Commercial Weekly: Demand for Electric Vehicles and Chargers Bode Well for Retail and Land Markets

With gas prices up at the pump, one big development that is expected to positively affect the demand for the retail property market and the land market over the long-term is the recently passed "Bipartisan Infrastructure Law." This law allocates $5 billion aimed at increasing the number of electric vehicle chargers by nearly fourfold to 500,000 by 2030 (from 128,474 as of 2021) and the electric vehicle market share to 50%. This big push to install electric chargers, particularly along the nation's main highways, provides a long-term boost to the retail property and land market given the synergy between electric charging stations and retail sales.

California: 32% of electric vehicle chargers market

As of December 2020, there were 1,019,260 electric vehicles with charging needs supported by 128,474 EV chargers, or an average of about 8 electric vehicles per charger.¹ With the high cost of gasoline in California ($5.8/gallon vs. $4.1/gallon as of April 8, 2022), California accounts for 42% of electric vehicle registrations and 32% of the EV chargers (41,225 chargers), far outpacing the share of the next four highest states of New York (5.9%; 7,621), Florida (5.2%; 7,723), Texas (4.3%; 5,486) and Massachusetts (3.8%; 4,871).

Arizona, California, Washington, Texas, New York, Massachusetts, and the District of Columbia: highest demand for fast chargers

The anxiety of using an electric vehicle is that a motorist runs out of battery power before reaching one's destination ("range anxiety") and the inconvenience of long charging times for the battery for low-level chargers (Levels 1 and 2).

Direct circuit (DC) fast chargers address these two concerns. DC fast chargers take between 15 and 45 minutes to charge most passenger electric vehicles and deliver 60 to 300 miles of range. Level 2 chargers charge slower providing 18-28 miles of range per hour.² Thus, the recently passed "Bipartisan Infrastructure Law"³ allocates $5 billion in funding for the expansion of charging stations in what is called "alternative fuel corridors." EV fuel corridors are designated by the Federal Highway Administration under certain criteria, which is that the designated EV fuel corridors only have direct current fast-charging stations that have at least four ports and each support a power output of at least 150 KW.

Currently, DC fast chargers make up a small share of the market, at 17% of total chargers (21,782 out of 128, 474 EV chargers). In Washington, D.C., only 5% of its EV chargers are fast chargers. In New York, just 11% are fast chargers, and in Massachusetts, only 8.8% are fast chargers. This indicates the need for investments in these markets and with it also comes the associated demand for land and the sprouting of retail stores that are co-located to the EV charging stations, similar to the convenience stores in gas stations.

Another indicator of demand for DC fast chargers is the ratio of EV registrations to fast chargers. As of 2020, there were 47 EVs per one fast charger. The state with the highest number of persons relative to chargers is Hawaii (135.1), followed by Washington (70.6), Arizona (67.9), California (62.4), Alaska (58.8), and Texas (57.8). Given the current state of demand, these states have the largest need for public stations that offer DC fast chargers and the investments in public charging stations in these states will also boost the demand for land and the retail trade market.

Whole Foods and Target Stores demonstrate synergy between the retail property market and electric charging services

Whole Foods and Target were the first major retailers that provided EV chargers at their stores as a convenient amenity for customers, to attract business into the main store, and as one way to contribute to environmental sustainability.

Whole Foods first installed its chargers in 2009, allowing Whole Foods customers to charge for free. In 2013, Whole Foods installed its first fast charger, which can charge in less than an hour. By 2019, 200 of Whole Foods's 504 stores had slow chargers and more than 50, mostly in California, had fast chargers. Whole Foods pivoted from managing the chargers itself to contracting with charging providers, which install and maintain the chargers. It now works with many of the leading companies, including EVGo, Tesla, and ChargePoint Inc. The chain provides the slow charging for free while rates for the fast charging are set by the charging companies. Jonathan Levy, vice-president of EVGo, one of the chain's charging providers, described the relationship between Whole Foods and its providers as a "symbiotic relationship." He says, "People who buy organic arugula are also the kind of people who are first to adopt electric cars. Come for the electrons, the thinking goes, and spend more time and money at the salad bar."⁴

Target started investing in EV chargers in 2012 by partnering with ChargePoint to provide Level 2 chargers. It ramped this up in 2017 by partnering with Tesla to install Superchargers. In 2018, Target announced that it will expand the installation of EV charging stations to a goal of 600 parking spaces in over 20 states over the next two years and partnered with Electrify America to provide DC fast-charging stations.⁵ According to John Leisen, vice president of Property Management, "It's an opportunity to work with industry-leading partners to bring a more convenient shopping experience to guests as we look to design lower-carbon solutions throughout our entire operation." At the end of 2019, Target had 527 spaces at 74 sites in 16 states.⁶ Target customers could charge for free for as long as two hours using Level 2 chargers.

¹ NAR analysis of Alternative Fuels Data Center data

² EVBox, see https://evbox.com/us-en/ev-chargers/fast-charger#:~:text=DC%20fast%20chargers%20are%20significantly,to%20charge%20on%20the%20go.

³ This is the "$1 Trillion Infrastructure, Investment, and Jobs Act" signed on November 15, 2021; see https://www.whitehouse.gov/bipartisan-infrastructure-law/

⁴ Energy Wire, "How Whole Foods Became Ground Zero in the Charging Wars," https://www.eenews.net/articles/how-whole-foods-became-ground-zero-in-the-charging-wars/

⁵ A Bulls Eye View, "Target Is Charging Up Its Electric Vehicle Program to Reach More Than 20 States," https://corporate.target.com/article/2018/04/electric-vehicles

⁶ https://www.bizjournals.com/twincities/news/2020/10/07/tesla-superchargers-at-target-stores-in-metro.html