Vendor Financing for EV Equipment (Electric Vehicles)
The growing popularity of electric vehicles (EVs) has created a significant opportunity for businesses that sell EV charging equipment. As more consumers switch to EVs, the demand for charging infrastructure is on the rise. However, the upfront costs associated with investing in EV charging equipment can be a major barrier for businesses, making it difficult for them to enter this lucrative market. Fortunately, financing options are available to help businesses overcome this challenge and invest in EV charging infrastructure.
The growth of the EV charging market
According to the Australian Renewable Energy Agency, the sale of EVs in Australia forecast to reach 615,000 vehicles per annum by 2030, increasing to 1.89 million annual new vehicle sales by 2040, or 49% and 100% of sales respectively.. In the UK, National Grid predicts that the number of EVs on the road could reach 37.4 million by 2050. In Canada, Statista estimates that the country will have circa 200 thousand in EV sales per annum by 2027 growing from 10 thousand in 2016. Meanwhile, the International Energy Agency predicts that the number of EVs on the road in the US could reach 300 million by 2030 in their net zero 2050 analysis scenario. As the demand for EV charging infrastructure continues to grow, businesses that sell EV charging equipment are in a unique position to capitalize on this trend.
Upfront costs as a barrier to adopting EV equipment
The upfront costs of EV charging equipment can be a major barrier for businesses trying to enter this market. In Australia, the cost of a Level 3 DC EV charging station (the top tier, fastest EV charger category) can range from $40,000 to $100,000, according to the EVSE. In the US, Future Energy estimates that the cost of installing a Level 3 charging station can range from $40,000 to $175,000. These costs can be prohibitive for many businesses, given the need to purchase multiple charging stations at once.
Recent developments in EV charging and vendor finance for EV equipment
Government incentives are available in each market to help businesses finance EV charging infrastructure. In Australia, the government is offering co-funding of up to $490,000 per station with no more than 50% government co-funding or $900,000 with 70% co-funding for fast-tracked options that meet certain criteria. Meanwhile, in the US, the Department of Energy is offering funding opportunities for businesses that want to install EV charging stations.
The increased demand for EVs and charging infrastructure in each market is also driving partnerships between automakers and charging companies. In the UK, Volkswagen had partnered with Pod Point and Tesco to offer free EV charging to its customers. Meanwhile, after forming Electrify America, Volkswagen has now formed Electrify Canada which saw the installation of 32 charging stations across the Canada. In the US, Ford has also partnered with Electrify America to offer Ford customers access to its charging network.
Advancements in charging technology are also making EV charging infrastructure more accessible for businesses. For example, Tritium has developed an ultra-fast charger that can deliver up to 475kW of power. Meanwhile, ChargePoint has developed a modular charging solution that allows businesses to expand their charging infrastructure over time.
Benefits of offering vendor financing for EV equipment
In addition to helping businesses overcome the upfront costs associated with EV charging equipment, financing options offer a range of other benefits. For example, businesses can access bespoke financing options to meet their unique needs in each market. This can help them to secure the best possible terms and interest rates for their investment. Financing options can also speed up the approval process and simplify the application process for businesses. This can be particularly important for small and medium-sized enterprises that may not have the resources to navigate complex financing options on their own. Furthermore, financing options can offer tax benefits and can help businesses to build up their credit rating, which can be important for future investment opportunities.
In summary, vendor financing for EV equipment is practical and makes sense
As the demand for EVs and EV charging infrastructure continues to grow in markets around the world, businesses that sell EV charging equipment have a significant opportunity to capitalize on this trend. However, upfront costs can be a major barrier to adoption, which is why financing options can be a smart way for EV equipment vendors to increase their sales. By partnering with financing companies that offer bespoke financing options, the customers of EV equipment vendors can access the capital they need to invest in the latest charging technologies and meet the unique needs of customers in different markets.