The challenge of Electric Vehicles in Multifamily

Learn to adjust yourself to the conditions you have to endure, but make a point of trying to alter or correct conditions so that they are most favorable to you. --William Frederick Book

Oct 05, 2022

In 2018, a projection was made that by 2030, 18.7 million electric vehicles would be on our roadways. I recall at the time thinking that would be impressive, considering in 2018, there were roughly 350,000 electric vehicles sold in the United States. That December marked the 39th month of consecutive year-over-year monthly sales gains for plug-in vehicles. I remember that milestone so clearly because this was the first time my colleagues and I began to question out loud what might be the impact of 18.7 million electric vehicles on our multifamily assets if 5% of all cars purchased in the US are electric vehicles (EVs).

Of course, the point here is if nearly 7% of our residents need electrical charging infrastructure - how will we respond? In a 200-unit community, that means 13 EV owners looking for a place to plug in.

Fast forward to today, and that projection has been adjusted with an anticipated 26.4 million EVs forecast to be on the road by 2030 - nearly 10% of the 259 million cars and light trucks expected to be on US roads in 2030. If you are doing the math, in our 200-unit community, we are now up to 20 vehicle owners, and the trend line is pointing towards 50% of all vehicles on the road being electric by 2050.

So what does that look like for the multifamily community?

For starters, it is clear this issue isn’t going away. EVs are not a fad, and history is proving that adaption is occurring more rapidly than forecast. Vehicles also need energy to operate, which means they require infrastructure.

The first step in the question of infrastructure is where the charging infrastructure will be located. We have communities with garages, on-street parking, parking decks, parking lots, driveways, and carports. Each scenario has specific implications that need to be considered early in the planning phase.

Unfortunately, the planning is a bit more complicated than just where you want the charger. We also need to assess the access to an electrical source. This also means we need to have a general idea of the type of charger we plan to install - each type has advantages and disadvantages:

Level 1 Chargers: The Level 1 charger is the most cost-effective and can use any standard 120V outlet (8-20 Amps), making it the most versatile from an electrical supply perspective. They can be purchased between $350 to $500 and often resemble little more than an extension cord. It is, however, also the slowest charger type, taking roughly 20 hours to charge approximately 124 miles worth of charge, and this makes its use outside of single-family homes rare.

Level 2 Chargers: The Level 2 charger is the most commonly deployed commercial level charger, charging 3-7 times faster than a Level 1 charger, taking 2-4 hours to charge the EV fully. These chargers require a more complicated setup as they require a 240V electrical supply (12-80 Amps) and cost more than Level 1 chargers, ranging from $400 to $4500.

Level 3 Chargers: A Level 3 charger is much faster than the other two types, providing 124 miles of charge in about 30 minutes and 249 miles of charge in an hour. These chargers are sometimes called fast chargers, and perhaps the best known are the Telsa FastCharge Network across the United States. The electrical requirement is also much higher, with requirements ranging from 200 to 800 direct current volts (100+ Amps). These units are considerably more expensive than Level 2 chargers at a price point between $15,000 to $50,000 per charger, and not all vehicles can use a Level 3 charger.

With the electrical requirements in mind, we can now determine if the location we have in mind has adequate electrical capacity or if we need to upgrade panels. In addition to the supply, we also have to get the electricity from point a to point b, so the pathway needs to be considered. That may require burrowing under concrete if you are needed to travel under a parking surface. Protip - if you develop properties, talk to the development team now about providing an extra conduit for future EV charging needs, even if EV charging isn’t part of the plan. It’s much easier in the future to run wire through an empty conduit than to install a conduit.

Another consideration is how we will recover the electricity. Depending on the jurisdiction your community s located in, this decision may be impacted by regulations that govern what you can or cannot do. Make sure to check with your legal team. You may also need to review the lease language as well. The two most common options for charger deployment are a dedicated charging station that is exclusive to one resident or common area metered charging stations that residents share; this will impact recovery strategies.

