Vinson & Elkins report outlines challenges and opportunities for financing the future of electric vehicle charging infrastructure

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NEW YORK and HOUSTON, June 14, 2022 /PRNewswire/ — According to the latest Vinson & Elkins report, Power Play: The State of EV Charging Station Fundingthe continued adoption of electric vehicles (EVs) is creating new financing models to support needed charging infrastructure.

The report is based on market overview experienced Vinson & Elkins attorneys with in-depth knowledge of electric vehicles and the infrastructure required to meet the high demand. Vinson & Elkins attorneys from its project finance, capital markets, mergers and acquisitions, information technology and real estate teams contributed to the report.

Highlights and key considerations include the following:

  • Although individual EV charging station projects do not require a lot of capital to build and have low overhead costs to operate, EV charging companies have not demonstrated a steady flow of year-over-year contract revenue. the other. Investors will need to make valid assumptions about use cases, availability of government incentives, and return on investment over a short period of time.
  • A successful and promising model for electric vehicle charging stations is fleet charging financing, which is based on a subscription-based contract in association with a creditworthy customer with a large fleet of electric vehicles. Municipal transport agreements also present a form of fleet pricing, but with a municipal counterpart.
  • While capital markets have played a critical role in advancing the electric vehicle charging infrastructure industry, there is a need to tap into third-party asset-based financing to increase growth and facilitate the construction of large-scale charging stations.
  • A new source of financing for electric vehicle charging stations could come through the favorable tax treatment offered to real estate investment trusts (REITs). REIT-owned properties – retail, office and multi-family – are ideal sites for the installation of electric vehicle charging stations. [Read more here: Can REITs Charge for Charging Electric Vehicles?]

“The electric vehicle industry is changing and growing rapidly as demand and affordability increase,” said Michael Joyce, Energy Transactions and Project Finance Partner, Vinson & Elkins. “No business model or financing approach is better than the last, which is why customers need to understand the risks associated with many critical factors – state and federal regulatory rules, supply chains and manufacturing barriers, price commodities, network transmission scale – and finance with both a short-term and long-term market view.”

“We’ve seen a slew of new clean energy start-ups going public through a traditional IPO or SPAC since 2020,” said Ramey Layne, Capital Markets Partner, Vinson & Elkins. “Even though the SPAC market has encountered headwinds, capital markets will play a vital role in financing clean energy, and we expect SPAC mergers to continue to be a choice for investors. companies to go public, including those hoping to play a role in the energy transition.

“As the availability of electric vehicles continues to increase and charging infrastructure becomes a higher priority, we are going to see new innovations and technologies come to market,” said Michael Kurzer, Technology Transactions and Intellectual Property Partner, Vinson & Elkins. “Technology is playing an increasingly important role in expanding our electric vehicle infrastructure, from battery performance improvements to new charging stations and ultra-fast charging technologies. All of these advancements will play a key role in ensuring our customers and the industry can meet growing consumer demands.”

For more information and to read the full report, visit: Power Play: The State of EV Charging Station Funding.

About Vinson & Elkins

For more than a century, Vinson & Elkins has provided exceptional customer service in important industries that drive the global economy. Built on a strong culture of collaboration in 12 offices around the world, V&E lawyers are committed to excellence, offering their clients decades of legal experience in handling transactions, investments, projects and disputes around the world. Learn more by visiting www.velaw.com or follow us on Twitter @VinsonandElkins or join us on LinkedIn.

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SOURCE Vinson & Elkins LLP

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