E-Mobility – is your company ready for mobility transition?

​Electrical mobility will (soon) be an inseparable part of the mobility culture. What does it mean for your customers and employees? Will they expect to be able to recharge their cars during working hours or business meetings in the future? If you want to offer this service to your business partners, what can they expect from you from a technical, organisational, and tax point of view?

At the beginning of 2019, 47.1 million passenger cars were registered in Germany. In the first half of 2019, the number of newly registered passenger cars totalled 1.8 million. Out of this number, about 30,000 cars were entirely electric and about 105,000 were hybrid. In particular, the approx. 80% increase in the number of electric cars year over year shows that e-mobility is becoming more and more important and this trend is speeding up.

The federal government is aiming for 6 million electric cars on the streets of Germany by 2030. Industry experts expect that there will be 7-10 million electric cars, 1 million public charge points, 100,000 fast charge points and several million private charge points by 2030. In addition, the EU Regulation (EU) 2019/631 was issued, which aims to achieve a fleet-wide CO2 reduction of 37% for passenger cars and light commercial vehicles (LCVs) by 2030 against 2021. Penalties levied on automobile manufacturers increase the pressure to take action so it can be expected that the e-car product range will increase fivefold to about 150 models by 2023.

Even with a conservative estimate of 4 million vehicles, this is still just under 10% of the German stock of vehicles.

This trend brings various questions for companies, which we answer below:

1. What kind of charging infrastructure should I offer my customers and employees?
2. What are the technical and organisational implications of providing the charging infrastructure
3. How to treat e-mobility from the tax point of view?
4. What does a sustainable and profitable energy and mobility concept look like?

Question 1: What kind of charging infrastructure should I offer my customers and employees?

Generally, 4 types of common charging infrastructure can be distinguished. For companies, a charging capacity of up to 22 kW is usually enough, which can be achieved with wall-mounted charging stations (wall boxes) or charging terminals on open spaces or ideally under solar carports. In terms of prices, offers vary significantly, but it can be expected that for a professional system-compatible wall box with a capacity of 22 kW AC the price will be about EUR 2,000 and for a charging terminal with a capacity of 2x22 kW AC the price will be about EUR 7,000.

For those who opt for a charging terminal, the charging process of an electric car is particularly interesting in terms of its impact on the peak load. In the majority of e-car models, the charging capacity is constant from the very beginning of the charging process. The charging capacity will decrease only towards the end of the charging process (starting at about 80% of the charge). Only the charging time and the rate of charge vary from model to model and heavily depend on whether AC or DC is used for charging. (Fraunhofer Institute for Wind Energy Systems, IWES Kassel branch) In the standard case of an employee who commutes no more than 25 km to work every day and spends 9 hours there, an AC charging solution is sufficient. By contrast, customers, service personnel or highly flexible workers need to be able to rapidly charge their e-cars with DC charging technology due to larger distances and shorter on-site times. As a benchmark for the number of installed charging terminals until 2030, 10% of car-using employees is a plausible basis for decision-making. A mobility study helps determine the level of demand.

Question 2: What are the technical and organisational implications of providing the charging infrastructure?

To answer this question, we would like to show the impact of the growing e-mobility trend on companies and their energy management strategies based on an example.

The scenario assumptions are as follows: a medium-sized company consumes approx. 800.000 kWh per year and its peak load is 350 kW; the company has 500 employees, 420 of whom drive to work by car every day.

While energy consumption can be viewed separately from the company, the individual load profile of the company, the charging procedures and load management play an important role, especially in the case of the peak load. Uncontrolled charging can lead to load peaks, which involves higher costs of electricity.

With an active charging and load management system in place, the load can be controlled and distributed. Cars can be charged in a way ensuring no additional power peaks. The power that electric cars need to charge is then provided according to the load profile with as little peak load contribution as possible.

Especially in light of these considerations, it is critical to consider the opportunities of installing an additional PV system and a battery storage system. The combination of a PV system, electric car charging terminals and batteries uses many synergistic effects of all systems. We will discuss these synergistic effects and a sustainable and profitable system in more detail in our answer to Question 4.

 Illustration 1: Sample load profile with low charge flows into electric cars and a 150 kWp PV system

Question 3: How to treat e-mobility from the tax point of view?

Tax-free charging (of employee’s cars):

As a rule, price-reduced or free consumption of electricity used for charging electric and hybrid cars as well as price-reduced or free provision of charging stations by the employer to employees represents a benefit in kind, which is subject to payroll tax and social security charges. In order to promote e-mobility, however, the legislator has classified the supply of the electricity used for charging as exempt from tax and social security, with this exemption being valid by the end of 2020. This will thus save employers huge bureaucratic workload. As part of incentivising the provision of charging stations or their acquisition, the employer may choose to pay a lump-sum tax of 25% plus solidarity surcharges. According to the current draft of the Annual Tax Act 2019, this incentive will be extended beyond 2020.

Taxation of company cars:

If used also for private purposes, company cars will be basically taxed according to the 1% method. For electric or hybrid cars registered from 01/01/2019, the tax rate will be reduced to 0.5%. In the case of hybrids, this will only apply if it can be evidenced that their minimum (electric) range is 40 km or the maximum emissions are 50g CO2/km.

