Payments Unbound: Electric vehicles and the energy ecosystem

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Suela Rossberg: Imagine an entire fleet of EVs who are storing that clean energy only to discharge it later. So while we would think that electric vehicles are requiring more electricity, somewhat counterintuitively, they can absolutely help the grid operators.

Bal Ahir: The mobility ecosystem is rapidly evolving thanks to electric vehicles and the technology that powers them. What can we expect from the fast-approaching future of EVs and how will tomorrow solutions impact infrastructure, energy and the customers at the heart of it all? Welcome to Making Sense. My name is Bal Ahir, global head of Mobility Payment Solutions. I'm thrilled to be joined by my colleague today, Suela Rossberg, EMEA, head of payments for energy, power and renewables. Suela, welcome. It'll be great to hear from you, what you and your team actually do.

Suela Rossberg: Pleased to be here. Thank you for the invitation. We work with corporates in energy, power and renewable space, and more specifically their treasury and finance teams who have a mission critical mandate to make sense of the highly complex world we live in. In particular, separating noise from patents, and taking advantage of opportunities in the transaction banking space. The industry lens helps us co-create with our clients solutions that are as unique as their challenges.

Bal Ahir: The electric vehicle industry is going through a thrilling period of expansion and innovation, but with all these changes, of course comes a few growing pains. Suela, in your opinion, what are some of the most pressing challenges facing the electric vehicle market today? I mean, I know that's quite a broad question, but it'll be really good to get your perspective, you know, with all the interaction and dialogue you have with clients and your focus on this sector.

Suela Rossberg: That's absolutely true. And the point that you mentioned about EV adoption, just looking at some stats the last six years, EV car sales have increased tenfold globally with that, the corresponding infrastructure, but giving that big focus on the number of the charging points, we might be neglecting the customer experience. So in my view, and from the discussions I'm having with clients or friends and family, the main issue is the lack of upfront information. As a driver, I'd like to know beforehand in order to make that decision, informed decision where and when to charge my vehicle. And when I talk about information, I'm referring to charge availability, charges, availability and reliability. Where can I go at which point in time? Fast speeding chargers, best price. You have price differentiation between operators and locations, even different locations of the same operators, the fragmentation of charging point operators. 25% of drivers are using more than four apps in their mobile devices. So how can we make that experience much smoother and give that customer journey a consistent approach?

Bal Ahir: So you just mentioned a, a couple of interesting points there that I would just like to explore further. So from a ChargePoint operator's perspective, you know, what are some of the key topics that, uh, you are hearing from them?

Suela Rossberg: We find from, from drivers that the main features that they would like from their operators is high uptime, ensuring that those locations are in strategic connecting points as you're driving. The best e-mobile service operators are those that can guide their customers towards that quality, directing them to the right chargers, providing a holistic experience with extra services like toilets, cafeterias, knowing upfront that you will find all these facilities and you can plan your journey accordingly. If there are no fast charges in the facility, you're planning to stop for a moment, then maybe you don't have your meal yet. But knowing all this information in advance, ideally in a super app, that makes the entire journey much more pleasurable. Thinking of the subsegment as well, when we look at electric vehicles, the vans or the trucks are only 4% of that market. So there's a growing opportunity in that particular sector, but it is quite unique. Drivers, for example of trucks need to rest for 11 hours. They need a parking space for their trucks, locations that are offering that charging option. But also facilities for resting, for social gathering between drivers will be the winners for the future.

Bal Ahir: Fantastic. So really focusing on fast charging, making sure that there are additional functions and features and just facilities available. So the customer, if they do have to spend 10 minutes or 20 minutes or 30 minutes for the charge, that's sort of the reasonable timing that the customer would wanna spend at a charger, that there's something else to do there as well.

Suela Rossberg: What's your view about the number of players out there? How's the market consolidating or shifting? What's next?

Bal Ahir: Uh, I think that's a really critical point. If we just focus in on the European region and we look at the entire electric vehicle value chain from an EV charging perspective, it's really, really clear and obvious that there are too many players all attempting to achieve the same outcome. One of the routes forward is clearly the utilization has to grow as vehicle adoption grows, the energy pricing needs to hit a point that is actually economically viable for the Charge Point operators. Typically the pivot is gonna be towards high performance charging, where the consumer gets that right uh, level of charge to keep their car moving or their van moving or their truck moving.

Suela Rossberg: Can you provide a bit more color on what's the role of the MSP? We have all these abbreviations. We're using C-P-O, M-S-P, um, and how can one charger be used in multiple ways?

