Financial Challenges and Opportunities in the Electrification Transition
by Jason Cortes
The shift toward mass adoption of Electric Vehicles (EV) specifically in the buildout of EV
charging infrastructure (EVCI) has presented a unique mix of challenges and opportunities for
developers. Upfront deployment costs, unpredictable revenue streams, an evolving policy landscape,
and technological advancements have intersected with public funding in both positive and negative
ways. When I entered this industry in 2017, the Volkswagen emissions scandal (Dieselgate) had settled
with a $2 billion commitment to invest in EVCI over a decade. This would support the EV transition by
developing charging infrastructure across the United States. This initiative included the establishment of
Electrify America (EA), a subsidiary responsible for deploying and managing the charging network
Volkswagen would pay for. By 2018 the first EA sites became operational and as of November 2024
there are 1,008 active charging locations (a).
Overtime we’ve seen other public funding opportunities appear with the most recent (and
largest) being the National Electric Vehicle Infrastructure (NEVI) program. This federal program has
allocated $5 billion to disperse over a period of five years (FY 2022–2026). Each state may use these
funds to support the deployment of EVCI. As of November 2024, around $500 million has been awarded
to developers and site hosts with around 70 sites in operation across eight states (b). Despite these
programs as well as utility and other state led subsidies, developers still face significant barriers to
proceed with EVCI.
Funding opportunities are allocated through a competitive application process, meaning awards
are not guaranteed. Developers or site hosts must cover all capital expenditures upfront, as the program
reimburses only up to 80% of total project costs upon project completion. The combination of a
competitive application process and the requirement for site hosts to bear 20% of the overall costs has
deterred some developers from participating. There is no ‘free’ money and so Innovative financing
mechanisms are needed to shape how stakeholders approach this emerging market. Citing current
insights and trends, this paper explores some thoughts surrounding EVCI development and the prospect
of financing.
Challenges in Securing Financing for EVCI
Developers face unique challenges in securing financing for EVCI, primarily due to the
unpredictability of revenue streams and variable customer utilization. Unlike more mature
infrastructure projects, EVCI depends heavily on EV growth rates, which vary by region. Regions with
higher EV adoption, such as California naturally have higher utilization rates making investments more
attractive. Conversely, areas with slower adoption present a riskier profile for financiers and deter
investment. To mitigate these risks, developers often turn to stronger revenue guarantees such as
partnering with commercial fleet operators to ensure baseline utilization. However, these charging sites
are not always viable as they are “behind the fence” which offer no broader benefit to the public. In
such cases diversification of revenue streams, such as integrating a public access function coupled with
value-added services such as retail or other amenities is critical.
The Role of Private Investment in Long-Term Viability
The high upfront costs associated with installing EVCI necessitate significant private investment
to ensure financial viability. Private equity and infrastructure funds have shown increasing interest in
this sector, particularly through public-private partnerships. These arrangements could allow investors
to share risks with government entities while benefiting from steady returns over time. Moreover,
private investors are leveraging advanced analytics and predictive modeling to better understand
utilization patterns, optimizing their investments. Funds that focus on sustainable infrastructure can
raise higher amounts, signaling confidence in long-term returns from EVCI and other clean energy
investments.
Importance and Risks of Government Incentives
It is my position that reliance on government funding and incentives have never been the
position of a legitimate prospective site host or developer. When these have been the basis for moving
forward with deployment, inevitably the project doesn’t proceed or is significantly delayed. And with a
change of administration coming, fears loom that subsidies and tax credits for EV infrastructure could be
eliminated altogether. I personally do not think a Trump administration signals a threat to the industry
as it was coming into fruition without subsidies. If anything ‘free’ money has created drag in
deployments as it created interested parties that were not really viable candidates to deploy anyways.
Further there is room for optimism based on former President Trump's public acknowledgment of the
growing importance of EVs in the U.S. economy. While his administration may take a different approach
to policy implementation, his positive comments about EVs suggest an understanding of their potential
to bolster domestic manufacturing, create jobs, and position the U.S. as a leader in innovative
transportation technologies. This perspective could translate into targeted incentives or support for
initiatives that align with these broader economic goals, ensuring continued momentum in the EV
transition. Regardless as fiscal priorities shift, all public funding programs may face reductions which will
weed out projects dependent on subsidies. To counter this, developers are increasingly exploring private
financing avenues and structuring projects to remain viable even if incentives diminish.
