Do Retail Businesses Have Efficient Incentives to Invest in Public Charging Stations for Electric Vehicles?

Abstract

Many public charging stations for electric vehicles in the United States are slow chargers installed at the premises of pre-existing businesses such as grocery stores or restaurants. This paper investigates the incentives of these retail businesses to install and operate charging stations.First, we observe that existing pricing schedules for slow charging stations in the U.S. significantly depart from both first-best and monopoly pricing. We argue that this may be interpreted as evidence that many hosting facilities install charging stations primarily as a strategy to attract more customers to their core business.Second, we use an imperfect competition model to study retail businesses’ incentives to invest in charging stations.We show that hosting facilities may be trapped in a prisoner’s dilemma where investing in a charging station decreases their profit in the long run. However, the equilibrium level of investments in public charging stations need not differ from the socially optimal outcome.

Keywords: electric vehicles, charging network, pricing, investment incentives