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The real cost of an EV charging station- AC vs DC chargers, profitability analysis

Devang Mistry, Co-Founder and Tech Lead at Pulse Energy, breaks down the cost and revenue potential of AC and DC chargers and does the math behind determining the profitability of a charging station in the long run.

There are two types of charging stations in India, AC chargers (slow charging and cheaper) and DC chargers (fast charging and expensive). Apart from the cheaper vs expensive debate, another thing that matters is the number of units that your charger can dispense. The more units (i.e. energy) that your charger dispenses, the more revenue you generate.

For example – If 1 unit (i.e. 1 kWh) equals INR 17, then a 15kW DC charger can dispense 15 units in one hour compared to a 3.3kW AC charger that can dispense only 3.3 units in one hour – A 4.5X more units and earning potential.

More units dispensed = More money

Comparing initial setup cost

AC chargers are cheaper, but your earning potential is 4.5 times less than a DC-001 charging station at equal utilization levels. The DC001 chargers are used predominately in the fleet operator business like BluSmart and for 3Wheeler EVs. 50 kW DC chargers are used in public places that charge private electric 4 Wheelers and heavy vehicles.

Below is a breakdown of the initial cost setup for AC and DC charging stations in Koramangala, Bangalore, and use over a period of 3 years.

Source: Pulse Energy

For 15 Amp AC charger land rentals – the usual arrangement is a revenue share with 20% of revenue going to the land owner. For this reason, land rental per month has been taken as zero for this analysis.

In addition to these costs, there are taxes and charger efficiency losses that you incur on a recurring basis. The charger efficiency loss is the % delta between how many units the charger needs from the grid to offer 1 unit to your customer.

For example – A DC-001 charger has a Charger Efficiency Loss of 7%. (i.e. It will cost you ₹6.4 to deliver ₹6 worth of energy to your customer).

By including all these costs, breakeven graphs for AC and DC chargers are mapped to determine the minimum one should charge the customers based on the utilization rate of the charging station.

Breakeven models for AC and DC chargers

DC charging

For our breakeven model, we assumed that you have an EV meter for your charging station at the cost of ₹6 per unit. Now, if your usage is below 25%, then you should set the unit price to ₹31. However, this does not work out for customers as it will be more expensive for them to charge at your charging station than using their gas-powered vehicle. According to Pulse Energy’s customer research, the ideal price range is ₹13 to ₹11 per unit, which is the threshold at which electric driving becomes cheaper than ICE vehicles.

Source: Pulse Energy | Calculations assuming the chargers are deployed in Koramangla, Bangalore

For a DC001 charger at 70% usage, you should charge customers a minimum of ₹11 per unit. This is why private charging station operators typically price between ₹20 to ₹15 per unit. However, most public stations today operate at less than 25% utilization, which means that even a ₹20 per unit price is ₹11 less than the minimum price to break even, resulting in a loss today.

The ideal price for a 50kW DC fast charge is ₹18 per unit, and to achieve this target, the charger needs to be at over 20% utilization, which is not currently the case.

AC slow charging

Source: Pulse Energy | Calculations assuming the chargers are deployed in Koramangla, Bangalore

AC slow chargers are 75 times cheaper than DC 001 chargers by cost. At a 6% utilization rate, the minimum charge per unit is just ₹11 per unit, and the price goes too low as ₹7 per unit till 100% utilization.

Looking at the graph, AC chargers seem way more cost-efficient both for the CPO and the customer. i.e. You can charge users at the price point they prefer, even at 5% utilization.

However, the right question one should ask is – What kind of chargers make more money in the long run with adequate utilization (~50% utilization rate)?

Profitability model of AC and DC chargers

According to our profitability model, DC fast chargers can generate much higher levels of revenue compared to AC slow chargers at higher utilization levels (i.e. above 50% utilization). Positioned at the right place with the right density of electric vehicles, a DC charger will yield a higher return compared to a single AC charger. In addition, as the number of AC chargers in a location increases, the CPO incurs additional costs like upgrading the grid, land rental and deposits, efficiency losses, and more which will further reduce the margins you get from AC chargers. A DC charger needs to just run at 50% utilization to churn out profit equivalent to an AC charger running at 100% utilization.

Source: Pulse Energy
Excel sheet with the costing, breakeven model and profitability model

The final verdict, in my analysis, is that DC charging station operators will generate copious amounts of profit in the long run. In contrast, AC charging station operators will need to diversify to other streams of revenue to increase their margins (like charging for parking, showing ads on chargers, etc.).

Article contributed by Pulse Energy Technologies, which is an Electric Vehicle SaaS startup based in Bangalore, built by ex-Amazon engineers. Pulse Energy says that CPOs leveraging its platform have seen their charger utilization percentage increase from single digits to double digits (>20%) in less than 45 days. Currently, Pulse Energy’s platform is connected with 554 DC chargers and 13,326 AC chargers. This article was originally published in Pulse Energy Insights and has been reproduced here with their permission.

This article was also published in EVreporter Feb 2023 Magazine which can be accessed here.

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