A global survey and report out recently by DLA Piper, with support from Infralogic, has forecast that over the next five years the total value of Electric Vehicle (EV) infrastructure deals worldwide is set to balloon to USD57.4 billion
Recent dealmaking activity illustrates the clear increase in trajectory of these deals over the past five years. In 2019 there were nine EV infrastructure deals completed. Of these, five disclosed their deal values, with a total of USD 321 million. This rose dramatically to 78 deals in 2022, with 47 disclosing deal values with a total of total of USD 12.5 billion. Even in the difficult worldwide economic conditions of 2023, there were 104 deals of which 53 announced deal values with a total of USD 24.4 billion in the first 9 months of the year. *1
DLA Piper’s survey of over 100 senior executives involved in EV infrastructure from across the globe has identified that nearly all respondents (92%) anticipate increased investor appetite in this asset class over the next 12 months, with a third expecting significant growth. Even taking a relatively conservative growth trajectory from the past five years, this would lead to a forecast combined deals value of USD57.4 billion by 2028.
The remarkable growth being experienced by the global EV market is being driven by a combination of favourable tailwinds. These include supportive regulation, subsidies and incentives across major car markets worldwide, ambitious corporate environmental, social, & governance (ESG) goals and shifting consumer preferences. Surging demand for EVs also correlates to demand for, and investment in, EV charging stations and related technologies.
Europe is expected to attract the largest share of EV and related infrastructure investment (42%) over the next 12 months, followed by North America (35%) and APAC (23%). This is despite the fact that the European market remains relatively modest compared to other geographies which have more aggressive policy interventions, such as in the US. The trend suggests that Europe is perceived to be a relatively mature market, and is regarded as a world leader in setting ambitious EV adoption objectives.
In February 2023, the European Commission set a target for all new cars sold in the European Union (EU) to produce zero CO₂ emissions by 2035. Meanwhile, the UK government intends for the sale of petrol and diesel-powered cars in the country to be banned within the same timeframe.
When it comes to the rollout of EV charging infrastructure over the last three to five years, the largest share of respondents overall identify the US (65% of top-three selections) as having made the most significant progress, followed closely by China (59%).
After the US and China, survey respondents identify several European markets as having made significant progress in EV charging infrastructure, especially Norway (46%), the Netherlands (39%) and Sweden (34%). Reflecting on the key drivers of progress in the introduction of EV charging infrastructure, respondents cite supportive government policies and regulations as the most significant factor, with 65% overall selecting it among their top-three influences.
However, investing in still-nascent sectors inherently carries risk. Our survey respondents believe the primary risks associated with investing in EV charging infrastructure are the operational and maintenance costs of charging stations (46% identify this as a top-three risk) and the high upfront costs and financial investments required (44%). Insufficient standardisation and compatibility between charging equipment is thought to be the biggest barrier to greater investment in EV charging infrastructure, with 44% of our survey participants citing it as a top-three obstacle.
Rubayet Choudhury, partner at DLA Piper, said: “It is clear from our survey that the industry is expecting extraordinary growth in EV infrastructure over the short to medium term. This is buoyed by a number of factors, including supportive regulation, subsidies, incentives and ambitious worldwide decarbonisation targets. Any short-term risks associated with investment are counter-balanced by potential upside. Investors willing to take on informed risk have the opportunity to capitalise on the growing demand for this infrastructure and develop solutions that overcome challenges. Obstacles such as the lack of compatibility in charging equipment and limited data to help revenue forecast are largely a function of the nascent stage of the industry’s maturity. With increasingly sophisticated business models and revenue stacks being rolled out at scale, these challenges present opportunities for switched-on players in this transformative industry.”