Bal Ahir: Let me dive into that. There's this statement that I've heard recently from pumps to platforms, and I think it's really important to recognize that where a fuel pump is largely analog with an electric vehicle charger, you're really looking at a platform that's a digitized experience. With that has come the role within this ecosystem of a Charge Point operator. So this is the physical device provider, the hardware provider, but also the organization that's gonna pay the energy bill. But because it's a digital experience, you do get market aggregators, which are referred to as e-mobility service providers. So these are independent organizations that through roaming services, are able to connect to Charge Point operators and provide the consumer the promise that through one app you can access, you know, 200,000 or 300,000 chargers across 50 CPOs. So when I've launched EV cars in the past, this is a huge consumer pain point and is something that the customer definitely values. Now, that was true in the first wave. Unfortunately, what we've seen is it's driven a behavior that adds an additional consumer pain point, which is around price. So what we now see is that for a customer buying an electric vehicle, they have to go through a process to really understand what is the most economically beneficial way of accessing a charger that is on their route. And what do I mean by that? You can have a charger from a BP or a Shell recharge or Allego, and that charger is typically gonna have a price displayed on the actual charging unit. You can then actually download those organizations apps onto your own device and you can buy into a subscription. But quite frankly, there's multiple thousands of other EMSP apps in the marketplace where actually you could subscribe to one of those apps and that will actually generate a different pricing matrix for the same charger. So even as I'm explaining it, the listeners will probably be pretty confused as to what was the price of that charger, and that's the process the customer has to go through on the go, live. And unfortunately that's becoming the experience of the first 12 months of living with an electric vehicle.

Suela Rossberg: So does it look like the consumers are moving more towards a subscription model, like a mobile contract rather than individual refueling recharging?

Bal Ahir: I think it's too early to call whether the customer on a wholesale basis is moving to a subscription model. What's definitely happening, and I'll give you my own experience of having launched EV cars and also, uh, owning an and running an EV car, is that certainly in the first year, the customer will be subscribing to at least one EMSP service. And that's just to make sure that they get the coverage of charges so they never get stuck and the inconvenience of having to download multiple apps at that time. But then the customer is also back to the pricing point, downloading and maybe subscribing to 1, 2, 3 or four other CPO apps as well, making sure they're getting the right rate of charging in the most economically viable way. So we described the, the whole ecosystem. How do you see the role of the cost of the energy and everything that's happening in this entire ecosystem? From an energy perspective,

Suela Rossberg: We have a lot of discussions with our customers around the energy ecosystem. I'll probably touch on two dimensions. One of them being the increased electricity demands, and that's coming from multiple elements. Thinking about manufacturing, there is a big focus on electrifying manufacturing data centers. Everyone is quite keen on using ChatGPT and the likes. But that means a minimum of 10 times or 60 times more energy than using the same prompt on Google. So a lot of increased demand on that front. Looking at the data, if we want to reach net zero by 2050 just to electrify road transport, we need 8.3 PETA watt hours. That's a term I had to Google the first time I heard about

Bal Ahir: PETA watt, that's the first time I’m hearing this!

Suela Rossberg: That's 8.3 million-billion-watt hours.

Bal Ahir: Oh, wow.

Suela Rossberg: And the other point that we discuss quite often is energy And the other point that we discuss quite often is the energy trilemma. Governments, municipalities, even households are thinking about energy trilemma, which consists of energy security, sustainability, and affordability. So everyone wants to be much more energy independent in the current era, I love the term “prosumers” – households becoming producers and consumers at the same time. So while we would think that electric vehicles are requiring more electricity, somewhat counterintuitively, they can absolutely help the grid operators. The UK generates electricity from renewables to a large extent, and 40% of that is coming from wind farms in Scotland. However, Scotland has only 10% demand. On the other side, London and south of England requires one third of that electricity that's being produced. The grid is not ready, requires modernization to handle all that increase on the renewables that is being generated. And this is where electric vehicles can step in and assist. Think of a household producing electricity from solar panels. They are powering up their homes during the day. They are storing that surplus renewable energy that they produced to only use it later at peak hours or to sell it back to the grid. This, of course, would reduce the cost of ownership for an electric vehicle if you're being paid for that electricity that you are selling back to the grid. Of course, we need the right incentives in place, um, from a government perspective, be that subsidies be that tax rules, anything that would motivate people to feel more encouraged to utilize their electric vehicles during the day at the right moment. So imagine an entire fleet of EVs either parked at home or outside in parking lots who are storing that clean energy only to discharge it later. So I think electric vehicles have a very important role to play until that grid has been modernized and a big gap to fill in

Bal Ahir: Really, uh, really interesting. So this is mobility meeting energy. I'm convinced on the smart energy equation as well. Just explain how you see smart energy and first it'll be good to explain smart energy and then the role of smart energy overall.