With the location determined and how we are going to handle electricity, we also need to consider the resident’s experience. Just like electricity, this is not a straightforward answer - we need to think about the behavior of EV drivers. People use and “refuel” their EVs differently than those with internal combustion engines (ICE). This is a new consideration for a property manager, previously, the refueling occurred offsite, but now the experience is going to be associated with your property. EV drivers rate charging experiences the same way they rate restaurants and apartment communities. In fact, there are entire online forums in which EV drivers discuss their charging experience - was it slow, did it feel safe (well lit), etc. Just what our properties needed, another online review - but it is happening with or without you.

Let’s spend a moment inside the head of an EV driver…

With an ICE vehicle, we tend to drive the car until we hit a specific spot on the gas gauge, which is our signal to refuel. We don’t pay much attention to that gauge until we are close to that refuel point. At that point, the need to fill up is based on need and price. Everyone is a little different. I refuel at half a tank, others at a quarter. 32% of all ICE drivers actually don’t refuel until the low gas light comes on. The point is we are not thinking about our fuel level until our gas gauge gets close to that level on the gauge that triggers us to start thinking about refueling.

EV drivers think about their car battery charge level a bit more like you likely think about your phone battery level. EV drivers watch the charge level more closely and recharge daily or every other day, typically overnight at home. Overall about 70% of charging occurs at home.

While there are publicly available chargers, these tend to be used most often where vehicles are typically parked for extended periods (i.e., airport parking lots, grocery stores, restaurants, etc.).

This also means shared chargers at a multifamily property are not necessarily viewed the same as personal or assigned chargers. Notice that the behavior of the EV driver is a preference for plugging in at night - and letting the car charge overnight. Again - very similar to how many of us treat our cell phones. That EV driver doesn’t want to get up at 3 am to move their car from a shared charger and try to find another parking space. When that happens, one of two things happens - either EV drivers become less satisfied or simply leave their car at the public charger all night - even though their vehicle may be fully charged.

This means if you assumed with 10% of your residents driving EVs in that 200-unit community, instead of installing 20 dedicated chargers, you installed ten community chargers - potentially, only ten cars will be charging every night.

Here are some other demographics from a study by RCLCO that is discussed in more detail below:

One other EV driver behavior you should be aware of. 46% of EV owners purchase their vehicles without consideration of the availability of Level 3 chargers and assume they can use a Level 2 or even a Level 1 charger. Those same EV owners, however, do look for the availability of charging infrastructure when purchasing a home or leasing an apartment.

So what is the impact on the multifamily owner who ignores the EV Wave?

In a study by RCLCO, Class A and B multifamily properties were evaluated in Los Angeles, Seattle, and St. Louis. In both LA and Seattle, the Class A properties already overwhelmingly offer EV charging stations, and the tenants view these as a necessity, not a perk or amenity. In fact, it is considered a differentiation between a Class A and a Class B property in these markets, according to the RCLCO study. A difference of 20-30% rent premium.

This study also pointed out meaningful revenue streams that real estate owners can extract from charging stations, including EV-equipped premium reserve parking spaces, which command an additional $25-$50 per month in reserve parking revenue. There was also a notable shift in including the charging station purchase and installation costs in common area maintenance expenses recovered from residents. In addition, some jurisdictions provide the ability to recover administrative fees for the actual use of the charging stations themselves.

While you may elect to take a wait-and-see approach, for those proactive real estate owners, there are incentive programs available to help offset the installation of EV Charging Stations. With the recently passed Inflation Reduction Act, these incentives are expected to continue and potentially increase; however, they will not be available in perpetuity. Just as when LED lights first came on the scene, we saw many incentive programs to encourage the adaption of LED lights; however, with market saturation, those incentives have significantly reduced. It just makes business sense to install LED lights, but finding incentive dollars to offset costs is a much more significant challenge. EV chargers will likely face the same cycle; first, incentives will be available to encourage adaption; however, as markets become saturated with EV infrastructure, those incentive dollars will reduce.

You can help reduce the impact of the built environment by sharing this blog with your peers. Together we can impact the 39% of greenhouse gasses attributed to the built environment. It starts with awareness, and we succeed with teamwork.

Stay well!

Thirty Nine

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