In 2014, when the State Grid opened the electric vehicle charging pile market to private capital, it sparked a surge in charging station construction. Dozens of companies rushed into this promising industry. However, more than two years later, the flaws in service and the unclear profit model have left the charging pile industry in a difficult situation—neither rising nor falling, uncertain about its future. Let’s explore this topic with our automotive electronics editor.
There are many strange issues in the charging pile industry. Some media visited several public charging stations in Beijing and found that while the number of charging piles is growing rapidly, the service quality leaves much to be desired. During field investigations, six stations were found to have damaged or non-functional charging units. Stations operated by the State Grid and Star Charging had two or more chargers out of commission.
Additionally, parking spaces near the charging stations are often occupied by gasoline cars, leaving electric vehicles unable to charge. As a result, even though there may be over 20 charging piles at a station, only a fraction are actually in use. For investors, despite significant financial and material investments, returns remain limited.
Take the State Grid as an example: in 2016, it built 40,000 public charging piles and provided over 12 million charging services throughout the year. This means each charging pile was used less than once per day. The cost of a single slow-charging unit is around 5,000 yuan (fast chargers start from 30,000 yuan), while operators typically charge a service fee of 0.8 yuan per kWh. In such a scenario, a charging pile would need to operate for 6,250 hours just to break even, which equates to 260 days of continuous operation without rest.
The State Grid itself admitted that its charging pile operations were not profitable in 2016. According to the China Association of Automobile Manufacturers, new energy vehicle sales reached 1.09 million in 2016. Even if we assume a 100% growth rate (which was actually 87% in 2016), the number of new energy vehicles in China by the end of 2017 was expected to reach around 2 million.
Despite the government's strong support for new energy vehicles, the current user base of under 2 million charging pile users still presents a challenge for operators. With such a small user base, the profit model remains limited, relying almost entirely on charging service fees. This makes it hard for operators to sustain their business.
Why then do so many players continue to enter the market? Government subsidies play a key role. In cities like Beijing, Shanghai, and Shenzhen, subsidies for charging pile construction were set at 30%. However, after the introduction of detailed regulations, many companies were excluded due to strict requirements.
This article highlights some of the challenges facing the charging pile industry. If you want to learn more, stay tuned. Electronic Engineering will provide you with more comprehensive, detailed, and up-to-date information.
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