Integration of Renewables and BESS: Unlocking New Financing Avenues
Integrating renewables and battery energy storage systems (BESS) with EVCI opens up
innovative financing opportunities. Renewable energy sources such as solar can offset energy costs
while BESS mitigates demand charges. This integration enhances project bankability by reducing
operational costs and increasing resilience. For example, data is available to indicate projects
incorporating solar can reduce electricity costs by up to 25% which is a compelling proposition for
financiers. Additionally, renewable integration aligns with ESG (environmental, social, and governance)
goals, attracting investors focused on sustainable outcomes. ESG is also under suspicion as being at risk
under a new administration. To that I would say those organizations who are serious about their ESG
plans will continue and those who were greenwashing will not.
Investment Assets and Innovation in the EV Transition
The EV transition offers diverse investment opportunities across various types (equity, debt) and
asset classes. These include:
- EVCI: Direct investments in charging networks, from hardware to software platforms.
- Fleets: Supporting fleet electrification through leasing or infrastructure development.
- Real Estate: Charging hubs co-located with retail or commercial properties.VC/PE in Components: Funding innovations in batteries, power electronics, or energy
management systems.
Innovations in DC fast charging level of EVCI, vehicle-to-grid (V2G) technology, and AI-driven
optimization of charging operations draw equally curiosity and interest. Advancements in these will not
only improve user experience but address the operational challenges making projects more attractive to
financiers. V2G technology enables energy storage and grid support, creating ancillary revenue streams.
AI-driven platforms can enhance utilization and reduce maintenance costs by predicting demand
preempting failures, and provide an efficient response with corrective maintenance.
Addressing Regional Disparities and Grid Challenges
Investors are increasingly weighing the risks posed by regional disparities in EV adoption. While
regions with high EV adoption offer immediate returns, areas with weaker adoption represent long-term
opportunities requiring patient capital. Similarly regions with underdeveloped grid infrastructure or rural
areas necessitate greater investment in grid upgrades, influencing project costs and timelines. The
transition to renewable energy further impacts viability, as regions with renewable-friendly policies or
abundant resources attract more investment. Developers in these areas can tap into clean energy
credits and lower operational costs, enhancing project attractiveness.
The Role of Utilities and Policy Advocacy
Utilities and their investors stand to gain significantly from the electrification transition.
Charging destinations provide a legitimate revenue stream, and proactive utilities are already lobbying
for regulatory changes to facilitate grid modernization and demand management. For example, 2024
saw leading utilities advocating for demand charge reductions and time-of-use rates to incentivize off-
peak charging. Such measures not only enhance grid efficiency but also ensure that utilities remain
central to the evolving energy landscape.
Conclusion
The electrification of transportation is reshaping the investment landscape, creating both
challenges and opportunities for developers and financiers. By leveraging innovative financing models,
integrating renewable energy, and fostering strong public-private partnerships, stakeholders can
navigate uncertainties while capitalizing on the immense potential of this transition. As the market
matures, collaboration between developers, investors, and policymakers will remain key to building a
sustainable and profitable EVCI ecosystem.
About The Author
For 25 years Jason Cortes has been in Transportation and Energy Infrastructure technologies holding roles in operations, business development, and project management. As an e-Mobility executive, Jason has gained expert knowledge in multiple EVSE products and networks. Over the last 7 years he has provided consultation to many organizations developing actionable, go-to-market strategies and deployment readiness.
About Field Advantage
Field Advantage is a national IT field services company headquartered in Kingsport, TN. Committed to field technician safety, we provide hands-on training, specific EVSE PPE, safety testing tools, and 24/7 support. Visit us at fieldadv.com to learn more about our services and initiatives.
References
(a) Alternative Fuels Data Center
(b) Ohio, New York, Pennsylvania, Vermont, Maine, California, Connecticut, Alabama