Multifamily Housing Needs EV Charging. This startup will pay for it.

“This story was originally published by Canary Media .”

3V Infrastructure is self-financing EV charging at multifamily properties, betting that the rewards of selling at-home charging at scale are worth the up-front risk.

Aubrey Gunnels, CEO of 3V Infrastructure , understands the risks involved in installing and owning EV chargers in thousands of apartment building garages and condominium parking lots. She also sees the opportunity.

Just look at the statistics. By 2030, EVs are expected to make up close to half of all new U.S. car sales . Today, roughly 80% of EV charging takes place at home, and roughly one-third of Americans live in multifamily housing . But only 5% of U.S. multifamily housing offers on-site EV charging, according to CBRE, one of the world’s largest property management companies and a 3V Infrastructure partner .

“People really prefer to charge at home,” Gunnels said — and they’ll want to live in apartments or condos that offer that option.

Tenants don’t pay to install EV charging, though — property owners do, and they aren’t in the business of financing, installing, or operating complex EV charging projects.

That’s where 3V Infrastructure comes in, Gunnels said. Since launching last year, the New York–based startup has raised up to $40 million from an affiliate of Greenbacker Capital Management to finance charging installations in properties across the country. With big-name customers like Camden Property Trust and Bridge Investment Group , 3V is installing chargers at hundreds of sites in 17 states, and hopes to expand to thousands by 2030, she said.

Getting big is key to 3V’s business model, Gunnels said. Many “charging-as-a-service” offerings for multifamily properties already cover the cost of chargers in exchange for monthly fees or other payback structures. But 3V isn’t asking property owners for any money at all, she explained — just a 10-year contract to let it build chargers on the site and charge customers for using them.

That means it’s up to 3V to pick the right properties, install the right number of chargers in the right locations, keep them in good working order, and decide how much it needs to charge users to make its money back.

“We’re taking early risk with the EV driver adoption rate at each site,” Gunnels said. “And once we’re profitable, we share the profits with the property owner — and that helps allow us to maintain the chargers.”

A business model for EV chargers to match the market’s evolution In that sense, 3V’s business model more closely resembles that of the public charging operators that rely on electricity sales to earn back their up-front costs. That’s inherently riskier than getting someone to pay you to install and operate EV chargers — and so far it’s a rarity in the world of multifamily EV charging developers.

It is, after all, still early days for the EV charging industry. The first public charger deployments were boosted by significant government or utility incentives to make up for the fact that there weren’t enough EVs on the road to reliably finance their costs.

But up-front incentives aren’t a good mechanism to ensure that chargers keep performing over the long haul. In fact, EV chargers have a long and troubled history of not working when drivers need them to. This is a well-publicized problem with public chargers, but it’s affected multifamily properties as well.

“As we all know, the statistics about EV charger uptime are not great. A lot of those chargers may be not functioning,” said Mark Kerstens, vice president of EV charging solutions at CBRE. That’s certainly true for the earliest rollouts of multifamily charging, many of them undertaken by property owners themselves.

CBRE manages and advises multifamily property owners around the world, and works with a number of chargepoint operators, including 3V, for those looking to install EV charging, Kerstens said. Some property owners have taken on charging installations and operations on their own, he said. But most are simply looking for a way to not be left behind in a market that’s constantly seeking out new amenities to draw in tenants and residents.

How badly property owners feel they need EV chargers depends on where they are and what type of tenant they want to attract, he said. He sees the overall market as shifting to the point where it could be “a negative differentiator, if you’re the only multifamily property that does not have an EV charger.” And for many property owners, “it’s just like a vending machine in the rec room — they don’t want to do it themselves, they’d rather have a service provider.”

CBRE’s EV charging partners run the gamut from all-in risk-takers like 3V to a range of “as-a-service” models that charge monthly fees or arrange cost- and revenue-sharing agreements with property owners, he said. What’s paramount, he said, is that the chargers work properly — and “there’s quite a bad track record for those who’ve tried to do it on their own.”

