Updated: Nov 30, 2021
A recent infrastructure bill is committing more than $7.5 billion toward electric vehicle charging and related initiatives, leading to an inevitable surge in the number of electric vehicles on the road that will need a place to charge up. Businesses once looked to EV charging stations as a way to differentiate themselves in a crowded market, but today, they are fast becoming a necessity. Global electric vehicle sales in the first half of 2021 were up 80 percent over the entirety of 2020, showing how travelers are choosing to invest as the economy continues to recover, and major car manufacturers are expecting half of their sales to consist of electric vehicles by 2025.
This has been a long-running trend in vehicle travel, and in response, regulators are increasing pressure on businesses to install EV charging stations to meet the oncoming wave of demand for zero-emission vehicles. If this issue is not addressed when new project construction begins, property owners could be signing themselves up for a headache and higher costs down the road.
The success of future electrification in the U.S. relies on the business community’s willingness to commit to improving the travel infrastructure of this country. Roughly one out of three housing units in the U.S. is unlikely to have a garage, limiting homeowners’ ability to install their own EV charging stations. Cities are also still a long way from the widespread use of curbside charging stations as well, meaning if you want to own an electric vehicle in one of the more populated areas of the country, you are often out of luck.
With no other option, cities and states across the U.S. are beginning to set building code parking ordinances requiring businesses to install a set number of EV charging spaces, capitalizing on existing infrastructure to encourage EV adoption. In new construction, there are fewer obstacles to installation, but existing properties have additional considerations to keep track of.
Fire codes, handicapped spaces, and other existing ordinances limit the number of available spaces for EV chargers. Cities in 11 states currently have electrification ordinances requiring 10 percent of available parking spaces to be fitted for EV charging, but to properly meet demand at the pace it is increasing, developers should aim for 20 percent. Otherwise, developers may find themselves making a quick return trip to a recently finished property to install additional chargers just a few years later at greatly added expense.
Positioning your building’s EV chargers in an appropriate location without ripping over this tangled web of requirements can be tricky, but it’s far easier to strategize their locations before construction has finished. As such, EV investments benefit new builds most of all and investing in EV charging today can save developers millions of dollars in the future.
First in Line
As more and more companies continue to join the Greenhouse Gas Protocol and have ESG requirements to reduce their impact on the environment, it is going to be more important than ever for commercial real estate developers to factor EV charging into their project plans. The good news is that there is help available to assist developers with the added expense that such an installation brings, in the form of alternative fuel vehicle property credits. The bad news is, time is running out to take advantage of these subsidies.
Through this program, developers can earn up to $30,000 in credits for all qualified charging stations installed by Dec. 31, 2021. With the end of the year approaching quickly, this is possibly the last chance to shave off major costs attached to EV charging installations. While building these units can be accomplished over a short timetable, limited available construction materials and labor will make this a challenge for some developers to fulfill before the credits expire.
Regardless of whether these credits are available or not, the demand for EV charging is only going to increase. The governor of the state of Washington recently signed an executive order designed to cycle out government vehicles to an all-electric fleet over the next several years, with 40 percent of the fleet to be electrified by 2025. This includes medium and heavy-duty trucks, which are tentatively expected to join the fleet through 2035.
Even if your city or state does not mandate the construction of EV parking spaces, neighboring cities or states may. Eventually, these requirements will become standard. Developers are familiar with the hidden cost of adapting to new building codes once a project is already finished, and know it is sometimes worth it to stay ahead of the curve.
Any developers considering their next project should clearly identify whether or not it will require EV chargers in the future based on requirements for similar projects in locations with existing mandates. Condos, apartment complexes, multi-family housing, hotels, and even gas stations frequently have EV requirements. Installing EV chargers during the early development of these properties will save owners hundreds of thousands of dollars down the line, and will also attract business as electric vehicle ownership grows.
It always pays dividends to be early to a cultural shift in something as large as transportation, particularly when the demand curve can be so easily seen. Continued investments into EV charging infrastructure have garnered a variety of reactions and expectations, but it will ultimately fall to business owners and commercial real estate developers to create an environment where EV owners are welcome.
Another factor to consider is the impact of international travelers’ habits. The U.S. has roughly one quarter as many electric vehicles as China or Europe, and when their travelers visit they are going to expect a similar transportation experience. This suggests a swell in EV interest as international travel gradually picks up. The availability of existing EV charging stations is not enough to meet today’s existing demand, and it will certainly not be enough without significant new development attention.
This doesn’t have to be the case. Travelers and business owners are more eco-conscious than ever before, and the sustainable initiatives your development pursues can have wide-reaching impacts on property values in the future. Breaks exist for the owners and developers who are willing to commit to the transportation infrastructure of tomorrow. The drive to go is here. Who will provide the spark?
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About the Author
Robb Monkman is a mission-driven entrepreneur who is passionate about making the world a better place. Robb is the Managing Partner of Charge Up USA where he is making an impact by accelerating the transition to electric vehicles (EV) and other electric technologies. Robb is a serial entrepreneur with experience launching multiple hardware and software products at early-stage companies. Robb is an active angel investor and advisor helping companies that are making a positive impact in clean energy, electrification, and IoT.