ELECTRIC VEHICLES - AUTOMOTIVE OEM

Creating a cross-network charging platform for EVs

Our client is at the forefront of BEV manufacturing globally and has a leading market share in the Nordic region. Despite the rapid growth of BEV adoption in this region, infrastructure remains the Achilles heel for BEV OEMs, with more vehicles in the region than there are charge points to support them, expensive subscription fees, and disparate charging apps for different charging stations, operators, and chargers.

Our client sought to change all of this and asked us to help in their due diligence efforts.

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Our Client's Problem

Our client’s premise was impressive: Because of their market share advantage, they sought to unify different charging networks in the Nordics via an in-vehicle app. This app would create a provider-agnostic charging and payment solution for customers. By using their in-vehicle app, customers could pay for their electricity usage without needing to download or sign up to any additional provider solutions. However, they were unsure if the premise would be accepted, or if their proposed technology proposition was appropriate.

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Our Brief
The client needed to know if their value proposition and product solution was suitable for the Nordic market. We were tasked with answering several key questions, including:

• How convenient are current charging networks across the Nordics?

• What are customer perceptions of current charging apps?

• Are in-car purchases a major opportunity in the short-term?

• How are other OEMs preparing for in-car purchase and charging apps?

• What is the ecosystem's acceptance on joining an alliance network where customers can be allowed to cross-charge between members?

Our Method

Depth is one of the founding principles of 4D’s practice. The client had quoted a report by McKinsey that stated that OEMs and other players in the sector were moving towards in-car applications, whilst other commentators speculated that customers wanted a universal payment system. In either case, incentivizing the various players across the value chain to work together without high charges would be impossible.

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We sought to move beyond such vague predictions and investigate the true viability of the client’s proposed solution.
 

We therefore recruited and interviewed two senior executives from each part of the charging value chain: CPOs, infrastructure vendors, application technology providers, and energy/utilities providers. Having two interviewees from each part of the value chain ensured the verifiability of our research - another one of our core principles. 

The interviewees were duly sourced and provided their views over 1 hour calls each, which were combined and analyzed by our team prior to presentation to the client.
 

Client Outcomes
Our research indicated a number of interesting findings for the client:
 

First, the market is challenging, with many CPOs noting that there is insufficient power infrastructure in the region to support new EV sites, let alone the new ultra-fast charging stations that are more in demand. This, however, was advantageous for the client, as the limited number of stations in the Nordics are insufficient to meet charging demand, and the number of different players with various applications to enable charging meant that the market was still fragmented and in need of a potential solution.
 

Secondly, the market is plagued by high CAPEX for establishing locations, and long investment horizons due to the small margins generated by electricity sales. Though VCs are justifying the case for investments, returns are harder to realize. This to some extent justified the need for a consolidated payment system for CPOs, creating a way of benefiting from additional sales.

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Next, the interviewees across different parts of the value chain all agreed that in-car applications were potentially less useful in favor of mobile applications, given that in-car technology is less versatile, giving our client cause to pivot the platform for their offering.

The interviewees also told us that consolidation activity was occurring, and less profitable or small operators were likely to be bought out first, including by utility companies in the medium term. This posed a challenge for the client, and heightened the need to enter the market with this solution rapidly before the market becomes too concentrated.

Most importantly, however, all interviewees, and particularly CPOs, agreed that a common system was needed and would be willing to cooperate with other CPOs and players within the value chain to achieve this. The majority also suggested that a roaming system, as is common in the telco sector, would be the best way of achieving this, and that regulation would likely dictate the charging system and amounts - a key insight for the client’s product development strategy and how their product could be implemented.

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Our client was thrilled with the findings and has begun talks with various stakeholders in the market to implement their solution as a priority, as well as pivoting from an in-car solution to a mobile application.

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