Electric vehicles (EV) and EV-charging infrastructure will play an important role in the decarbonisation of the transport sector. For many, EVs will be one of the most ‘visible’ embodiments of the energy transition. The transition presents challenges and opportunities to wholly transform one of the world’s largest manufacturing industries, as well as dozens of supply chain components and related service sectors.
According to the IEA’s EV Outlook 2021, EVs sales topped 3mn globally and accounted for around 4.6pc of the world’s car sales in 2020, continuing their 40pc back-to-back increase each year since 2018. The pace of growth is only set to accelerate. In the first quarter of 2021 alone, global EV quarterly sales soared by 140pc compared to the same period in 2020.
While consumer demand will undoubtedly fuel growth, governmental regulation and policy is vital to shift the market firmly towards EV uptake. The UK Energy White Paper, published in December 2020, reiterated the government’s flagship policy of banning the sale of new petrol and diesel cars and vans (but not HGVs) by 2030, extending this to hybrid vehicles too by 2035. The ban on petrol and diesel cars goes hand in hand with the plans for a massive acceleration in the roll-out of electric and other low-emission vehicles. Total support to roll out EV-charging networks will near £1.3bn ($1.84bn). A further £1bn will also be spent on developing and promoting EVs themselves, including £582mn in grants for those buying zero or ultra-low emission vehicles and £500mn for the development of ‘gigafactories’ (electric car battery factories) with clusters in the North East and West Midlands to complement the government’s ‘levelling up’ agenda. More detail is likely to emerge soon, when the Transport Decarbonisation plan is published later this spring.
In this context, Stephen Rigby, a partner in Norton Rose Fulbright’s London energy team, recently spoke to Dan Kaufman, legal counsel at bp pulse.
Rigby: Tell us a little bit more about your business.
Kaufman: I am the legal counsel at bp pulse, BP's EV-charging infrastructure development business in the UK. It is a very broad business: we sell and install EV-charging units to consumers and businesses. We also invest in the development of land into public EV-charging hubs and ‘E’ forecourts, which operate on the UK's largest and most-used public charging network—so that makes us a digital business too.
Rigby: What role is bp pulse playing in the energy transition?
Kaufman: Our business exists to support EV drivers and potential EV drivers who are considering that switch. We really want to be part of a decarbonisation of road transport. BP's ambition is to become a net-zero company by 2050 or sooner.
Rigby: How is the energy transition impacting the automotive sector? What are the changes that are coming?
Kaufman: Emissions from energy generation have reduced a lot recently. Emissions from road transport have not quite moved as much, and the larger share of road emissions comes from cars and vans in the UK. Moving to EVs is a key part of the energy transition. And that ties in with the UK government's aim of making sure all new cars and vans are zero emission at the tailpipe by 2035.
Electrification is just one of a number of so called megatrends affecting the automotive sector. Another is car sharing, such as car clubs and car pools, for example. A shared vehicle takes multiple private vehicles off the road and out of use. The development of autonomous vehicles is another megatrend on the horizon, and that is going to have a massive impact. But I think, for the industry, the focus is not necessarily limited to the tailpipe, it is also about increasing focus on the lifecycle emissions of the vehicle from production all the way through to end of life.
Related to EV emissions is the electricity generation mix. EVs are currently powered by a relatively carbon-intensive grid, and while it is still cleaner than internal combustion engines, it is clearly important that we are soon charging those vehicles using renewable energy. There are lots of ways to facilitate that, but the growth of EV ownership has to drive investment in renewable energy.
Rigby: There is a lot of different things happening there, and they are all interacting with each other. How is your business responding to all of this?
Kaufman: We offer our customers a range of charging solutions to help them charge at home, at work and on the go. While many competitors in our industry tend to operate just in perhaps one of those sectors and specialise in that, we are responding by developing a business that can serve customers right across that value chain. We provide charging points (or ‘wall boxes’) to place directly onto consumers’ homes, and our latest wall boxes are smart-enabled, allowing charging at times that are cheaper and greener. We have also got a big focus on workplace charging, which includes helping fleets and businesses to electrify their company cars and vans at their offices or at their depots.
We also operate the largest public charging network in the UK, which importantly is also the most used. So far in 2021 we have powered 4mn kWh of public charging, which is more than double the figure from two years ago over the same period. We are rapidly expanding, and one of our core strategies is to have an emphasis on ‘ultrafast’ charging—bringing the fastest chargers into the most convenient locations for our customers and giving them the best charging experience. We are installing ultrafast chargers at BP's existing network of forecourts across the UK, and we have announced that we are now going to be rolling out EV ultrafast charging dedicated hubs and 100pc ‘E’ forecourts. At these sites, you can expect to see up to 24 ultrafast charging points, with speeds up to 300kW, and where possible with a retail convenience offering that makes the whole charging experience far more enjoyable.
Rigby: You mentioned a number of different business models for EV charging, all with potential. Which ones do you see having the greatest potential over the next few years?
Kaufman: There is massive opportunity for many different business models to drive value and gain market share—whether it is supplying charging points, operating a charging network, developing land for EV charging, or in the digital and technology space. Being a really broad EV-charging business we cover all of these areas. We believe that gives us the experience, the perspective and the ability to evolve with the market. There is no doubt there is a massive opportunity in the fleet-charging segment, where delivery of a premium fleet management and charging digital platform is just as important as accessibility and reliability to charging points themselves. There is a real opportunity if you can bundle both of these as a service proposition. For public charging, we offer pay-as-you-go and, recently, contactless services. Our subscription model, which offers our bp pulse community discounted charging rates and also other bundled services, has proved really popular. For the business, it develops regular and recurring revenue streams that enable us to invest in network growth.
Rigby: What do you think are the biggest opportunities and the biggest challenges facing the sector in the next few years?
Kaufman: Let me start with a challenge—I think the regulatory landscape for EV charging is still quite nascent. As a business, we interface with a variety of laws and regulations, but these are generally part of an existing patchwork. There is no overarching framework covering the EV market holistically. This presents some business uncertainty and complexity, so we are working with other industry stakeholders, the UK government and the regulators to facilitate thinking in that space. There is no doubt it is necessary as the market matures, but I think there is a risk that, at this nascent phase, overregulation could stifle growth, competition and innovation. All those things really need to be encouraged at this time, so I think changes need to be carefully considered.
In terms of opportunity, the next five years are going to see a massive uptick in EV ownership. It is one of the fastest growing markets globally, and that is only going to accelerate over the coming years. The sector is very dynamic: if we are not making an exciting announcement about something that we at bp pulse have done, then our competitors are—it is a very exciting and fast-moving environment.
I think there is a big opportunity in the integration of renewable energy, generation, EV-charging and energy management savings systems. So pulling together those technologies into a single ecosystem, including things like battery storage, is crucial; it creates a multiplier effect that really benefits the whole business, which is yet to be exploited to the fullest extent.
Rigby: Thank you, Dan. EVs and EV-charging infrastructure will clearly play a very important role in the UK’s net-zero targets. I am inspired by what you are doing and what bp pulse is doing, and thank you again for taking the time to share your perspective on an exciting market.
Stephen Rigby is a partner at Norton Rose Fulbright, Daniel Kaufman is a legal counsel at bp pulse, and Kathryn Emmett is a knowledge lawyer at Norton Rose Fulbright