How NEVI funding can transform EV charging stations and EV adoption

EV charging stations by the numbers 2022–35

• 51.5m US chargers needed by 2035 
• US$165b: investment needed to deploy all charger types 
• 23% public charger annual growth*

State and local governments are being handed a down payment to create a network of chargers across the country through the federal NEVI formula program. It provides funding to states as part of the Bipartisan Infrastructure Law (BIL), also referred to as the Infrastructure Investment and Jobs Act (IIJA). NEVI funding, roughly $5b over the next five years, can facilitate private sector partnerships to build publicly available charging infrastructure along alternative fuel corridors (AFCs) and, once AFCs are fully developed, in communities across the country.² Enabling access to publicly available chargers for long-distance trips may significantly reduce barriers to EV ownership; lack of charging stations replaced high up-front cost as the top inhibitor to purchasing EVs, according to the EY Mobility Consumer Index 2022 study.³ NEVI funding, in addition to helping build chargers and confidence about EV travel, is intended to help states address equitable outcomes as EV use expands.⁴ Additional discretionary grants will be available to support the build-out of EV infrastructure.

Federal funds for EV infrastructure

• $5.0b National Electric Vehicle Infrastructure Formula Program
• $2.5b discretionary grant program for charging and fueling infrastructure
• U.S. Department of Transportation Surface Transportation Block Grant
• U.S. Department of Transportation, Department of Energy and Environmental Protection Agency funds for electric school buses and ferries, port electrification, domestic supply chain for battery production, and battery recycling, among other EV-related initiatives

Source: U.S. Department of Transportation

Engaging stakeholders

State and local transportation planners can help pave the road to a self-sustaining, private EV charging station and infrastructure system that lowers carbon emissions, if they are able to fully engage a complex group of stakeholders.⁵ Policies and actions taken today will have long-term impacts on EV adoption and the transition to a comprehensive network of EV charging infrastructure that does not rely on public subsidies.

Federal government NEVI funding covers up to 80% of a project’s eligible costs, and the remaining 20% is likely to come from public or private sources. As the first round of NEVI funding rolls out, a web of e-mobility stakeholders is seeking to influence electric vehicle supply equipment (EVSE) and related infrastructure deployment.

Public stakeholders include government entities, public interest groups, equity advocacy organizations, local residents, consumer groups, EV enthusiasts and environmental organizations. Numerous commercial interests include those of real estate owners, automobile manufacturers, retailers, insurance and financial companies, charge point operators, the local business community and, not least, utilities. State and local governments may need to move quickly to form new partnerships with these diverse stakeholders so the right financial arrangements, procurements, project design and technological tools are in place for successful and secure transactions and performance data monitoring. At the same time, leaders may need to consider the complex short-term and long-term social and economic costs associated with the quickly evolving EV charging network.

To meet this challenge, it is important for leaders to start with a vision of the future and then work back to the actions and partnerships that can be fostered to achieve that vision. The discussion can begin with drivers’ needs and then address how stakeholder engagement and partnerships can be shaped to meet EV driver demands and have a lasting impact on EV adoption.

What electric vehicle consumers can teach governments about EVSE 

As leaders, planners, engineers and designers invest time, energy and NEVI funding in EV charging infrastructure, thinking like a customer can help guide the earliest decisions.

EV users will demand fast chargers in convenient locations, proximity to cell phone towers for app-based navigation and payment, and standardized connectors across many EV models. They also are likely to frequent charging locations with the ubiquitous traits of a well-run gasoline station: easy-to-find locations, well-maintained equipment, options for payment, and security. Common amenities like bathrooms and refreshments will also be key to a positive customer experience.

To keep charging costs competitive as consumers gain more options, it is important to build EV charging sites that can scale economically as EV adoption increases and charger utilization rises. Although NEVI only requires four chargers per location, with each EVSE port capable of a 150-kilowatt (kW) charge, governments would do well to design high-traffic EV charging locations with room for expansion.⁶ An expansion strategy can reduce future costs tied to real estate needs and utility upgrades. Governments can also consider whether battery storage and solar generation can be used to reduce operating costs and provide additional resiliency.

Reliability of chargers is critical if users are to depend on them for their transportation needs. For this reason, NEVI requires that charge point operators maintain at least 97% uptime. This will likely require efficiency in equipment supply chains and maintenance operations, as well as digital connectivity and cybersecurity, to thwart downtime. Typical EV charging stations require regular maintenance and can require full replacement within a decade. Careful planning can avert challenges with EV charger part sourcing, maintenance schedules, recommissioning and waste.

All these factors, plus utility rates, can contribute to variability in the cost to charge an EV and the risk for states and partner-operators that EV charging rates are viewed as uncompetitive or unfair. If lack of durability or high charging rates result in unloved-by-the-public chargers that fail to meet consumer needs, governments may be left to explain any dubious investment decisions and stranded assets.

Key questions transportation planners can address

• How can you verify that charge point operators meet NEVI uptime requirements?
• Will you rely on charge point operators to report their own performance metrics, or will accountability require third-party monitoring and verification?
• What data collection and sharing will be required to enforce accountability for charger reliability and uptime?
• How will you safeguard charger and data stream cybersecurity?
• How do states protect consumers with rate transparency, complaint hotlines and other measures?
• How should state department of transportation (DOT) procurements address expandable future needs of EV drivers?

