ChargePoint CEO Pat Romano: Don’t Try To Sell Electrons! (w/video)

JAN 2 2014 BY MARK KANE 37

$334 Billion is a Lot of Dough

It’s hard to make profit on electrons

Pat Romano, the CEO of ChargePoint, last month had the opportunity to present the company strategy and business model.

“Chargepoint- CEO Pat Romano shares how the company bet early on electric cars and a unique business model that rejected selling electrons to scale the largest charging station network in the world.”

The interesting part was on selling electrons from charging points.  The CEO of the largest network of almost 15,000 points strong advised to not try to sell electrons, but rather to attract EV drivers as customers instead by giving them energy for free. Profits will come from higher sales of other goods or services.

Worth a listen for sure.

Categories: Charging, Videos

Tags:

Leave a Reply

37 Comments on "ChargePoint CEO Pat Romano: Don’t Try To Sell Electrons! (w/video)"

newest oldest most voted

I agree with his sentiment, but ironically, ChargePoint has some of the highest fees around for their monitoring software etc.

GE Wattstation chargers have that same monitoring capability without the expensive software licensing fees.

Well, do you need the monitoring software if you’re not selling the electrons? If a business were to install these with free access in order to attract customers, why would they be paying licensing fees?

See slide at 5:14 for the reasons.

Brian, National Grid funds the electricity for these things by me in Buffalo. Don’t they have an analogous program in Syracuse?

Yes they do, one of which is the charge point we used next to Chili’s / Red Lobster.

My question, though, is if an independent business person – such as Restauranteur Tom M. – wanted to pay for one of these out of their own pocket to attract customers, what would be the benefit of the connectivity? I see the slide at 5:14, but none of that is critical functionality.

Tesla already got that message a long time ago and instead writes its Supercharger network off as a marketing expense. Not surprisingly “free for life” is the sort of slogan that sells cars.

+1

Dr. Kenneth Noisewater

Not to mention that they get a certain amount of SC-based profit per vehicle for the SC, whether it’s an option or priced into the higher spec version. Say a blended $1k per vehicle is profit, for someone to get their “money’s worth” of free charging at 10 cents per kWh, they’d need to charge 10,000kWh, which would be 30k miles worth of power. So that’s 2-3 years worth of mileage if all your charging is via SC.. Presumably say 30% of your charging is on SC, so you’d need about 90-100k worth of total mileage to “break even”, and theoretically you’ve already traded in for a newer model.

And when Supercharging is a $2k option on 250,000 3rd gen vehicles?

If supercharging is free for life on 250,000 new GenIIIs / year, the congestion is going to be absolutely absurd. It will be to the point that you cannot count on a stall being available when you need it, and thus it will be as if the SCs don’t exist. Tesla will need to start charging fees if they want the GenIIIs to access the SC network. And I, for one, would be happy to pay a fee even after the $2k option. I’d rather pay a fee for a charger I can count on than have “free” access to one with a 4-hour wait!

Adding a charging fee will not help congestion very much. The only solution is adding more superchargers. Whether that means each location gets more stations (going from 6 – 8 to 12 – 16.) or adding more locations (closing the gaps to less than 100 miles between locations), something will need to be done in three – four years.

I respectfully disagree. I don’t think upping the number of ports by 33% will be anywhere near enough. We’re talking about Tesla increasing sales by an order of magnitude. Anyone living near a supercharger will be tempted to go top off for free once a week (or whatever it takes). This is my larger concern than busy holiday travel times. I would hate to be on the road, looking for a quick boost only to find a line that’s 4 hours long before I can even plug in.

Before you say that SCs are planned between cities, so out of the way, there’s one planned for my county, which will be within 20 miles of over 750,000 people.

Bottom line, though, I would love to have these problems. It will only happen if EVs are wildly successful

I think their strategy to manage congestion is to promote increased usage of their battery swap tech, which is not free, but takes just a minute or two.

Interesting theory. I guess I just assume they have a master plan for sorting this out, but I haven’t given it much thought myself. I still think charging an access fee wouldn’t be a bad model. Elon said that if you bought a Model S today, it would have free SCing for life. He didn’t say that any Tesla you bought ever would have it free for life.

The caveat here is that the superchargers don’t seem to have a mechanism to meter and charge the user for electricity. Maybe that’s all done electronically? I suppose the car could have an account which is automatically billed. Now that I think about it, isn’t that similar to how the battery swapping is managed?

Tesla will be very interesting indeed to watch over the next few years.

From photos of Tesla’s Supercharger network dashboard, only ~10% of miles driven by Model S owners in 2013 used supercharged energy. At $1000 allotment per Model S this equates to a 300,000 mile lifetime odometer reading (30,000 miles of prepaid SC driving per S). The real cost saving for Tesla using this model is no per-charge transaction fees, no customer support for failed RFID cards, not credit card hardware at supercharger stations, etc. These are costs (large in relation to the cost of energy) that a charging network would normally pass on to customers, are real opperational savings for Tesla owners. Tesla will be adding solar PV canopies and energy storage at Supercharger stations in the next couple of years which will net more energy that will be used for driving. Additionally each EV Tesla enables SC a deposit is made in the Supercharger fund (adding to the network of Superchargers). Only a percentage of the SC funds will be *charged* back by customers each year, giving Tesla some time before drivers exceed 300,000 miles. Beyond a Tesla owners 300,000 mile allotment, their additional miles will truly be supercharged with free solar power! note: 300,000 miles is a dozen orbits… Read more »
Dr. Kenneth Noisewater

On the other hand, EVs should be more reliable than diesel vehicles, and they routinely go well over 300k miles 😉

Well, sort of. They have said that they value it at about $2k/car, and that it’s built into the price of the car. That’s different than a marketing expense. But the effect is the same: people don’t feel like their being nickeled and dimed to death. It gives the PERCEPTION of financial freedom, vs. saving $2k and paying $5/fast charge or something like that.

