Electric vehicle (EV) charging stations, seen as crucial for cutting carbon emissions in transportation, are proving to be good for business too. A new MIT study shows that these stations benefit not just the environment but also local economies.
The study, which focused on California, found that installing EV charging stations increased yearly spending at nearby businesses by an average of $1,500 in 2019 and $400 between January 2021 and June 2023. While these figures may seem small, they add up to meaningful boosts for local businesses, especially in under-resourced areas.
Wider benefits
The researchers hope to shift the conversation about EV charging stations beyond environmental benefits. “These spending increases cover a significant part of the cost of installing a charging station,” they explain. “They could also help diversify the revenue streams for charging providers and shape smarter business models.”
Expanding the number of charging stations is key to moving towards cleaner transportation. The U.S. government set aside $7.5 billion in the 2021 Infrastructure Investment and Jobs Act to build a nationwide network of chargers. But private investment is also necessary to make these stations widely available.
“Many EV charging providers are struggling to make money,” the researchers point out. “Even though the government is pushing for more chargers, it’s hard for businesses to turn a profit.”
Hard evidence
EV advocates have long claimed that charging stations benefit surrounding businesses, but there’s been little hard evidence to back this up. The MIT study stands out for its scale. It analyzed data from over 4,000 charging stations and 140,000 businesses, using anonymous credit and debit card transactions to track consumer spending from 2019 to June 2023, leaving out 2020 to avoid pandemic-related disruptions.
To find out if charging stations actually caused more spending, the researchers compared businesses within 500 meters of new charging stations before and after they were installed. They also looked at similar businesses further away as a control. They found that spending at nearby businesses rose by 1.4% in 2019 and by 0.8% from 2021 to mid-2023. While these percentages sound small, they amount to nearly $23,000 in additional spending in 2019 and about $3,400 per year from 2021 onward.
The slower growth in the second period could be due to saturation—fewer people may need to charge—or post-pandemic drops in spending. Still, the increase is enough to cover over 11% of the typical cost of installing a charging station.
Biggest gains
The biggest gains came from businesses within about 100 meters of a charger, especially in low-income areas. “These benefits aren’t limited to wealthier neighborhoods,” the researchers note. “Policymakers should build more chargers in disadvantaged communities, where they can improve both the environment and local economies.”
The findings also give EV charging companies ideas for making their projects more profitable. They could follow the model of gas stations paired with convenience stores, which allows owners to benefit from both fuel sales and store purchases. “EV charging sites could partner with retailers to capture these extra sales,” the researchers suggest.
The study could also lead to new funding approaches, such as nearby businesses sharing the cost of installing chargers to profit from the increased spending. While the results are promising, the researchers urge caution. They call for more studies in other states and countries to confirm their findings.
“This research shows that EV charging stations, like other forms of transport infrastructure, consistently boost local businesses,” they conclude. “It sets the stage for more studies in this growing area.”
