Charging piles on the "trend": profitability still needs to be solved

Our reporter/Li Zhe/Beijing report

The charging pile market, which has been included in the "new infrastructure", has ushered in a new round of development cycle.

Since 2020, many domestic and foreign electrical companies, including State Grid, Trede, ABB, etc., have increased their investment in the field of new energy charging piles. However, facing the trillion-level market scale, how to make profits is still a difficult problem facing many charging pile companies.

"The key to restricting the profitability of charging piles is their utilization rate." A person in the charging pile industry told the reporter of China Business News, "The utilization rate of many charging piles is even less than 5%. Coupled with the subsequent maintenance costs, equipment depreciation, and the need for funds for continued expansion, it is indeed difficult to make a profit."

"New infrastructure" drives charging piles

The content covered by "new infrastructure" is very broad, including 5G infrastructure, ultra-high voltage, big data centers, industrial Internet, new energy vehicle charging piles, intercity high-speed railways and urban rail transit, and artificial intelligence.

"'New infrastructure' has a driving effect on the charging pile market. I hope that the market can have a better development driven by the 'new infrastructure'." said the above-mentioned industry insider.

According to data from the China Association of Automobile Manufacturers, by the end of 2019, the number of new energy vehicles in China reached 3.81 million, a year-on-year increase of 46.05%. The rapid growth of the new energy vehicle market has increased the demand for charging piles.

In May 2014, the State Grid opened the charging and swapping operation facility market, and private capital began to enter the charging pile operation field. By the end of 2019, my country had 516,000 public charging piles and 712,000 private charging piles.

The "Guidelines for the Development of Electric Vehicle Charging Infrastructure (2015-2020)" mentioned that by 2020, my country will have added more than 12,000 centralized charging and swapping stations and more than 4.8 million decentralized charging piles, including 500,000 public charging piles and 4.3 million private charging piles, to meet the charging needs of 5 million electric vehicles nationwide.

Faced with huge market demand, many companies have increased their investment in new energy charging piles.

On March 16, Mao Weiming, chairman of the State Grid Corporation of China, emphasized the work of "new infrastructure" and proposed that in addition to grasping the construction of UHV projects under construction, it is necessary to accelerate the research and promotion of new energy vehicle charging pile construction. Previously, the State Grid Corporation of China had mentioned the charging industry many times in its key tasks for 2020. In November 2019, State Grid Electric Vehicle (a subsidiary of the State Grid Corporation of China) and Guanghui Automobile established a joint venture. It is understood that the joint venture has focused more on the private charging pile market.

Teladian, a subsidiary of TGOOD (300001.SZ), has a 28% market share in the public charging pile market. On March 2, Teladian completed a capital increase plan of 1.35 billion yuan. TGOOD mentioned in the announcement that this capital increase will greatly enhance Teladian's capital strength and future business development capabilities, and further promote and improve the company's strategic layout in the charging field.

In addition to State Grid and Trede, some foreign companies are also competing for the charging pile market.

Recently, ABB announced the completion of the acquisition of 60% of the shares of Shanghai Chargedot New Energy Company in order to increase ABB's DC charging equipment market share in China.

DC vs AC

As companies are making their plans, disputes over the "route" of charging piles are also arising.

At present, there are two technical solutions for charging piles: AC and DC. Compared with DC charging piles, AC charging piles have a simpler structure and are more convenient to install, but the charging speed is relatively slow. DC charging piles are known for their charging speed.

In terms of price, there are also differences between AC and DC. A person from the securities department of Trede said, "The price of AC charging piles basically remains between 2,000 and 3,000 yuan, while the average cost of DC charging piles is tens of thousands of yuan."

Since AC charging piles are relatively cheap, companies can quickly seize more market share. Around 2017, many AC charging piles were put on the market, which directly led to the inability to fully utilize charging resources.

"I bought an electric car originally because I considered there were charging stations near my company, but during the charging process I found that the charging was very slow and took up a lot of time. In the end I simply stopped going to public charging stations to charge." said Zhang Lin (pseudonym), owner of a new energy vehicle.

