Driving towards a greener future? CMA takes stock of electric vehicle charging in the UK

As the UK embarks on its journey to reach its target of net-zero emissions by 2050, the Competition and Markets Authority (CMA) has launched a market study into the electric vehicle (EV) charging sector, focusing on the supply of charge points for plug-in hybrid and all-electric "passenger" EVs.

The successful transition to EVs will play a critical part in delivering the UK's climate commitments, with the government recently announcing plans to bring forward the date for banning the sale of new petrol and diesel vehicles to 2030. As highlighted in its 2020/21 annual plan, the CMA is eager to support the transition to a low-carbon economy, and it intends to ensure that this nascent market remains competitive and works well for consumers as it expands.

Plug-in infrastructure

In order to recharge an EV, it must be parked and plugged into a charge point connected to the electricity grid – almost like an electronic fuel station. Substantial infrastructure by way of EV charging points must therefore be put into place over the course of the next decade to meet future demand and to boost purchasing of EVs. It is difficult to project how many charge points will be needed by 2030, but estimates have ranged from 150,000 to 1.7 million and, while data shows that the availability of EV charging points has significantly increased over recent years, there is certainly still a long way to go with considerable investment still required.

"Range anxiety" – the fear that an EV will have insufficient charge to reach its destination because there is not the opportunity to recharge – has been identified as one of the main obstacles to large-scale adoption of EVs. Consumers need to feel confident that charge points will be readily available to use and their perceptions of this changed in order for uptake in EV vehicles to significantly increase. The CMA's investigation will help to play a part in this by ensuring the effective regulation of the EV charging market, which should in turn stimulate investment in the sector and instil the trust of consumers.

According to the CMA, the EV passenger charging market can be split up into six different segments consisting of: off-street home charging; on-street charging set up on the kerbside; workplace charge points; key destination charge points; along travel routes at service stations; and at "hubs" where multiple charge points are installed together. Each charge point can also be distinguished based on the time it takes to charge an EV. Depending on their power output, charge points can be classed as either rapid/ultra rapid, fast or slow.

Charge-point players

Unsurprisingly, the crucial players identified within the EV charging market are the charge-point providers. The CMA notes that the 15 largest providers in the UK account for 75% of all public charge points. It notes that the 10 largest rapid charge-point providers account for 85% of rapid charge points.

These statistics appear to suggest that the market is currently operating sufficiently healthily from a competition perspective. Indeed, the CMA's current view of the market is that it 'appears relatively fragmented at the national level, but there is potential for it to become more concentrated as it develops, or for there to be concentration in certain segments or geographic areas.' However, this view will be further informed by the market study and a more in-depth investigation into the sector will reveal any current and anticipated problems within the market.

The authority also recognises that there are a number of other relevant players within the market, including: local authorities through the procurement of services from charge-point providers for roll out in their areas; distribution network operators in enabling the installation of new charge points and ensuring there is sufficient reinforcement if additional capacity is required; and comparison websites and apps, which play a role in helping consumers to find public charging points and to compare home-charging providers and EV energy tariffs.

Competition probe

Over the course of the next six to 12 months, the CMA will probe a range of aspects of the EV charging sector, looking at it from the consumer prospective, as well as incentives on infrastructure roll-out. If it finds that some aspects of the market are not working well, it may make recommendations for legislation and regulatory reform to the government, and may launch a wider investigation into any areas of specific concern that it identifies during the market study.

The scope of the market study will cover the supply of charge points for plug-in hybrid and all-electronic passenger EVs, consisting of cars and light vans. The CMA has proposed that it investigates the following two broad themes in relation to passenger EV charging at home, work and publicly across the UK:

• How to develop a competitive sector while also attracting private investment to help the sector grow, including looking at potential barriers for businesses to enter or expand and other factors impacting competition.
• How to ensure people using electric vehicle charge points have confidence that they can get the best out of the service, including the possible challenges facing people when charging and what additional measures may be needed to protect consumers so that mistrust does not become a barrier to roll-out.

Under each of these themes, the CMA has listed a number of consultation questions on which it is particularly interested in receiving feedback from stakeholders, which include charge-point providers, industry bodies, regulators, local authorities and consumer groups.

Some of the questions include:

• What impact does public subsidy have on private investment incentives; are there any areas/gaps where public support is most likely to be needed?
• How can competition in the different sector segments be strengthened as the sector develops, either by building on current policies or through other approaches?
• What are the main existing and potential barriers to entry and expansion for EV charging providers? How can these be addressed?
• What role should local authorities play to help deliver EV charging in a way that promotes competition? What support would they need?
• How do consumers decide which charge-point services and providers to use? What information do consumers need to make this decision and at what stage in the decision-making process?
• What, if any, open data measures are needed to support consumer interaction, such as through the growth of comparison sites and apps?

The CMA has set an initial deadline for responses to its consultation questions and any of the broad issues raised in its Invitation to Comment (link to ITC) by 5 January 2021.

Osborne Clarke comment

The CMA recognises that it has an important role to play in achieving the government's net-zero ambitions by helping to shape this market for the future. By identifying potential issues within the EV charging market at an early stage, the authority will be able to address any hurdles before any bad competition practice becomes embedded into the market, and can propose appropriate measures to prevent any anticipated problems in the future.

Given that the CMA's markets studies are generally undertaken once a particular market is already considerably developed, this is a rare opportunity for businesses in a budding sector to have their voices heard and to advocate for positive change that will ensure their business models and strategy have room to flourish in an increasingly crowded market.

Osborne Clarke has substantial experience in assisting businesses with responding to the CMA's market studies and initiatives, including helping to formulate client strategy. Please contact one of our experts if you would like to discuss how best to approach and engage with the CMA.