If you think you’ve been seeing a few more Teslas on the road lately, your eyes are not deceiving you. In the first half of 2022, global electric vehicle (EV) sales shot up 62 percent year-over-year, skyrocketing to more than 4 million vehicles sold. Municipalities across the globe are committing to EVs as a path toward a cleaner future for transportation, and as innovation in the sector continues and EVs become more affordable and accessible to the general public, this widespread adoption is only expected to grow.

Stakeholders on the road and across the automotive industry are preparing for a range of market shifts emerging in response to increased EV use, but a potentially overlooked party impacted by this trend is commercial real estate’s multifamily sector.

With most passenger cars parked eight to 12 hours a night at typical multifamily residences, at-home EV charging provided to residents by owners and operators has the potential to be the most convenient and affordable charging option for EV drivers. As such, the demand for EV charging as an apartment amenity is projected to continue to rise; by 2030, about 20 percent of on-road vehicles will be EVs, and about half of those drivers will rely primarily on charging sources at their residences, according to McKinsey. Property operators who approach this opportunity thoughtfully and strategically will be well-positioned to leverage EV charging as an essential amenity that can also potentially generate a new revenue stream.

DIFFERENT CLASSES OF CHARGING

For the uninitiated, it can be challenging to analyze the wide range of EV chargers, but the most common EV charging devices fit into either a Level 1 (L1), Level 2 (L2) or Level 3 (L3 or DCFC) classification. Primary differences between each level include an increase in power output, installation and maintenance costs, and device usage rates as you move from L1 to L3, as well as a decrease in the time required to “refuel.”

The different kinds of chargers are also used differently. L1 charging is what most EV-driving homeowners use at their houses; L2 devices are the types of chargers at malls and other locations where cars will sit for several hours; and L3s are designed to be the equivalent of a gas station — they’re typically located in roadside charging stations and can power up a car in around 15 minutes.

However, amidst ongoing spikes in EV adoption, some property owners have begun offering a hybrid charging option. Labeled Level 1B (L1B) chargers, this hybrid approach seeks to improve upon the power output of L1 chargers, while reducing the hefty installation and maintenance costs — and the lack of convenience — associated with L2 devices, which are typically shared.

At multifamily properties, dedicated overnight charging utilizing L1 and L1B chargers are particularly intriguing because they provide EV-driving residents with full accessibility whenever they want. Compared with the alternative — outfitting a property with shared L2 devices — this dedicated charging approach has numerous advantages. Shared products typically burden drivers with limited charger availability, peak charging rates, and idle fees for prolonged use; dedicated charging gives residents increased accessibility, while also allowing them to dictate when charging occurs to leverage discounted rates during off-peak hours.

For most property owners, dedicated overnight chargers also offer a better financial profile compared to shared L2 technologies. When looking at the ROI generated through charger usage, assuming a modest price premium of $0.15/kWh, the payback on dedicated L1B devices is typically between one to three years. Shared L2 devices are going to average a payback closer to three years, but this can be more volatile, sometimes surpassing the nine-year mark, due to heavy reliance on public, nonresident utilization during working hours. Shared devices also have higher repair and replacement costs; unsurprisingly, communal chargers are damaged more frequently than designated devices maintained by their sole user.

With all of this in mind, L1B is widely believed by leaders across the multifamily industry to be the premier EV charging option for the sector. Now, the question becomes how to execute.

THE RIGHT NUMBER OF CHARGERS

Requirements and demand for the number of EV charging stations at a given property will vary based on a number of regional and asset-level variances. For example, though all multifamily properties will likely need some EV chargers, luxury class A properties may necessitate stronger, more expansive infrastructure than class B or C properties, where the EV driver population is expected to be smaller.

Additionally, different geographic regions can expect to see different numbers of EVs on the road, influenced by local laws that incentivize — and in some cases even mandate — adoption.

All that said, there is simply no way of knowing precisely and with certainty what EV charging demand at a property will be 10 years from now. Because of this, operators should focus on how many spots should be “EV ready” rather than fully outfitted with EV charging equipment. Most L1B systems are highly scalable and easily activated once proper power sources and basic outlet infrastructure are in place in the parking garage; on the other hand, it is worth considering that L2 technologies often require a much more robust power installation to support even the smallest on-site expansion. Owners and operators should understand that decisions made around EV charging infrastructure today could impact deployment in years to come.

General guidelines suggest owners should prepare roughly 15 percent to 20 percent of a building’s parking spots to be EV-ready over the next three years, expanding that to 20 percent to 35 percent over the next four to five years. Forward thinking is key here, as it’s much more affordable (and less disruptive) to slightly overestimate EV demand and therefore prepare an abundance of available charging infrastructure. If demand is even slightly underestimated, owners could be forced to spend an excessive amount ripping up concrete and adding additional conduits, wiring, etc., in years to come.

To better understand a specific property’s needs and gauge more accurate resident sentiments, many operators have begun distributing surveys that directly assess EV needs.

GETTING READY TO SCALE

Over the course of the next decade, we should expect to see significant advancements surrounding the adoption of EVs, driving the demand for EV charging as an amenity across multifamily communities. Apartment owners and operators should be prepared accordingly to handle this evolving resident need and to develop an EV charging deployment strategy that most effectively serves the needs of each individual property and its residents. By leveraging the right technology and processes, operators can generate significant financial returns while also boasting this sought-after feature to improve resident retention and leasing efforts.

Looking forward, the big question multifamily operators should be asking is not whether they should pursue EV charging deployment, but rather how much longer they can wait if they don’t want to fall behind on this massive trend. To reap the greatest reward, the time to act is now.

Doug Pearce is executive vice president, information technology at Waterton.