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Payback is a switch: Business case for EV charging

John Anton is a small-business owner in Tempe, Ariz., with an environmental consciousness that is growing but has its limits.

In 2009 his company, DesignAShirt, scored a contract with Arizona State University to provide the school with all its shirt design needs. There was a hitch: The ASU Global Institute of Sustainability required that the company use only water-based ink, which is less noxious to the environment. Anton agreed.

Not long after, the sustainability folks came back and encouraged him to go solar, and he came to see the economic—as well as the environmental—benefit of that, and the company put up more than 200 solar panels.

More recently, they came and suggested installing charging stations for electric vehicles in his parking lot. "I said, 'Now hold on a minute,'" Anton recalled.


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DesignAShirt's business is mostly conducted online, but it does have customers that come in to pick up or drop off orders. "These people are in and out in five or 10 minutes. The last thing I need is for people to stop and say, 'Hey, I think I'll stay and visit for a while while my car charges,'" Anton said. "And the fastest chargers take at least 30 minutes. We're busy. We don't have time for it."

A switch has flipped
As electric vehicles catch on, business owners like Anton are weighing the question: Do I need charging stations on my lot to keep customers and attract new ones?

Some see momentum for EVs building fast, perhaps fast enough to overcome the nascent sector's circular problem: Car buyers being wary of going electric until there are more places to charge, and businesses' hesitancy to build or host charging stations until they see more EVs on the road.

"In the last six months, it's like a switch has flipped," said Pasquale Romano, CEO of EV station network ChargePoint, which boasts 15,000 nonresidential charging systems across 2,100 customers and is backed by, among others, venture capital firm Kleiner Perkins. "The question we get from businesses now is not whether to put in stations but how to scale up."

(Read more: Tesla aims for world record electric-car trip)

A 2013 Deloitte report, "Plugged In: The Last Mile," also suggests urgency on the part of businesses in trying to stay ahead of the curve on this issue.

"A push/pull strategy appears to be at work in forming these partnerships" between suppliers and retail businesses, Deloitte wrote, with both now rushing to each other to "get in on the ground floor" of the EV charging business.

Public parking garages and employee lots installing charging stations are more likely to charge fees for the convenience and the power. About half of current charging stations are with employers.

"I feel that 10 years out, more new cars will be electric than gasoline-based," said Bill Lerner, CEO of iPark, New York's biggest private parking-garage operator.

"There's going to come a day when you can't find a place to gas up in Manhattan."

IPark installed its first Beam Charging station in 2011—the company currently has 14 in its garages, and that number will climb to 20 in the coming weeks. Ultimately, Lerner wants the EV charging stations in each of the company's 110 garages.

Upfront costs
The big, national retail chains have been among the first to embrace the concept.

One of CarCharging's retail partners moving most aggressively into the EV charging space is Walgreen, which has more than 400 operational EV charging stations. Kohl's has EV-charging in 32 locations with 85 chargers total. IKEA is planning to have charging stations installed at 55 locations in the future. Meanwhile, Wal-Mart has EV charging stations at 29 sites across 6 states. "We're evaluating these projects before determining any next steps," said Christopher Schraeder, senior manager of sustainability communications.

Typically, retailers do not take ownership of the charging station, according to Deloitte, but instead partner with an EVSE—electric vehicle supply equipment provider—like Beam Charging, which installs and maintains the station and shares revenue with the lot owner whose prime parking spots it is using.

(Read more: How a one-person business can break $1 million)

Beam owns and operates the EV charging equipment; manages the installation, maintenance, and related services; and shares a portion of the EV charging revenue with the property owner. Last year, Beam Charging—which has focused on the New York City and Northeast market and has 13,600 EV charging systems in use—was acquired by CarCharging Group, which has operations in 36 states and three countries, and has also installed EV charging stations for commercial real estate landlords, including Simon Property Group and Federal Realty Investment Trust. Mall owners and their tenants are being targeted as a key growth market for public EV charging.

ChargePoint sells charging station hardware, which costs about $2,500 (excluding installation), and offers software to set prices for charging and collect payment from drivers. It also provides customer service support through an annual fixed subscription per port, which includes placement of the station on an EV charging destination map (available to drivers online, in nav systems and via phone apps), and an information system that shows real-time availability of EV ports. It has also launched a no-money-down solar lease model for EV charging stations in hopes it will stimulate adoption.

Romano estimates that 20 percent of stations currently charge a fee for the service, though that number is rising.

"People can expect some amount of free charging in retail—the cost is negligible compared with the goodwill and customer loyalty retailers can engender," Romano said. "The last thing you want as a retailer is to lose a customer to a competitor who is offering a service you aren't."

In iPark garages, charging costs $98 a month for unlimited, or $2.95 an hour (that's on top of the cost of parking). The Deloitte white paper said the sweet spot is $2 an hour to draw consumers who wish to pay no more than the equivalent for gasoline.

Deloitte put the cost of installing a charging station at $4,000 for its analysis, which concluded that "there is a business case to be made" for such an investment, assuming sufficient penetration of EVs, but noted installation costs can range from "as little as $500 to as much as $18,000 for a more elaborate arrangement."

(Read more: The economics of EV charging)

Payback time
A Kelley Blue Book analyst, Alec Gutierrez, said the alternative-fuel market—that's hybrids as well as plug-ins—has not been strong, comprising less than 3 percent of U.S. sales in 2013. Steep prices as well as "range anxiety"—the fear of a charge falling short of the nearest station—are keeping EV growth in check, and he expects 5 percent growth for the segment this year, roughly on pace with the rest of a quickening market.

However, adoption has accelerated quickly: 53,000 EVs were sold in the U.S. in 2012; that jumped to 96,000 last year. Navigant Research sees the global market for plug-in electric vehicles growing by 86 percent this year.

In addition, electric-vehicle makers' frenzied push to install charging stations is bound to alleviate consumers' concerns.

In the U.S., Tesla currently offers 66 Supercharger stations—which provide half a charge in 20 minutes to Model S owners. The company expects to offer coast-to-coast coverage within months and be within reach of 80 percent of the U.S. population by the end of the year. (Tesla departs from companies like ChargePoint in its approach to charging infrastructure, though, focusing on long-distance travel recharging to complement home-based charging ports rather than around-the-town charging solutions.)

Nissan, meanwhile, aims to complete an initiative to add 100 quick-charge stations—which fill 80 percent in a half hour—to LEAF dealerships in 21 markets by April 1.

According to the Deloitte report, most vehicle charging will be done at home, and in most cases that will be more than adequate for commutes.

Lerner is convinced that flipping the switch on EV charging will ultimately have a bottom-line payback for a business: "As of today, it hasn't had a monumental effect. But EV is just gaining traction." More important, he said, is to offer the service customers want. "It's the same as choosing a garage that accepts credit cards over one that doesn't."

ChargePoint's Romano asserts that "every single business with a parking lot is a potential customer." Anton's reluctance to extend his green business initiatives to EV charging doesn't back up that assertion, but he does think it makes a lot of sense for some small-business peers: "If I had a grocery store or a bookstore ... Done."

By Matt Twomey, Special to CNBC.com. Follow him on Twitter @Matt_Twomey

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