Nowadays, with the increasing market share of DC charging piles, the problem of slow charging is gradually improving.

The reporter learned that as of the end of 2019, the number of AC charging piles in China was 301,238, accounting for 58.33%; the number of DC charging piles was 214,670, accounting for 41.57%; and the number of integrated AC/DC charging piles (which have both DC charging and AC charging functions) was only 488.

"DC charging piles can achieve fast charging. In order to better dispatch charging resources, the cloud platform we developed can adjust the charging plan according to user needs. For example, if a user parks the car to charge for a day, we will fully charge the battery when electricity prices are low, so that we can better achieve economy. If the user urgently needs the car, resources can be mobilized to achieve fast charging at maximum power." said a person from Trede's securities department.

At present, many charging pile companies such as Trede and Wanma Group (002276.SZ) have chosen DC charging pile solutions when building public charging piles.

The private charging pile market presents a different picture. "When buying a car, the salesperson repeatedly asked whether the community's power system has reached the load. If it is fully loaded, the charging pile cannot be installed," said Zhang Lin.

The reporter learned that although DC charging piles can achieve fast charging, the requirements for the distribution network will also be higher.

"There are still some shortcomings in the construction of terminal distribution networks in our country. The increase in power-consuming equipment will increase the load on the power grid. In addition, users will also consider the price issue. Relatively speaking, the price of fast charging will be higher. High electricity prices will invisibly inhibit charging consumption. The utilization rate of charging piles is a very important issue. 'New infrastructure' cannot become a 'new burden'." Han Xiaoping, Chief Information Officer of China Energy Network, said.

The above-mentioned person from Trede Securities said, "Some electric vehicle companies that cooperate with us will purchase AC charging pile products from us. When installing private charging piles for users, they will choose AC charging piles."

"The uses of public and private charging piles will be more concrete in the future. In the field of public charging piles, DC charging piles are expected to continue to rise, and the proportion of DC in public charging piles will reach 60% in 2025. In the field of private charging piles, AC charging piles will become the mainstream. Driven by the 'new infrastructure', it is expected that the charging pile equipment market will reach tens of billions of yuan by 2025." said a person in the charging pile industry.

The market oligopoly effect is obvious

Even though charging piles are once again in the spotlight, the weak profitability of companies in the industry remains a difficult problem to solve.

Previously, in 2018, Beijing Fudian Green Energy Technology Co., Ltd., known as the first charging pile stock, announced its delisting. In August of that year, Shenzhen Rongyi Electric Technology Co., Ltd. (hereinafter referred to as "Rongyi Electric") issued a dissolution announcement.

In its dissolution announcement, Rongyi Electric mentioned that due to excessive investment in research and development and improper financing methods, its operating financial costs were too high, and Rongyi Electric had been suffering losses in recent years and could no longer continue to operate.

In fact, most companies in the industry are still in a loss-making state. "The company is still making a loss. This is mainly because the amount of money invested in the initial infrastructure in the charging pile field is relatively large." A person from a charging pile company told reporters.

As a leading company in the field of charging piles, Trede said, "After several years of development, the company can basically achieve a break-even point. We also hope that this situation can be improved under the impetus of the 'new infrastructure'."

The reporter learned that the minimum production price of DC charging pile modules, the core component of DC charging, is constantly falling. In 2019, its cost price dropped to 0.4 yuan/W, a 50% decrease compared to 2017. However, even so, there are still companies in the charging pile field that have been unable to make profits.

In the past few years, it has become a common phenomenon that charging pile companies cannot make money from charging services.

"The key factor restricting the profitability of charging piles is the utilization rate of charging piles. The utilization rate of many charging piles is even less than 5%. Coupled with the subsequent maintenance costs, equipment depreciation, and the need for funds for continuous expansion of scale, it is indeed difficult to make a profit." said a person in the charging pile industry.