in the second wave in both places, and that wave is we need to make sure all the infrastructure works reliably out there with very high uptime, and we are very far behind on where we need to be for those metrics, so there's not enough infrastructure. We can get into the stats of that, but there's not enough charging infrastructure out there, and it's not working Working well enough. So that's phase two. Third pha…

AI assessment note: “I would argue we're still in the second wave in both places”

Q then they need the DC fast chargers when they're taking longer road trips and things like that, and so this perception that, like, we need ubiquitous public charging apart from DC fast chargers or, or, you know, chargers on highway corridors and things like that, like, Is there evidence that that is actually a problem, or is it a consumer perception problem, ah, that gets solved once people have vehicles?

A Yeah, I think it's, it's a problem if you are living in an only EV household, and you are taking lots of longer trips, or if that's something that's important to you. So I think it is sometimes a problem for consumers. It's also a problem by geography. But I think the, the point is that it mostly is perception, and that when you're at the purchasing decision point, You can come up with a thousand reasons that you might, you know, that your EV might not get you there, and that you might not have access to the right charger to do so. And so I think it's ultimately a perception thing for most people, but there are some strips that, you know, can definitely be more complicated if you, if you don't have the right public charging infrastructure near you.

AI assessment note: “I think it's ultimately a perception thing for most people”

Q to be subsidized by Whole Foods or something like that to, uh, Put the station at their premises. You needed some other kind of subsidy because the utilization wasn't high enough. You just weren't, you didn't have somebody charging at all times because there was this chicken or egg problem with chargers and vehicles. Is that still true today? And how, how much does that vary by location and type?

A Yeah, it's interesting. We've been talking about this chicken and egg issue for a long time, where you need to roll out the charging infrastructure, as we said, number one reason why consumers aren't adopting EVs, so we know we need to roll it out. But then, in terms of those charging stations penciling, it's hard to roll out the charging stations unless you know that you're going to have a certain amount of utilization. And as you said, that has been the state of the industry for a while, where either it's Confirmed very low utilization for a lot of these chargers, or it's just really unknown, and so that had, had been the state of the industry. We are seeing increasingly charging stations in a lot of places penciling from a utilization standpoint, and so, um, some of the large owner-operators post some really tremendous statistics, especially in cities or in certain DC fast charging corridors for travel where the utilization does pencil, but part of the problem is still, and we'll talk about this maybe later when we talk about the project finance side of things, it's, it's very hard to know what the utilization is at the time that you are installing the charger, and so while we certainly have a lot of chargers that are penciling today based on utilization, at the moment that you are installing the charger, It's really hard to know if it does, and so we've seen a couple ways t…

AI assessment note: “We are seeing increasingly charging stations in a lot of places penciling from a utilization standpoint”

Q willing to bear the risk of financing EV charging through a project finance structure? With that utilization uncertainty baked in? Like, is anybody willing to take a view on, to your point, if I put an EV charger in location X, uh, I'm, I'm gonna take a view that EV rollout will, uh, will accelerate in this location and so utilization will go up over time or anything like that?

A Yeah, I think people are willing to take risks when it comes to this underwriting relative to, say, a utility-scale solar project or a utility-scale wind project, and it's fascinating to think about the early days of project finance for those assets and how it still did take a while for the industry to get behind underwriting those projects from, um, from a project finance perspective relative to the uncertainty that we see In EV charging. So I think that, you know, the infra players are super hungry to invest in these assets. We're seeing them invest a lot, actually, in the corporate equity of a lot of these companies. So there are tens of deals that have happened in the past two years from the corporate equity level. But I think they are willing to take a bit more risk than they would for other projects when it comes to, um, EV charging. But There's a limit to it, and so you really, the, the holy grail is to have either guaranteed utilization, so you could have a counterparty who's willing to guarantee a certain amount of utilization, and if they don't hit it, that they'd be willing to make up the difference, or a partner who you can get comfort with that they would provide enough utilization for the assets. So for, you could think of, for example, like a Lyft or an Uber, uh, Agreeing to be the charging partner for a fleet of charging stations. That's going to go a huge way t…

AI assessment note: “Yeah, I think people are willing to take risks when it comes to this underwriting”

Q else you might use, uh, your, your EV battery for like the F one 50 lightnings that are charging Teslas and things like that. So let's talk about V two G discharging the vehicle battery into the grid. How do you think about that opportunity or market? I guess it's not really a market yet, but what do we see coming there and how, how bullish are we on it?

A Yeah, I think it's definitely an opportunity, and it depends on your time frame, but if you look at the rollout of stationary storage that we're seeing on the residential, commercial, and utility scale level, clearly we need grid storage, and we need it at every level, and if you look at the growth rate of storage right now in the U.S., I mean, it's, it's just a tremendous, Space. We've invested in a bunch of companies in it because we know that it's going to grow so much, and so on the one hand, it would be such a shame to have all these batteries out there that folks have already paid for that are sitting there and most of the time are theoretically available to be used as a grid resource. On the one hand, that would be such a shame to have that not Be leveraged for the grid in conjunction with our fleet of existing stationary storage. But on the other hand, to your point, there probably needs to be a market for that, or at least an economic incentive to do so. And where we are seeing vehicle to grid happen today, it's where there is an economic incentive to do so. And the reason that we aren't seeing it yet on a huge scale is because, you It, it doesn't necessarily pencil, um, for, for example, the homeowner to participate in a significant amount of V to G. I think there's also some, just folks are working through it when it comes to how OEMs think about it, and when it come…

AI assessment note: “I think vehicle to grid is absolutely going to happen. To me, the question is”

Q chargers that could be level two, they could be DC fast chargers, there's workplace charging, there's, you know, a sort of endless debate over what the split of all those Different things should be. What's your take on, like, do you, do you think that, um, do you think that we know, first of all, what the split should be, and is it even a relevant question at this stage?

A Right. Yeah, I hear this debate a lot, and from the investment standpoint, so, you know, at EIP, we've invested in a number of EV charging companies, and so we've been a part of a lot of these conversations, and some of the debate on the investment level or on the policy level or just on the consumer level is, well, is everyone just going to charge at home? Should we even have public fast charging infrastructure? Well, why are people People, why are we even rolling out at workplaces? Will people really charge at grocery stores? How fast is fast enough? I think those, that's an interesting intellectual exercise that we could have here, and we could debate what percent we think is going to happen where, and what percent of Americans have access to a home charger, things like that. But it's just so clear across every metric that we're behind on all of those. We're behind on Public level two chargers. We're behind on workplace level two chargers. We're behind on DC fast chargers, and we're behind on resi charging. So I think that that's a really a question for the third wave, and I don't see that as a question for the second wave. We need to roll out much more infrastructure than we currently have, and so I actually kind of think it's a counterproductive debate to be having when we're thinking about where should we be putting policy dollars and where should we be putting investment…

AI assessment note: “I actually kind of think it's a counterproductive debate to be having... We need it all.”