Electric vehicle (EV) charging stations are crucial for reducing pollution and transitioning to cleaner transportation.
But beyond their environmental impact, new research from MIT suggests that these stations are also boosting spending at nearby businesses.
A study conducted by MIT researchers found that, in California, the opening of a charging station increased annual spending at nearby businesses by an average of $1,500 in 2019 and around $400 between January 2021 and June 2023.
This boost in spending adds up to thousands of extra dollars for local businesses each year, with an even bigger impact in low-income and disadvantaged areas.
The study’s authors hope these findings provide a more complete picture of the benefits of installing EV charging stations, highlighting not only environmental advantages but also economic ones.
“These increases are a significant part of the cost of installing an EV charger,” said Yunhan Zheng, the lead author of the study and a postdoctoral researcher at the Singapore-MIT Alliance for Research and Technology.
“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 research paper, published in Nature Communications, was co-authored by MIT experts David Keith, Jinhua Zhao, and alumni Shenhao Wang and Mi Diao.
The economic impact of EV charging stations
As the world moves toward cleaner energy, EV charging stations are essential to support the growing number of electric vehicles. In 2021, the U.S. government passed the Infrastructure Investment and Jobs Act, which allocated $7.5 billion to build a nationwide network of public EV chargers. However, private investment is still needed to ensure that charging stations become common everywhere.
“Many EV charging providers are struggling to make enough money, and getting to profitability is a major challenge,” said Zheng.
EV advocates have long argued that the presence of charging stations brings economic benefits to surrounding communities. However, previous studies on this topic have often relied on surveys or small-scale data. Zheng and her team wanted to provide solid evidence of these benefits by studying real-world spending data.
The researchers analyzed data from over 4,000 EV charging stations and 140,000 businesses in California, using anonymized credit and debit card transactions to track changes in consumer spending. The study looked at data from 2019 to June 2023, excluding 2020 to avoid the effects of the COVID-19 pandemic.
To measure the impact of charging stations on nearby businesses, the researchers compared spending before and after a station was installed, focusing on businesses within 500 meters of the new stations. They also compared these results to similar businesses that were not near charging stations.
Charging stations drive spending growth
The study found that installing an EV charging station increased annual spending at nearby businesses by an average of 1.4 percent in 2019 and 0.8 percent from January 2021 to June 2023. While these percentages may seem small, they translate to a significant boost in revenue for businesses. In 2019, this increase amounted to almost $23,000 in total spending across businesses, and from 2021 through mid-2023, it amounted to about $3,400 annually.
The researchers noted that the decline in spending from 2019 to 2023 could be due to several factors, including a saturation of charging stations leading to lower usage, a decrease in overall business spending after the pandemic, and fewer businesses being served by each station. Despite this decrease, the increase in spending still covers around 11.2 percent of the average cost of installing a standard charging station.
The study also found that businesses located closest to the charging stations, within the distance of a football field, saw the biggest benefits. Additionally, businesses in low-income and disadvantaged areas experienced significant gains in revenue. These findings highlight the importance of installing EV charging stations in underprivileged communities, as they not only help clean up the environment but also support local economies.
A new business model for charging stations
The study suggests that charging station operators and local businesses could work together to maximize the economic benefits. For example, EV charging providers could adopt a business model similar to that of gas stations, which often pair fuel pumps with convenience stores. This approach could allow charging stations to attract more customers and generate additional revenue.
Zheng also proposed that nearby businesses could share the costs of building charging stations, since they would all benefit from the increased consumer spending. This new funding model could help speed up the expansion of charging networks across the country.
However, the researchers cautioned that more studies are needed to see if these findings apply to other areas outside California. They hope future research will look at the economic impact of charging stations in other states and countries.
“This study provides evidence for the economic benefits of an important, emerging piece of transportation infrastructure,” said Jinhua Zhao, one of the study’s authors. “It paves the way for future research on how EV charging stations can support local businesses and help build stronger communities.”
