EV charging entry: clarify which business you are assessing

Start with the offer:

“Are we assessing home-charger installation for households, public charging stations, or both?”

The interviewer replies:

“Home-charger installation and servicing, sold directly to households. Public stations are outside this decision.”

That answer changes the revenue model. You should investigate installation jobs, price per job, hardware and labour costs, customer acquisition and ongoing service work. Charging sessions and electricity sold per public station are not the main revenue drivers of this offer.

Separate home access from public charging needs. The number of EVs alone does not establish how many households can or need to install a charger.

Ask:

“What financial result and investment limit should the entry meet?”

Suppose the new business must generate positive annual operating profit by year three, with no more than €2 million invested before then.

These are two tests. A profitable third year does not prove the business stays within its funding limit on the way there. Nor does staying within the funding limit make a persistently loss-making offer attractive.

Confirm what management includes in the investment cap if it becomes important: equipment, setup spending, operating cash losses and working capital can all consume funding. Do not assume “investment” means only tools and vans.

A useful transition is:

“I’ll estimate the installation and service demand we can win, test year-three operating profit, and build the funding requirement through launch and ramp-up against the €2 million cap.”

The relevant market is not every EV owner in the Netherlands. Start with households that can install a charger, then identify those needing a new installation during the period and those the company can realistically reach.

A household may already have a suitable charger. A driver may live in a property without a viable installation location. Several vehicles may share one home charger. These facts affect the number of installation jobs.

For a fictional local opportunity, suppose 20,000 households in the company’s service area are both technically suitable and expected to need an installation over the next year. If the company can win 10%, that creates 2,000 jobs, subject to delivery capacity.

For the delivery-capacity check, assume two completed installations per crew per working day and 200 working days a year. At those rates, one crew can deliver 400 jobs a year. Two thousand jobs require five fully productive crews. Travel, training, complex properties and callbacks could reduce that productivity, so check whether the stated rate already includes them.

Demand you cannot install on time is not a completed sale.

Assume the company receives €1,400 per completed installation. Hardware, direct installation work and expected warranty service cost €950. Customer acquisition costs another €150 per completed customer.

Contribution is therefore €300 per installation. With €450,000 of annual fixed operating costs, the installation business breaks even at 1,500 jobs a year, before any separately modelled servicing revenue.

At 2,000 jobs, annual operating profit is €150,000. At 1,200 jobs, it loses €90,000.

The calculated sensitivity table compares the 2,000-job opportunity with a hypothetical 1,200-job downside and the 1,500-job break-even point. These are volume scenarios, not three demand forecasts.

The entry decision is now tied to a concrete question: can this company reach and serve enough customers at the assumed contribution by year three?

Do not add service-contract revenue automatically. Establish how many customers buy it, when it starts and what it costs to deliver. If the installation price includes a warranty, those obligations already belong in the installation economics.

Suppose tools, vehicles and setup require €900,000, cumulative operating cash losses before profitability are €700,000, and peak additional working capital is €300,000. Under a case definition that includes all three, funding reaches €1.9 million.

That leaves only €100,000 under the €2 million cap. A supplier requiring larger deposits or a slower customer-payment cycle could breach the limit even if year-three operating profit remains positive.

I would test the timing of these cash needs, rather than simply adding every balance from different dates. The €1.9 million figure assumes the stated losses and working-capital requirement coincide at the funding peak. A month-by-month cash schedule would show whether that assumption holds.

This is the practical consequence of asking about the investment hurdle at the start.

Now imagine the interviewer says the client will own public fast-charging stations instead. The structure needs site economics, power availability, utilisation, electricity margins, maintenance and a much different investment model.

Keeping the household-installation structure would be a failure to use the answer, even if the underlying industry is still EV charging.

Try the market-entry case-opening drill. Define the offer, customer and commitment before estimating the opportunity. The market-entry framework guide shows how to carry those answers through the rest of the case.