Welcome to a three-part series on infrastructure project financing for electric vehicles. Planned posts:
Part 1: the challenge itself and how Repower Groups believes it can be solved
Part 2: a view into an analogous asset type – what worked & what didn’t
Part 3: the financing sources that exist for different project types and how they’re impacted by the President’s infrastructure plan
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[Part 1] The EV Infrastructure Financing Gap
While you might assume that electric vehicle infrastructure is niche, consider that Morgan Stanley projects $2.7T in spending on chargers, batteries, distributed & other energy generation, and installation costs for charging infrastructure between now and 2040... and that's not even taking into account that electric fleet vehicles are projected to use ~$40B worth of electricity each year in the US alone by 2025,
However, today's ability to access to adequate financing halts many active vehicle electrification projects.
Key reasons for this gap:
Traditional financing sources are limited in ability to value cost reductions from new technology implementations (until there is a track record of performance – foreshadowing…)
Few individual projects large enough (yet) to justify custom financing products
Limited residual value information due to product life cycle of EV fleet infrastructure components
Optimal implementations to maximize profitability of different types of fleets are still being tested
For these reasons, access to adequate project financing to support fleet scale EV projects is lacking. But it doesn’t have to be that way.
By taking a structured view on EV infrastructure project evaluation, risk assessment, and contracting, vendors and customers alike can build a performance track record that enables lower cost capital availability.
Structured finance has a demonstrated track record for reducing asset class cost of capital (i.e. auto, aircraft, cell towers, structured settlements, residential solar). While achieving this reduction requires time and market education, it’s the right time to begin that process for EV infrastructure.
By establishing a consistent approach today, Repower Group can help fleets and their vehicle & infrastructure vendors to be ready for the projects of tomorrow… when even more commercial electric vehicles have come to market.