The same concern applies to charging provided by a third party, said Clark Longhurst, president of commercial markets at SitelogIQ , the company working with 3V on its projects with Bridge Investment Group. SitelogIQ has decades of experience installing LED lighting, building controls, and other energy-efficiency projects in multifamily housing. EV charging is a relatively new addition to that roster — and “there’s a longer list of people who will do it ‘as a service,’” he said.

But EV charging for multifamily properties has had some serious problems. Early projects were plagued by chargers that couldn’t receive wireless control signals in concrete parking garages, low-cost chargers that companies failed to repair promptly when they broke, and other issues, he said.

“I don’t want to hand this over to someone who will provide a bad experience – that’s bad for me as a property owner,” Longhurst said. Any provider of charging as a service “needs to have the same incentives — or maybe more incentives — than you have as an owner to ensure the charging works, that it’s done without friction, and if there’s a problem it’s handled quickly.”

Multifamily property owners also have to consider the risks of taking responsibility for charging infrastructure that could end up being abandoned as companies exit various markets, said Larsen Burack, EV charging product manager at analysis firm Ohm Analytics. His company’s latest report on the U.S. multifamily charging space indicates how many choices exist, from multifamily specialists such as Swtch and EverCharge to large-scale public charging providers like ChargePoint and Tesla . But those choices have also included companies like Enel X Way that abruptly exited the market and stopped supporting customers.

“Options like the 3V model are intriguing for property managers because there is no up-front capital cost and can be seen as relatively low risk,” Burack said. At the same time, “this is still a volatile industry, and if a company shutters, you risk having another Enel X situation on your hands.”

Scaling up multifamily charging infrastructure Gunnels conceded that 3V’s customers will need to have faith in its ability to execute on its 10-year contracts. She also highlighted that the company doesn’t rely on government subsidies for its projects to be profitable, and takes a conservative approach to forecasting utilization — the critical metric of how often chargers are used, and thus how quickly they can pay back their costs and earn profits.

That’s important for aligning the long-term incentives of the charging business, she believes. “Many of the stranded chargers we have across the nation are not a product of hardware or software [issues] — it’s really the economics,” she said. “If someone’s not incentivized to make sure the chargers work, they’re not going to work.”

3V’s conservative approach may limit the scope of markets and properties that the company goes after. ”We don’t believe every multifamily building has to have an EV charger in the next five years,” she said, even if most will eventually need them. 3V will also limit how many chargers it installs at each property during its initial deployment phases, as the company tests its utilization forecasts against reality.

The key to success, Gunnels said, is scale and diversity. Each individual project may be relatively small — costing, say, between $30,000 to $100,000 to install up to 14 Level 2 chargers per property.

Luckily for 3V, it’s easier to predict utilization for multifamily properties than roadside and public charging. So said Quinn Pasloske, a managing director of the Greenbacker investment fund that supplied 3V with up to $40 million going into its first round of investments.

“Historically we’ve been very averse to taking utilization risk. This has been the third rail” for investors in the charging sector, he said. Roadside charging, for instance, runs the risk of too few EVs showing up to pay back its up-front or ongoing costs — or the risk that another charging station will open across the street and steal its business.

“But when there’s charging at home, people charge at home,” he said. “Now, all of a sudden, you have captive demand. Even though you are taking utilization risk, you can measure and modulate that so much more carefully.”

To be clear, that dilution of utilization risk works best at large scales, he said.

“You cannot be doing this on a property-by-property basis,” Pasloske said. “You need scale — it needs to be over $100 million, and to get to really attractive costs of capital, over $500 million. And you need a lot of diversification.”

“But once we have scale, the cost of capital comes down dramatically,” he said. That’s because these kinds of projects can be bundled into portfolios and sold as asset-backed securities — a class of investment that can include anything from home mortgages and credit card debt to residential solar projects.

“The market is very good at understanding the risk of distributed assets, even if these assets are high risk,” Pasloske said.

3V’s eventual success relies on achieving that level of scale, Gunnels said. It’s not there yet: “We are using equity to invest in this, so the cost of capital is high. But we have enough data to show that utilization is dependable,” she said — and “we know we have to be at thousands of properties to make this model work.”