EV infrastructure deals ‘set to balloon’ in coming years
According to a new report, the total value of electric vehicle (EV) infrastructure deals worldwide is rising significantly, and while Australia is slightly behind the pace, the market here is also on an upward trajectory.
Global law firm DLA Piper recently produced, with support from Infralogic, its Powering the Future of Electric Vehicles: The Global Charging Imperative report, for which more than 100 senior executives worldwide were surveyed.
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It found, among other things, that the total value of EV infrastructure deals worldwide is “set to balloon” to US$57.4 billion.
In conjunction with this, almost all respondents (92 per cent) expect increased investor appetite over the next 12 months, with one-third of respondents expecting significant growth.
In 2019, the global firm detailed, there were nine EV infrastructure deals completed, whereas this year – amid “difficult worldwide economic conditions” – there were 104 deals, of which 53 announced deal values with a total of US$24.4 billion, in the first nine months of the year.
The results show a “strong investor appetite” regarding this asset class for the coming year, DLA Piper corporate and projects partner Chris Mitchell espoused.
“Even taking a relatively conservative growth trajectory from the past five years, this would lead to a forecast combined deals value of US$57.4 billion by 2028,” he said.
Growth in the global EV market is being driven, Mr Mitchell explained, by a combination of favourable tailwinds.
“These include supportive regulation, subsidies, and incentives across major car markets worldwide, ambitious corporate environmental, social, and governance goals and shifting consumer preferences. Surging demand for EVs also correlates to demand for, and investment in, EV charging stations and related technologies.”
Down Under, he went on, “the increasing number of EVs on Australian roads has placed increased pressure on our rather nascent network of charging infrastructure, and a number of institutional investors have spotted opportunities to invest in the growing pool of early-stage technology companies.”
The report did detail that EV charging infrastructure in Australia trails other regions.
However, speaking to Lawyers Weekly, Mr Mitchell said that “the tide is certainly turning”.
“While the take-up of EVs in Australia has not been as rapid compared to European and North American jurisdictions due in part to local availability and supply of EVs and otherwise consumer sentiment regarding practicalities of EVs outside of Australia’s relatively dispersed urban centres – the tide is certainly turning, and we are starting to see an increased take-up of EVs in Australia,” he posited.
“The increasing number of EVs on Australian roads is placing increased pressure on Australia’s rather nascent network of charging infrastructure with a number of institutional investors spotting the opportunity to invest in the expanding number of early-stage technology companies seeking to meet the consumer demand profile or poising themselves to capitalise on expect increasing consumer demands.”
In DLA Piper’s experience, Mr Mitchell went on, these investors are having to take a patient and long-term mindset to achieve expected returns for this asset class.
“While there remains a degree of the classic ‘chicken and the egg’ debate as to whether the EVs or the charging infrastructure is expected to come first, continued investment in the broad rollout of reliable charging infrastructure in Australia is expected to accelerate as further data on the current and increasing revenue pools from EV charging services becomes more readily available,” he said.
“Greater standardisation of charging infrastructure occurs leading to a continued reduction in technology and equipment supply costs, and as charging infrastructure companies develop ancillary service offerings and revenue opportunities that can be paired with their expanding network of charging points.”
Moreover, DLA Piper global chair of energy and natural resources Alex Jones pointed out, growth in the global EV market will also be a significant driver for Australia’s battery minerals industry.
“Global demand for battery minerals will continue to support our economy. Investors value the Australian resources industry for its expertise, and its stability, and rule of law,” he said.
“Australia will benefit from the EV revolution through the export of battery minerals as well as from their broader adoption across industry and amongst consumers.”
The research also found that private equity investors are interested in battery technology and energy storage capabilities (53 per cent) and fast-charging technologies (57 per cent) as attractive investment areas, while corporate investors prioritise charging network expansion and scalability (58 per cent) and that government subsidies and incentives are seen as the most critical factor for achieving equitable access to EVs and charging infrastructure by 62 per cent of respondents.
It further found that the main investment risks are operational and maintenance costs (46 per cent) and high upfront financial investment (44 per cent), social impact objectives prioritise the reduction of air pollution and greenhouse gas emissions (60 per cent), and that artificial intelligence is seen as especially significant in enabling predictive maintenance and diagnostics for vehicles (45 per cent) and optimising fleet management and electric mobility services (42 per cent).