Suela Rossberg: The entire smart energy ecosystem is as, as we look at that household producing the renewable energy at home and then selling it at the right moment, being incentivized by an app that is informing you which price points you can look at during the day. So selling at the right moment, the right amount of that electricity back to the grid. But you do need to have the right technology for that. So we're talking about the household, but I even read that now we are considering using, um, charging points connected to lampposts. Um, so if we're using electricity from the grid, but then later during the day we are selling back, how is that managed on a daily basis, weekly, monthly? Do we need to make payments both ways or maybe net off and make one big payment once per month? This technology needs to be available and to make the process simple as well as to add loyalty programs to the consumer in the end for them to be incentivized to take the extra step in helping the entire ecosystem. How do you see smart energy from your perspective?

Bal Ahir: So smart energy by definition is all about retiming when you are using energy versus actually sending energy back into the grid system. So that's my simplified articulation explanation of that. And if you look at how this market is structured now with aggregators, ESPs in the marketplace, multiple Charge Point operators, what we're really seeing is that there is an opportunity for the right most advanced EMSPs through their technology to really on a wholesale basis. And what I mean by that is, in a given market, they may be connecting 40,000, 50,000, a hundred thousand cars at 6:00 PM in one market, in one country. The ability to retime when that fleet of vehicles is actually gonna use the grid is gonna be something of value that can be monetized over time. Doesn't impact the consumer in any way, shape or form because customer isn't actually gonna take the car back out, they're already home, now they're on with other chores around the house. But this could be happening in the background and this is where we really see there can be an opportunity for not only the EMSPs to actually, uh, make extra revenue streams, but also some of that revenue or that benefit could go back to the actual EV driver as well. So it could help the whole adoption and change the equation somewhat, uh, even further. So a really exciting place whilst vehicle to grid seems like a lot needs to happen before, this is really something the end consumer can realize in terms of value and benefit. Smart charging definitely feels from my perspective and for me, something that's actually more real and more here with us right now.

Suela Rossberg: And what's exciting about it is that it's a win-win for everyone, for the environment, for the consumer, for all the market participants.

Bal Ahir: Correct. And it's a technology play in reality and whoever can resolve this technology play and can actually then monetize the opportunity as well of a hundred thousand fleets, which, you know, to be frank, quite uh, it could easily be half a million cars being plugged in via one EMSP or a group of EMSPs that can communicate back to grids on when do you want these cars actually taking charge from the system

Suela Rossberg: Bal, you head up payments, mobility solutions. Can you talk a bit more about your line of business? How are you helping clients and market participants?

Bal Ahir: So what we see in mobility is a lot of fragmentation across the sector from a consumer's point that's quite a complex experience to navigate all these individual independent experiences. And at the bank, we believe we've got a role to play here - which is enabling customers to navigate a seamless  experience, whether they're buying a cup of coffee, whether they're actually fueling or they're actually charging their vehicle, or actually indeed purchasing that vehicle from the manufacturer. And the pivot of this product is really around the shift towards e-mobility. So as the industry electrifies, we believe that's a perfect opportunity to support really with this, uh, payment solutions that we bring. We're also heavily focused in the in-car, in-vehicle payment space. So look at EV charging as a specific use case that has the ability to really embed the payments experience to a point where actually the customer shouldn't even be thinking about the payment when it comes to an EV charger because you have software within the car, the car should recognize the charger and the payment should transact in the background via J.P. Morgan Mobility payment solutions.

Suela Rossberg: Fantastic.

Bal Ahir: Suela it was fascinating to really discuss a hugely, hugely complex, complex environment. So thank you for being with us today.

Suela Rossberg: It's been a pleasure to be here.

Bal Ahir: And thank you to our listeners for tuning in to another edition of Making Sense. We really look forward to having you again soon. And if any of you have been interested in some of the topics that Suela and I have been discussing, we have recently launched an EV charging white paper, which is available to download from jpmorgan.com. You can find the link in our episode page or directly in the description on Spotify.

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