I agree with Tesla’s approach, and think it’s more unconventional/out of the box than their car.

Yes, this is what I am also thinking. Electricity is too cheap that they are better to offer for free. Providing payment systems may increase substantially the capital costs of public charger.

Government can support one third of charging infrastructure expenses, because electric vehicles has favorable external costs. Especially if EV charged during off-peak hours.

Also larger employers should be encouraged either with positive or negative incentives to offer free solar powered workplace charging.

When electric cars become mainstream, there should be free chargers in every parking lot.

When electric cars become mainstream, there will be enough customers that you actually can start charging for electricity. Free chargers in every lot don’t help anyone unless it’s every spot.

They could mount them on the light poles, and pay for the electricity with savings from using LEDs.
http://energy.gov/articles/walmart-sees-light-parking-lots

Garages/lots should simply have a system that includes it in the parking fee with a request that EV drivers move their vehicles to a non-charging space once charging is completed.

Is there a term for an EV that is fully charged but still using a charging spot? Zapped?

Not yet, but I have a term for EVs that park in charging spots but never use the charger: Backstabbers.

LOL.. or

User
Abuser
Exploiter
EV’s-dropper

E Vuls = energy vultures

Dr. Kenneth Noisewater

Heh, I leave mine plugged into the public charger while at work with a note OKing folks to unplug when it’s charged (green light blinking). If that happens more frequently than 1-2x per month I’ll likely just switch over to using the Chargepoint’s 120V socket with my own charger since I can get back to 100% after 8h of work.

Chargepoints Network Pricing model is one sided. They would garner more installations if they priced their network cost as a percentage of use instead of the fix monthly fee they impose. I predict they will have to move to that % of use model before or when a competitor like GE does, which I hear will come soon.

NPNS!
Volt#671

“Dont try to sell electrons” is an odd statement as it implies that electrons are used as fuel … which is false. Only energy is added to an EV battery when charging (like with winding a rubberband, no rubber is exchanged). The electrons are just moved between the cathode and anode of the battery. The number of electrons in a battery before and after a charge is the same. The only two parameters that a merchant can use to modify behavior are “time” and “rate of energy delivery”. A merchant, or “Target” is happy if an EV visits for 1-2 hours, but less satisfied if someone charges 3-5+ hours. Restaurants, theatesr, and lodging locations fit a model of a customer spending some hours at their destination. Since there is no incentive to reduce a stay time below a 1-2 hours; chargers at these locations will always be relativly slow. Over time, as EV battery sizes increase, there will be less need to “top-up” with 4-8 kWh of energy. Typically 10-20 miles of additional range per charge; just enough to get to a cheaper source of energy (at home where 90% of charging occurs). For an EV range of 40-80 miles,… Read more »

How much does it cost for Chargepoint’s networking fees?

Maybe this early in the game, with so few EVs, businesses may be better off just putting in a dumb L2 charger. As usage goes up.. put it on the network so drivers can see if its available/etc.

Last I heard it was around $20/month whether or not the charger is used.

NPNS!
Volt#671

Network chargers definitely have limited viability, maybe when EVs reach millions and the cars in a mall parking lot are at least 5% Electric. Otherwise, dumb L2 and even dumber L1 or plugs will do fine for long term charging. The KISS principal stands. Keep it Seriously Simple. Bringing in fees and subscriptions doesn’t help with mass appeal.

I read somewhere that Chargepoint’s annual network fees in Canada are $170 if recharging is free.

However, once you want to charge people to recharge, it becomes $220 plus $0.44 per session, plus 6% of revenue.

The places that charge $0.49/kWh in California are losing money if you consume 1kWh or less.

That is perhaps why some Chargepoints have a minimum charge of 1 hour

kdawg, a bigger issue than network fees IMO is the very high cost of chargepoint hardware, as much as $7200 for a L2. It would be nice if they will allow other vendors, e.g. Clippercreek to make units that connect to the chargepoint network.

Have to completely disagree with his comment at 1:30 saying that a 20 min charge is equivalent to a 4 hour charge.

There’s plenty of times when a 20 min charge is a LOT more desirable than a charge that lasts an hour or more. Witness the huge demand for Tesla Superchargers or 50 kW CHAdeMO stations.

Of course, this explains why Chargepoint only sells wimpy 30A charging stations.

Can’t stand that he calls them chargers when he’s talking about charging stations.

Gas station owners have understood this for a long time.
http://gizmodo.com/5901517/gas-stations-dont-really-make-money-on-gas
“According to USA Today:

They make only pennies per gallon sold. Most of the profit, about 75%, comes from the markups on convenience store items such as sunglasses, hot food or medicine, according to the Associated Food and Petroleum Dealers, or AFPD, a trade association of independent operators.”

“Don’t try to sell electrons” I have to agree. I would take it one step further, if you are planning on buying a Chargepoint station for your business and not charging the customers, DON’T BUY A CHARGEPOINT STATION! They cost $5K each, why not put in 5 dumb EVSEs for $1000 each? Why give $0.50 per card swipe to Chargepoint if your going to give away the electricity? Wouldn’t adding more capacity for the same dollar make more sense?
Also his idea of locating chargers next to convenience stores is flat out wrong. We have several DC Fast Charge stations here that are co-located with convenience stores. Someone is going to be there for at least 15-20 minutes, that is a captive audience that will wonder into the convenience store for something.

In Austin, it is a subscription. You pay $25 every 6 months for unlimited charging. Since there is one at work, I’m basically paying for the first month and coasting the last 5. I don’t see it staying that cheep forever, but until they go over $100 – $125, then it’s still less than the gas I’d be using.