What will happen to the walled gardens such as Tesla’s Supercharger network in the future? Walled gardens have limited opportunities but the big question is, are open networks able to take advantage of economies of scale and collaborate, writes Virta Co-Founder and CBO Elias Pöyry.
In 2020, almost one in 6 passenger cars sold in Europe was an electrically chargeable vehicle (16.5 %), compared to 3.0% during the same period last year. In 2021 it is estimated that over two million electric vehicles (EVs) will be sold in Europe alone. Naturally, these EV drivers need charging services and as a result, the demand for EV charging points is growing even faster. European Commission estimates that we need at least 3 million public charging points by 2030. This figure is big, but it is probably an underestimation.
Open network or a walled garden?
At the moment there are two types of charging systems: open charging networks and walled gardens. Open charging systems are available for everybody and with integrations, anyone can enter the market. Virta is one example of such an open charging network: Virta has Europe’s second biggest charging network. Currently around 7,5 % of European EV drivers use our open network.
Together with our EV charging roaming partners, Virta offers over 170 000 charging points around Europe. EV roaming is an outcome of the cooperation of electric vehicle charging service providers. To provide their customers with the optimal user experience, charging service providers unite and create a roaming network. Roaming refers to an EV driver's ability to use various charging stations even if they're only a customer of one service provider. In practice, it means that electric car drivers can use charging stations with just one customer account.
In addition to the open charging networks, there are closed networks, i.e., the so-called walled gardens. These walled gardens are available only for example to a certain EV brand’s customer. A classic example of a walled garden charging network is Tesla. Tesla is manufacturing and implementing everything by itself, from hardware to their Supercharger network and charging services. Supercharger network is available only for Tesla drivers.
The founder of Tesla, Elon Musk has hinted a couple of times that Tesla might open its network. In 2018 Musk said that “Supercharger is not a walled garden” and in December 2020 that “Tesla Superchargers are being made accessible to other electric cars.” But so far, the Supercharger network has remained just as closed as it has always been.
Ultra-fast charging is the way forward
What will happen to the walled gardens in the future? This question of the future of charging networks is an interesting one. Competition is getting fierce especially in the super-fast charging market and the demand for charging services is growing exponentially. On top of this, national and European recovery packages bring their own additional flavour.
Let’s look at the statistics: Tesla has about 600 Supercharger charging locations in Europe. Virta on the other hand offers ultra-fast, over 100kW chargers in just under 400 locations in Europe. Of course, Tesla's charging stations have on average more chargers per station.
But if we take roaming into consideration and compare the open charging networks to Tesla’s walled garden network, it is clear that the users of open networks have more ultra-fast chargers at their disposal. In January 2021, for example Virta offered ultra-fast charging in all together 3 560 charging points in Europe through our roaming network. And the amount is growing rapidly.
One thing is certain: single owner’s charging network is not enough to serve the mobility and charging needs of all EV drivers. The construction of fast charging networks is currently somewhat limited by the production capacity of charger manufacturers, but above all by the availability of suitable charging locations. In addition, negotiating all the land use and partnership agreements related to the expansion of charging network require a lot of work and in-house resources.
Collaboration is the key
Another important trend shaping the EV charging market is energy management. It brings direct benefits in the form of saving costs - for example grid connection and installation costs. Electric vehicles are the most important new source of flexibility in the energy system and the most cost-efficient batteries and energy storages because they come with zero incremental costs.
They also come with zero infra costs because the charging network is already there. They also run with zero maintenance and operations costs because the operation costs are already taken care of by the EV drivers and charging operators.
Will walled gardens continue in the same strategic path and choose to strengthen their own brand with an exclusive premium charging network? Or do they want to take advantage of the energy transition, become active players in the energy management services market and thereby optimize the utilization rate of their charging network?
For example, Tesla already makes solar panels, batteries and EV charging systems and, of course, electric vehicles, so a bigger role in the electricity markets could be a natural extension of business for them. Whatever Tesla and other walled gardens decide to do, the big question is, are open networks able to take advantage of economies of scale and collaborate?
This article was inspired by an interview and a blog post written by Tuomas Sauliala: "Energiamurros kannustaa avaamaan Tesla supercharger -verkon kaikille autobrändeille".
