The growing electric car market provides landlords with the opportunity to station charge points on their land, generating new lines of income. But what are the pitfalls?
The market for electric cars
Sales of electric cars in the UK have risen over recent years. From just a few thousand in 2012, there are now around 90,000 electric cars on the UK roads. Electric cars comprised 1.29% of overall car registrations this year up to October 2016.
The environmental benefits of electric cars are clear: carbon monoxide, nitrogen dioxide, hydrocarbons and other noxious substances make fuel powered engines a direct cause of adverse respiratory conditions. Nevertheless the adoption of electric cars by the mass market has been hampered by many factors, including: (i) cost; (ii) lack of choice; (iii) undeveloped infrastructure to support charging.
Some of these obstacles are being addressed. For consumers, there are financial incentives in the form of grants, vehicle excise duty concessions and for businesses, capital allowances are available. Car manufacturers are increasing their range of vehicles too, with the current UK best sellers being the Nissan Leaf, Mitsubishi Outlander, BMW i3, Renault Zoe and Mercedes Benz C350e.
However this is a “catch 22” situation in that car manufacturers would be more likely to invest in electric models if there were more buyers in the market, but consumers may be discouraged by the insufficient number of conveniently located charge points.
It was reported on 29 November 2016 that several large car companies (including BMW, Daimler, Ford and Volkswagen) have signed a memorandum of understanding to develop an electric vehicle charging network across Europe. Although it is unclear how this initial step will develop and in fact the arrangement would still be subject to regulatory approval, there is certainly a need for collaboration to ensure that there is uniformity of charging technology and a need for funding to provide some momentum to the development of infrastructure.
Charge Points – Practical Considerations
For a landowner, this growing market provides an opportunity. There are a number of suppliers in the UK market who can install charge points on your land. This is typically achieved by granting a lease to the owner of the charging equipment. This will provide a landowner with a revenue stream for a fixed term but may also have other advantages if the landowner owns a business that has other on-site services for sale, as it would attract new customers with a little spare time whilst they wait for their vehicle to charge up. This would suit retailers and restaurants for example.
If your site is suitable for the installation of an electric vehicle charge point, there are a number of commercial points to consider:
- Who pays for the cost of installation? Suppliers may offer free installation, which will be attractive, but this may have an impact on the flexibility to move the equipment or terminate the lease, as the supplier will expect to recoup capital expenditure and anticipated income.
- What payment will you receive? It is common for the payment under the lease to be a percentage of the electricity sold from the charge point. Landowners would wish to see the anticipated usage to understand what this payment is likely to be. There may be alternative payment structures too, which could be explored.
- Who is responsible for the equipment? From an estate management perspective, landowners will need to establish obligations relating to the maintenance of the equipment, to preserve the physical appearance of the site but also to ensure that the equipment is promptly repaired so as to maximise income (where income is a percentage of usage).
- What insurance arrangements do you need to consider? It will be important to clarify the parties’ respective insurance obligations and to assess what changes may be required to existing insurance terms. Landowners will also wish to ensure they are indemnified in respect of damage caused to their land or loss suffered due to actions of users of the equipment.
- How can you terminate the arrangement if you wish to redevelop the land? This is a key consideration for all landowners to preserve value and future opportunity. It is likely that a compensation obligation will be attached to exercising any right to relocate or remove the equipment, given that the supplier will strive for some certainty as to its own income. Whilst the level of compensation might naturally be a focal point for negotiation, equal importance should be attached to ensuring that the provisions that allow the equipment to be re-located provide a clear mechanism with suitable time limits so that any future re-development can be planned with certainty.
For further information please contact Vijay Patel, legal director
T: 020 7653 1611 E: firstname.lastname@example.org
 The commentary refers to plug-in cars only, not hybrid.
 Figures published by the Society of Motor Manufacturers and Traders
 The need for planning permission and any title restrictions would also need to be considered.