Own electric charging stations:

According to § 3 no. 25 of the German Electricity and Gas Supply Act (EnWG), the operator is treated as the final consumer and is thus not subject to the obligations of a utility. As regards the electricity tax, applicable is the exemption rule arising from § 1a (2) no. 2 of the German Electricity Tax Act Implementing Regulation (StromStV). In addition, the operator has the right to connect its system to the grid operated by the distribution grid operator as per § 17(1) EnWG and is free to select the supplier (§ 20 (1) EnWG). Because the operator is treated as the final consumer, it is required to pay the EEG surcharge and, if applicable, the electricity tax. It is, however, possible to use the electricity tax exemption as per § 9 (1) no. 3 of the German Electricity Tax Act (StromStG). According to the current legislation, this relief applies only to vehicles purchased between 01/01/2019 and 31/12/2021. The current draft of the Annual Tax Act, however, provides for an extension of the period of this relief.

Billing:

It is debatable how to treat the charging of electric cars from the point of view of VAT. On the one hand, this is due to the large number of parties involved and, on the other hand, due to the diversity of the services that these involved parties provide.

But in simplified terms, the general picture of how it works is as follows:

The Charge Point Operator (“CPO”) often offers not only the actual charging services but also other services, such as online booking of terminals or similar, has information about available terminals and their location, and provides parking facilities.

The E-Mobility Provider (“EMP”) acts in its own name towards customers and passes the services received from the CPO on to the final customer based on an agreement concluded with such a final customer.

In order to perform services owed to the EMP, the CPO signs an appropriate electricity supply agreement with a utility company (“UC”).

This structure gives rise to a multitude of questions concerning VAT, especially when not only the CPO but also an EMP is involved in the charging process. As regards the charging process itself, it is currently debatable whether the process is a single service or whether it comprises several independent services. If treated as a single service, there arises a question of whether this service should be classified as a service or as a supply of electricity. The French government has thus requested the VAT Committee of the European Commission to issue an opinion on e-charging. More specifically, the VAT Committee was requested to assess whether e-charging is a single service and whether this service should be classified as a service or a supply of electricity.

Even though the opinion of the VAT Committee is non-binding, it will hopefully add some clarity about this issue and create more legal certainty as regards the charging of electric cars.

Question 4: What does a sustainable and profitable energy and mobility concept look like?

A combination of the e-charging infrastructure, a PV system and a battery storage system (either as an on-site system or that of the electric car) is currently the most sustainable solution.

The number and type of charging terminals should be determined based on a mobility survey and adjusted to the current needs in the process of gradual expansion. The gradual expansion should be taken into account in the planning of the first stage and in the design of components to be used jointly at all expansion stages, such as electrical wiring. Both for electric cars and for charging stations, there are funding opportunities available on a national and local level. So long as free charging electricity is exempt from tax and social security for consumers, we recommend providing it also for free. If the operator plans to charge fees for providing electricity for use in electric cars, considered should be the option of billing through an app, a QR code or a (RFID) card system already from the beginning. An app offers the advantage of better communication, which helps optimise the charging times thanks to an integrated charging and load management system (which is a must) and enables their coordination with the loads of the company.

The battery (of electric cars) can be connected to the company's on-site grid for peak shaving, enables greater use of self-generated PV electricity and can supply primary control reserve power. V2G should be considered if charging terminals and company software are used.

The PV system should be designed in a way ensuring maximum consumption of self-generated electricity. This design should take into account future expansion stages and the related energy needs and load requirements. The currently still state-guaranteed feed-in tariffs and levels of energy consumed as part of day-to-day operations speak in favour of making use of all usable (rooftop) surfaces. The east-west orientation of solar panels combined with the battery and the load management system will increase the profitability of the PV system even more.

Ultimately, the aim is to have in place a coordinated concept that, taking into account the current situation and future developments, will enable users of electric cars to easily charge them partly using solar power.

 
For the company, this means an investment that can be made step by step. The PV system can also be implemented through a lease model as a variable cost item. Even in cases where all of the electricity is fed into the grid, it is profitable and its profitability may be increased even more through greater use of self-generated electricity as illustrated in Question 2, and has thus the potential as a means helping to finance the costs of the charging infrastructure. Non-monetary benefits include happy employees and a more sustainable orientation of the company or the company premises.

Conclusion

The trend towards e-mobility poses many challenges to companies but also offers them numerous opportunities. Challenges include, in particular, the design and costs of the charging infrastructure, increased costs of electricity and the maximum load, and, finally, the workload related to the organisational and billing aspects.  Also the legal and tax aspects should be taken into account and planned early on.

On the other hand, this trend also offers opportunities due to tax savings, a positive image projected to external audiences, and employee satisfaction. The company can tap into new sources of revenue thanks to the synergistic effects coming with smart energy solutions involving PV systems, battery systems and load management. Overall, with a well-coordinated and professional implementation of an energy and mobility concept, it is possible to reap the economic and social benefits already today.  The considerations are based on the current legislative framework – any amendments should be assessed separately.