US study finds EV charging stations boost spending at local businesses

A study in California has found that the presence of a new public charging station increased annual spending at each nearby business by an average of $1,500 in 2019 and $400 between January 2021 and June 2023.

The team from Massachusetts Institute of Technology (MIT) examined data from more 4,000 charging stations and 140,000 businesses in California between 2019 and June 2023 (ignoring 2020, for obvious reasons).

They used anonymised credit and debit card transactions to measure levels of consumer spending at businesses within 500m of new charging stations, before and after their installation. 

They also looked at spending patterns at similar businesses, in areas where charging stations had not been installed.

It was found that in 2019, a new charging station increased  spending at nearby businesses by an average of 1.4%. Between January 2021 and June 2023 the increase in spending was 0.8%. 

Lead author Yunhan Zheng, a postdoc at the Singapore-MIT Alliance for Research and Technology (SMART) speculates that the fall off in spending might be down to an increase in the number of EV charging stations and/or a decrease in spending as people were reluctant to head back to the shops following the pandemic. 

It is pointed out that even at this lower level of uplift, the annual impact of a charging station on all the surrounding businesses, would still cover around 11.2% of the average installation cost of a standard charging station.

Zheng said: ‘These increases are equal to a significant chunk of the cost of installing an EV charger, and I hope this study sheds light on these economic benefits. The findings could also diversify the income stream for charger providers and site hosts, and lead to more informed business models for EV charging stations.’

‘The U.S. is investing a lot in EV chargers and really encouraging EV adoption, but many EV charging providers can’t make enough money at this stage, and getting to profitability is a major challenge.

‘The joint gas station and convenience store business model could also be adopted to EV charging stations. Traditionally, many gas stations are affiliated with retail store chains, which enables owners to both sell fuel and attract customers to diversify their revenue stream. EV charging providers could consider a similar approach to internalize the positive impact of EV charging stations.’

Zheng believes the findings could initiate new funding models for charging stations, whereby a number of local businesses share the costs of construction, so they can all benefit from the added spending.

The research also found that the spending increases were highest for businesses within about 100m of the new stations and were especially significant for businesses in disadvantaged and low-income area.

Co-author Shenhao Wang said: ‘The positive impacts of EV charging stations on businesses are not constrained solely to some high-income neighborhoods. It highlights the importance for policymakers to develop EV charging stations in marginalized areas, because they not only foster a cleaner environment, but also serve as a catalyst for enhancing economic vitality.’