"We're going to have the ability to produce and deliver millions of EVs," said MIT Professor Charles Fine at the final session this semester of the MIT Mobility Forum. "It's not clear we're going to have the ability to charge them. That's a huge, huge mismatch."
Indeed, making EV charging stations as ubiquitous as gas stations could spur a major transition within the entire U.S. vehicle fleet. While the automaker Tesla has built a network of almost 2,000 charging stations across the U.S., and might make some interoperable with other makes of vehicles, independent companies trying to develop a business out of it are still trying to gain significant traction.
"They don't have a business model that works yet," said Fine, the Chrysler Leaders for Global Operations Professor of Management at the MIT Sloan School of Management, speaking of startup firms. "They haven't figured out their supply chains. They haven't figured out the customer value proposition. They haven't figured out their technology standards. It's a very, very immature domain."
The May 12 event drew nearly 250 people as well as an online audience. The MIT Mobility Forum is a weekly set of talks and discussions during the academic year, ranging widely across the field of transportation and design. It is hosted by the MIT Mobility Initiative, which works to advance sustainable, accessible, and safe forms of transportation.
Fine is a prominent expert in the areas of operations strategy, entrepreneurship, and supply chain management. He has been at MIT Sloan for over 30 years; from 2015 to 2022, he also served as the founding president, dean, and CEO of the Asia School of Business in Kuala Lumpur, Malaysia, a collaboration between MIT Sloan and Bank Negara Malaysia. Fine is also author of "Faster, Smarter, Greener: The Future of the Car and Urban Mobility" (MIT Press, 2017).
In Fine's remarks, he discussed the growth stages of startup companies, highlighting three phases where firms try to "nail it, scale it, and sail it" - that is, figure out the concept and workability of their enterprise, try to expand it, and then operate as a larger company. The charging-business startups are still somewhere within the first of these phases.
At the same time, the established automakers have announced major investments in EVs - a collective $860 billion over the next decade, Fine noted. Among others, Ford says it will invest $50 billion in EV production by 2026; General Motors plans to spend $35 billion on EVs by 2025; and Toyota has announced it will invest $35 billion in EV manufacturing by 2030.
With all these vehicles potentially coming to market, Fine suggested, the crux of the issue is a kind of "chicken and egg" problem between EVs and the network needed to support them.
"If you're a startup company in the charging business, if there aren't many EVs out there, you're not going to be making much money, and that doesn't give you the capital to continue to invest and grow," Fine said. "So, they need to wait until they have revenue before they can grow further. On the other hand, why should anybody buy an electric car if they don't think they're going to be able to charge it?"
Those living in single-family homes can install chargers. But many others are not in that situation, Fine noted: "For people who don't have fixed parking spaces and have to rely on the public network, there is this chicken-and-egg problem. They can't buy an EV unless they know how they're going to be able to charge it, and charging companies can't build out their networks unless they know how they're going to get their revenue."
The event featured a question-and-answer session and audience discussion, with a range of questions, and comments from some industry veterans, including Robin Chase SM '86, the co-founder and former CEO of Zipcar. She expressed some optimism that startup charging companies will be able to get traction in the nascent market before long.
"The right companies can learn very fast," Chase said. "There's no reason why they can't correct those scaling problems in short-ish order."
In answer to other audience questions, Fine noted some of the challenges that will have to be addressed by independent charging firms, such as unified standards and interoperability among automakers and charging stations.
"For a driver to have to have six different apps, or [their] car doesn't fit in the plug here or there, or my software doesn't talk to my credit card ... connectivity, standards, technical issues need to be worked out as well," Fine said.
There are also varying regulatory issues, including grid policies and what consumers can be billed for, which have to be worked out on a state-by-state basis, meaning that even modest-size startups will have to have knowledgeable and productive legal departments.
All of which makes it possible, as Fine suggested, that the large legacy automakers will start investing more heavily in the charging business in the near future. Mercedes, he noted, just announced in January that it is entering into a partnership with charging firms ChargePoint and MN8 Energy to develop about 400 charging stations across North America by 2027. By necessity, others might have to follow suit if they want to protect their massive planned investments in the EV sector.
"I'm not in the business of telling [automakers] what to do, but I do think they have a lot at risk," Fine said. "They're spending billions and billions of dollars to produce these cars, and I don't think they can afford an epic failure [if] people don't buy them because there's no charging infrastructure. If they're waiting for the startups to build out rapidly, then they may be waiting longer than they hope to wait."
Related Links
MIT Mobility Initiative
Car Technology at SpaceMart.com
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