eMobility value chain

Collaboration within the eMobility ecosystem – and with the public sector – is vital in order to create seamless charging experiences, or the new business models we previously described. Incumbents need to rethink their positions in this new industry and develop strategies that define their approach to cross-industry collaboration.

When orchestrating this convergence, each player should bring a deep understanding of what they require from others, and what they can provide to the rest of the ecosystem. Each step toward convergence strengthens and reinforces these interdependencies, but also improves overall customer experience. The charging experience becomes increasingly seamless, steadily addressing the issues that could stop drivers from buying or leasing an EV. Significant change is required.

Energy markets face a strong need to find ways to incentivize EV charging when renewable power is abundant, effectively monetizing the flexibility potential that these ‘batteries on wheels’ offer. The goal is balancing the grid in times of high demand, incentivizing customers to charge their vehicles only when demand is low – built on a foundation with dynamic pricing and new market structures that support EV aggregation and local balancing. What’s needed is new infrastructure that directly communicates with charge points and EVs, and manages payments to drivers who participate in flexibility markets.

The power industry needs to proactively attract EV owners into some of these programs. It is far from guaranteed that mass market participation will occur just by creating financial incentives. EV owners should be encouraged to participate. Even the simplest approaches – charging significantly less to charge overnight – are ineffective if customers do not know these tariffs exist. The challenge of recruiting drivers into flexibility programs increases with the additional complexity of V1G and V2G approaches. Customers need to feel that they are sufficiently rewarded for their participation, so the program needs to be simple and easy to understand. The power industry should also provide insight to raise awareness and allay any worries customers may have. Finally, flexibility programs need to be convenient and the driver should feel like they are in control.

While regulated utilities’ ability to participate in eMobility may be restricted, they are still a vital part of the ecosystem. For example, they can generate a regulated return on new infrastructure deployed to support EV charging. But opportunities exist beyond their core business model. For example, they may look into working with the owners of large fleets, advising them on renewable energy procurement strategies, such as how to best use power purchase agreements.

Electricity retailers in competitive markets may be less encumbered. While the increase in electricity demand will grow an energy retailer’s revenues, several other opportunities may emerge for them to facilitate customers’ net zero journey. The options include creating integrated offers that include the supply of clean electricity, orchestrate residential EV charge point installations, provide charge cards for charging on-the-go, provide rooftop solar, enable access to a local energy community, install a stationary battery and/or sell heat pumps.

The automotive industry is faced with a challenge to make significant changes as well. For one - our recent research indicates how the ongoing race to capture value in the sector is lacking a clear plan for monetizing digital services. But also in eMobility, it’s not just a simple case of transitioning from one drivetrain to another. It has already sparked a wave of innovation and reinvention among automakers, some of whom are moving into electricity supply, EV charging infrastructure, insurance, solar panels and home storage. ²⁹

Although EVs are intended to be a cleaner alternative to ICE vehicles, batteries are receiving significant bad press. There is scope for the automotive industry to address this issue by driving improvements in the battery value chain, all the way from sourcing raw materials to disposal. New battery chemistries will reduce or negate the need for unsustainable materials – for instance those in short supply, whose extraction is environmentally harmful, or relies on unethical labor practices. Lengthening battery lifespan lengthens the replacement cycle, which reduces demand. And new approaches to recycling will reduce demand for mined ore.

Service station forecourts could be transformed into new integrated transportation hubs. This opportunity can be boosted through collaboration between the oil, gas and automotive industries. There are significant opportunities for alternative ownership models – with shared ownership, leasing, rental and vehicle-as-a-service models all potentially helping to reduce traffic and demand for parking. Alternative approaches to EV ownership may also help transition customers with no off-street parking.