Calculating the ROI of an EV Charging Station Business

Is an electric vehicle (EV) charging station business viable — and profitable — and if so, what’s the potential return on investment?

For the past decade, the answers to these questions haven’t been particularly easy to find. It’s clear that the EV charging business model is fundamentally different from the model for traditional gas stations; exactly how different isn’t so clear. 

But according to a new report from non-profit Next 10 and the UC Davis Electric Vehicle Research Center, the ROI of EV charging stations may be coming into focus. Below, we’ll look at key takeaways from the report — and provide guidance for building an EV charging station business that delivers a profit. 

EV Charging Station Business Basics: Two Business Models

While the U.S. market for electric vehicles has soared in recent years, the public charging infrastructure has lagged. About 60% of Americans have a public EV charging station within two miles of their home, but many of those stations are under-maintained or underpowered; a 2023 study found that the current electric transportation grid is in danger of reaching generation and distribution limits.

A big part of the problem is the lack of private EV charging station businesses. Those businesses can be divided into two basic categories:

• The “Gas Station" Model: Standalone businesses that provide charging, along with food, snacks, and other conveniences found at traditional gas stations. Much of the profit comes from the secondary sales.
• The Amenity Model: Businesses that provide charging stations as a way to utilize onsite space. For example, a restaurant, movie theater, or department store could provide EV charging stations at a moderate cost to attract more customers while earning moderate profits from charging services. 

Both models can be profitable, but part of the promise of the electric revolution is the flexibility of the charging infrastructure. Any business with a dedicated parking area could build a new revenue stream — and attract more customers in the process. 

So, why aren’t more private organizations starting their own EV charging station businesses? 

The ROI of EV Charging Stations: Challenges and Solutions

Before investing in electric vehicle supply equipment (EVSE), businesses need assurance that the investment will pay off within a reasonable timeframe. According to the Next 10 analysis of California charging stations, that’s a problem — at least, when the chargers are intended as the sole means of revenue generation. 

“The analysis finds that revenues are nowhere near able to pay back the capital and operating costs of the even DC fast chargers with the lowest installation cost over a three-year period, a commonly used payback period for businesses,” the report reads, “even when doubling the average number of events and amount of energy dispensed to charge vehicles.”

Importantly, this conclusion only applies when government subsidies and secondary benefits are not part of the equation. As we’ll discuss, there’s an excellent business case for EV charging stations — but for an accurate ROI estimate, we need to accurately weigh the challenges. 

Several factors work against the business case for electric vehicle chargers:

• Maintenance. Typical costs for Level 1 and Level 2 chargers can range from $300 to $500 per year, while DC fast chargers may have maintenance costs in excess of $1,000 per year. High-quality equipment can reduce these costs.
• Low Utilization. Most EV owners would rather charge at home; EV charging stations are intended for long-range driving. According to the report, charger speed and proximity to amenities (like restaurants, grocery stores, and shopping centers) can directly affect utilization rates.
• Demand Charges. Commercial electricity prices can fluctuate throughout the day. Charging during peak hours can be more expensive, affecting profitability.
• High Upfront Costs. In some parts of the U.S., the initial investment for charging stations — particularly DC fast charging stations — can be substantial. Government subsidies can be used to decrease these costs.

These factors are important considerations — but they don’t outweigh the potential benefits of an EV charging business, particularly under the amenity model. 

Related: EV Charging for Fleets: Top 3 Approaches

For a Reasonable ROI, Businesses Must Take a Thoughtful Approach

EV adoption is accelerating. To meet consumer demand, we’ll need more public charging stations, and businesses that invest early can see substantial benefits.

An accurate ROI calculation needs to consider the entire business case for EV charging. The equation should include: 

• Installation and operating costs: Initial installation may include equipment, site prep, electricity, and maintenance.
• Government incentives: This includes any available subsidies or tax breaks that can offset costs. That may also include incentives for maintenance — which states are considering to make private investment more attractive.
• Revenue potential: Businesses should project revenue from charging fees and consider alternative income streams from co-located amenities. This is especially important for businesses that see charging stations as part of their value, rather than as a complete business.
• Branding and marketing: Offering EV charging can enhance brand image and attract environmentally conscious customers.
• Utilization rates: Charger usage should be estimated based on location, speed, and amenities.

Practical Steps for Building a High-ROI EV Charging Station

Investing in public EV charging can be a smart move for forward-thinking businesses. However, it's essential to go beyond a basic ROI calculation and consider the broader picture. 

By carefully evaluating all aspects of the business case, including costs, revenue potential, branding opportunities, and the long-term growth of the EV market, businesses can make informed decisions that maximize their return on investment and position them for success.

Some quick tips: 

• Choose a pricing strategy that’s appropriate to the equipment. DC fast chargers, given their high power output, might be better suited for time-based pricing, while Level 2 chargers often use energy-based pricing.
• Align your outfitting with customer preferences. Generally, this means providing a mix of Level 2 and DC fast chargers — but more fast chargers might be needed in certain high-demand areas to limit wait times and to attract more customers.
• Consider dynamic pricing based on real-time factors. As long as dynamic pricing strategies are aligned with driver demand, they can effectively offset utility demand charges (and provide a more reliable return).
• Take advantage of government incentives. Offsetting installation costs can lead to a fast ROI — and grants & rebates are certainly available. Read: Understanding Federal Grants for EV Charging Stations.

Limiting the Long-Term Costs of EV Charger Maintenance

Finally, businesses must keep chargers well-maintained — and limit the need for that maintenance. This means protecting the infrastructure from damage, particularly in high-utilization areas. 

EV Charger Pedestal and Cable Management Kits from Solus Group can help to improve ROI by limiting one of the most significant costs associated with charger ownership. 

Charger stands are fabricated from durable steel to withstand impacts, and a weather-resistant powder coating ensures suitability for both indoor and outdoor installations. Each pedestal accommodates up to two Level 2 EV chargers, with an extremely narrow footprint that minimizes space requirements.

Solus Group's EV Charger Cable Retractors feature auto-retracting reels that keep charger cables elevated when not in use. Available in wall-mounted or stand-mounted models, the durable steel housing with a powder-coated finish protects the retractable reel in all weather conditions.

If you’re interested in adding a new revenue stream — and attracting new customers by adding EV charging to your business strategy — we’re here to help. Contact Solus Group at 314-696-0200 today to get started.