Ionity juggles the short term and the long
The charging firm is full speed ahead on network build out. But how do you invest efficiently in an ever-evolving market?
European highway charging firm Ionity is targeting 7,000 points by 2025, an increase of over 150pc from its current network. But EV inFocus wants to know how you make long-term investment in a charging market undergoing rapid change.
Customer behaviour is still relatively unknown and likely to change; market size is growing, but not necessarily at the same rate across Europe; technology is evolving swiftly.
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So we sat down with Michael Hajesch, CEO of the firm since its 2017 founding as a joint venture between four major legacy OEMs — Germany’s BMW, Mercedes and Volkswagen and the US’ Ford, joined by Japan’s Hyundai in 2020 — to find out how he and his firm are approaching the challenge.
Is Ionity on target to reach 7,000 charging points installed by 2025?
Hajesch: I feel very comfortable in terms of achieving these kinds of targets. I see, in the field, not only upgrades of existing sites, but also new sites going live on a continuous basis.
Also, we are really progressing well in terms of securing land, which means that we have already been working on the pipeline for next year for months. And why is that? If you secure the land and the long-term concession, then the work starts in terms of applications for building, construction works, grid connections. And all these things require a lot of work, and also permitting from third parties like the grid operators.
The final stage of finalising the site and then doing the commissioning for the go live, that is just a few days by comparison.
What are your longer-term ambitions?
Hajesch: It is a long-term race to build a profitable company that is really known and provides customer benefits regarding high power charging and beyond. I think that is the overall mission of Ionity.
What comes next? Different use cases; going more into cities; building larger hubs; using partnerships with other companies we are not engaging with as of today; and broadening the network in different countries. We are in 24 countries, so that means thinking also of Poland, Spain, Portugal, Lithuania, Estland, Croatia etc.
These are all up-and-coming markets. And there is not the maturity level we see as of today in the UK, Norway, France, Germany. We have to take care that we have a really holistic approach for Europe.
When expanding the network, do you think about that longer term — e.g. when there is greater EV penetration — or do chargers have to be profitable from the get-go?
Hajesch: At one end is the long-term perspective, which you definitely need because we are talking infrastructure, and infrastructure is a long-term business. You install quite expensive charging equipment at highway destinations — with many outlets being ready to be expanded over time when demand kicks in.
At the same time, knowing that — even if the market is soaring by 30-40pc of new vehicle sales — at the end of the day, you still need a dedicated car parque and utilisation rate to get profitable.
So do you have a minimum initial usage rate threshold for installing a charger?
Hajesch: We see that the utilisation rate is totally different in the different countries, based on maturity level again. How many vehicles are registered? How much mileage is the customer really doing on long-distance trips? I think the long-distance trips taken in the UK might be different to long-distance trips taken in central Europe like in Austria or Germany.
So whatever number I would tell you now would be the wrong number. It is really a country-by-country and long-term perspective number, which is always focused on the profitability of the company itself.
How much do you think about customer psychology — when/how/where they want to charge — when planning your network?
Hajesch: We come from five years of being a first mover with a European approach to dedicated long-distance high power charging. Now more and more customers going for EVs means also that customer preferences — the options they look for — will get more differentiated in different countries and for different customer groups.
Looking forward, I would expect a much more tailored offer for different customer groups in the near future from Ionity, which takes into consideration, for example, peak times and off-peak times. So, less queuing and less waiting time [for the former], but also give an incentive to say, ‘Well, maybe you wait an hour or two, but then you get a more attractive price on an off-peak time.’ These are simple mechanisms we need to look at and then bring to the market as a next step.
How does a firm executing rapid build-out of infrastructure in an ever-evolving technology environment manage risk? How do you avoid, as best you can, obsolete tech?
Hajesch: First of all, for sure we have a decent risk management in the business. But, looking specifically at technology, we are trying to anticipate and build future-proof technology, meaning each Ionity outlet delivers 350kW. If we look at the vehicles on the market today, only a few come close to 350kW; we see average charging capacity at c.80kW. That means the infrastructure is future-proofed in terms of capacity.
I think, from the beginning, we were one of the few, if only, ones having a huge test site available, north of Munich, where we test charging equipment and also services to the vehicle.
We test different transformer concepts; different hardware from different vendors; interoperability testing; services integrated with app, without app. We want to really make sure that, at the end of the day, we can do best in terms of customer success and customer freedom.