Stakeholder engagement and electric vehicle supply equipment

State and local transportation leaders can navigate complex stakeholder relationships with a NEVI design and implementation approach that considers EV infrastructure and community needs, including how disadvantaged communities benefit from this significant investment.

The benefits of spending on EV equipment can include more jobs in local economies, related workforce development, lower carbon emissions and planning for the electric grid aligned with Justice40 equity outcomes as part of federal investment.

EV charging infrastructure stakeholders, who are closest to the technologies involved, are best positioned to build a business case and provide valuable information about what is likely and unlikely to be used and useful in a community. Their understanding and projections of peak EV charging demand management challenges, revenue opportunities, and costs is crucial in planning and communicating with divergent stakeholder groups.

Among the complexities to communicate in the community: some stakeholders with real estate that can host charging infrastructure may benefit through lease payments, an uptick in sales from greater customer traffic, or both. Auto manufacturers also may have partnerships with certain charge point operators, which can drive more traffic to those operators.

Behind EV infrastructure: the local utility

Utilities are a critical factor in any EV infrastructure deployment. The local power provider supplies and operates the supporting grid infrastructure, and its tariff may or may not subsidize charging infrastructure depending on location, expected customer utilization and other factors. Utilities have detailed processes for expanding service to charging sites. Depending on the extent of the work and the utility’s backlog, this can take significant time to complete. Utilities would prefer to engage with government agencies and their contractors as early as possible to deliver utility infrastructure faster, EY experience shows. Governments can also help customers get more value from the grid when they encourage utility-managed programs that shift the bulk of charging to off-peak schedules.

States can engage with all stakeholders simultaneously and inform them of their role and their stake in a statewide NEVI implementation by:

• Conducting a thorough stakeholder inventory and a community needs assessment to verify that appropriate representatives have been properly invited to the table.
• Communicating that 40% of the benefits of NEVI, by federal intent, must go to disadvantaged communities under Justice40. Relevant public interest groups should be engaged as allies in the process. 
• Being intentionally inclusive of stakeholder viewpoints. Forums and workshops can be held at times and locations and in media formats that are accessible to diverse groups.

Key questions transportation planners can address

• What steps can be taken to avoid delays and shorten timelines in local government and utility processes?
• How should state DOTs engage with utilities to address issues of subsidization?
• How can you organize the most effective stakeholder engagement process?
• How can you quantify the benefits of EV charging infrastructure?
• How can you distribute and measure EV infrastructure and benefits in/for disadvantaged communities?
• How can state DOTs coordinate with state broadband offices to use IIJA funding for transportation and data connectivity?

Leveraging partnership strategies to drive successful outcomes

Installing EV charging infrastructure with the scale to encourage EV adoption affords states an opportunity to engage with private industry in new and unprecedented ways, considering the commercial imperatives of charging companies, site hosts and electric utilities.

It is critical for states to engage directly and early with private sector players in the e-mobility ecosystem — charge point companies; site hosts such as private rest-stop operators, restaurants and cafes; retail establishments; and utilities — to develop a better understanding of commercial models and to educate potential bidders about the public goals they are trying to achieve.

Charge point companies would seem to be the natural lead partner for states in bidding for and implementing EV charging infrastructure. Commercial limitations on many public highways mean states may need to consider private land for EV charging infrastructure. This presents an opportunity for national retail establishments to play an even bigger role if they see EV chargers as a way to drive sales as customers wait to juice up. Under federal NEVI guidelines, however, deployment is meant to be executed to meet policy goals of the program, including chargers every 50 miles in corridors and providing 40% of benefits to disadvantaged communities. Planners may need to reconcile this inherent tension.

States will need to develop bidder selection criteria

Beyond equity requirements that may prove difficult to measure, the fundamental tenets of fairness, transparency and efficiency can inform any strategy for deploying federal capital through states to private partners. Many states will want to leverage private investment as much as possible to stretch federal dollars and limit local funding contributions. That said, some locations will be less economically attractive than others, raising the risk of stranded assets once NEVI funding dries up. This will inform procurement strategies and could encourage public-private partnerships. States will likely need to develop bidder selection criteria and strategies that are not only transparent and commercially viable but that also incorporate public goals and long-term performance.

State governments may want to avoid situations where a single EV charging site host is the dominant recipient of NEVI funding, which could lead to monopolistic behavior, create a single point of failure or deliver a first-mover windfall returns as the EV market takes off. On the other hand, states may want to limit the number of counterparties given the complexity of implementing a large charging program.

Given the potential challenges we have only begun to unearth about deploying EV infrastructure at scale, EY experience shows that states can consider multi-pronged partnership strategies that address realities between states and within regions of a state. These strategies could include:

• A procurement program where private parties compete for funds to deploy infrastructure in areas that meet NEVI requirements
• Concession procurement in which private parties bid for the right to design, build, operate, maintain and potentially finance publicly funded infrastructure under a performance agreement
• Construction and maintenance procurement where the state is the direct owner of the infrastructure

Ultimately, the rate of adoption of EVs will be the measure of success, within the parameters of policy and operational goals.

Key questions transportation planners can address

• What are competitive bidding best practices with many competing commercial EV charging station interests?
• Should the lowest public subsidy be the dominant selection criteria?
• How can procurement strategies reconcile the commercial needs of the private sector with the policy goals of the NEVI program?
• How can procurement and contracting strategies address the risk of stranded assets?
• How do you meet Justice40 goals through procurement and contracting strategies?
• What innovative public and private financing strategies can be used to stretch dollars and expand deployment?