We’re living in a time of change. As the EV market shifts from an early adoption phase to the more mature, early majority stage, everyone is looking for ways to not be left in the dust – EV charging solution providers among them. With increased pressure to provide flexible pricing and satisfy the increasing amount of evolving customer demands, navigating the path towards profitability can soon become overrun with obstacles.
But here’s the good news: some of these obstacles are fairly easy to move. All we need are a few, technology-powered adjustments to our mindset, and our path to higher profit margins and a happier, scalable future for our EV charging business will soon become much more clear and obstacle-free.
Profitability & EV charging: what are the challenges?
Lately, it seems like becoming a profitable provider of EV charging solutions has become similar to searching for the Holy Grail. Everyone wants to get their business in the black, but the frequently changing industry requirements, the diverse customer segments and still-evolving electric mobility market makes turning a profit seem more like a myth than a realistic goal.
To properly discuss the many factors surrounding profitability in the EV charging sector, first let’s look at the different types of EV charging solution providers in the market today.
From companies that package and sell EV charging solutions to bring them to market to EV-focused divisions of utility companies or hardware players – i.e. companies who started off making EV charging hardware and then decided to grow their scope – EV charging solution providers can be a bit of a mixed bag.
When it comes to these solution providers, profitability becomes a challenge because of the many diverse responsibilities they take on themselves. Since the electric mobility industry doesn’t have such an established history as e.g. the stand-alone automotive or IT industries, providing EV charging solutions for our customers isn’t enough: we also need to educate them, bring financing options to the table, give guidance during installation procedures and support them during the entire (sometimes quite lengthy) sales process!
The profit margins of a regular EV charging solution provider
Today, most EV charging solution providers get their revenue from customers as a one-off investment (so not as recurring or subscription-based revenue – this is actually set to change, but right now, in 2024, the one-off investment model is usually accurate).
And while this one-time fee may seem quite substantial at first sight, with hardware and installation costs being offset with a 20-30 percent profit margin; in reality, operational costs (like sales and project management) quickly eat into that surplus, and solution providers are left with a very slim profit indeed.
Meanwhile, any and all customer support requests and expectations through the entire process, from education and installation to billing and maintenance, also centers on EV charging solution providers. Which leads to increased support and service costs, of course – and coupled with the gradually changing market perception of electric mobility, which will soon lead to more sophisticated customer requests and increased price pressure in the market, our already slim profit margin can quickly become wafer-thin.
Which business model should we choose?
When it comes to EV charging solution providers, there’s actually quite a large variation of business models we can see in use. They’re often based on the “initial investment” approach, whether that means a one-off project sale or (less often) a financed or fully funded model – but pitching such a high investment to a customer is tricky, and needs a lot of time and attention from the sales team. The resulting high acquisition costs, as we’ve mentioned before, can take down our profit margins fast!
If, on the other hand, we position ourselves as a business providing recurring services – and instead of a higher initial investment, we set up lower monthly fees, transaction fees etc. for our customers – the problem becomes slightly different. While our sales team will have an easier time convincing customers to commit, there’s usually a mismatch between the complexity of the solution and utilization rates – making it pretty hard to come up with sustainable, transaction fee-based models going forward.
The key to becoming profitable: multiple business models and great customer experience (CX)
To clear away all of the obstacles in our way to financial success, we need to apply a different, more personalized mindset – especially as compared to traditional companies. EV charging solution providers deal with a much wider variation of customer needs and solution types, which means that we need to change our general way of thinking: instead of a one-size-fits-all approach, we have to find a way to provide solutions (and services) that is much more customisable.
Different customer types = different business models
It’s easy to see how a substantial electric car fleet will have very different EV charging needs (and utilization rates!) than a multi-family home. So how do we provide them both with a charging experience that fits their needs and makes our business profitable at the same time?
If we divide our customers into four big groups, we’ll see that the two defining factors of each are site number (and size) and utilization. This can inform our approach to their different needs:
- Customers with large sites but low expected utilization rates (like a multi-family home or a hotel) will most often be interested in a one-off investment model – making sense for solution providers, since a transactional fee-based setup would yield less profits.
- Customers with small sites but high expected utilization rates (like workplace charge points), on the other hand, will be more impressed with an attractive recurring or transactional fee setup. Which will benefit our company too!
- Customers with both large sites and high expected utilization rates (like public charge points) might be considered an investment opportunity for your company, so putting in our own money may become a rewarding option.
- Customers with both small sites and low expected utilization rates (like a single-family home) will, however, may need additional financing structure – as for our company’s bottom line, a fixed, recurring service model could work the most magic.
From business models to subscriptions – with the right technology
Successfully applying different business models to our specific customers hinges on one crucial aspect: the technology we use to do it. To make this shift in approach sustainable for our company, setting up different subscription plans for our customers (based on their different needs) has to be a quick and simple process – otherwise our operational costs will start adding up again, fast! With our innovative Monta Hub, for example, we can set up a new subscription plan in no more than 15 minutes; which we can then use to accumulate our many revenue streams (like transaction fees, monthly fees or roaming fees) and take large steps towards becoming a sustainably profitable business.
The most important thing to set up in your Monta Hub subscription module is a wide range of services you can support your customers with – from maintenance to tax refunds, or access to roaming networks at a better price. Once you’ve done this, you can set up a new subscription plan with some (or all) of these services to make sure it’s perfectly tailored to your customer’s needs, and then distribute your new plan to them directly. Powered by our automation and Monta Wallet features, it’s the fastest way to provide truly personalized subscriptions to your entire customer base!
How stellar customer experience (CX) can lower your costs
When we asked other EV charging solution providers about the costs they come up against in their businesses, they mentioned these four main levers as their top cost groups:
- Scaling (international expansion, premium customer experience)
- Sourcing (field services, installation, hardware)
- Sales and project efficiency (framework partners, process improvements)
- Ops and service efficiency (automation, reliability, customer experience)
While most of these costs are fairly straightforward – like hardware and installation fees, which understandably account for a large chunk of EV charging solutions providers’ budgets – it might feel strange at first sight to consider customer experience as a (potential) reason for financial strain. But it makes sense: customers who can’t find their way around an EV charging platform will soon lead to a big bump in support requests, which increases operational costs; also, when the time comes for our company to scale, a thoughtfully designed customer experience will save us considerable growing pains.
This is why, when it comes to our singular Monta Hub solution, CX has always been a first-level priority. From the reliability of our platform to our many different automation features, our guiding principle has always been the same: to spend the least amount of time possible doing what you need. Whether that’s launching a new subscription plan, onboarding new customers, or even scaling your entire business.
Main takeaways
Becoming a truly sustainable business in a still-evolving industry is no easy feat. When it comes to EV charging solution providers, however, the obstacles between us and a healthy profit margin are definitely avoidable. Keeping these three main points in mind will make the road to profitability much smoother (and shorter):
- Scale up effectively. When the industry is in a scaling phase, we need to scale as well to stay in the consolidating market.
- Use the right business models. No more one-size-fits-all approach: provide the best plan for your different customer segments.
- Prioritize exceptional CX . This will reduce your costs and impress not only your drivers, but also your site owners and direct B2B customers .
These three takeaways can serve as our headlights on the journey towards becoming a profitable company. They’ll make sure we reach our destination, which is more than any financial dream or mirage: being a sustainable and scalable EV charging solution provider is the technology-powered reality of tomorrow.
All we need to do now is drive towards it.
