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If you spot a Tesla on the road, you may be impressed by the sleek style of the car, but have you ever wondered how you could take an electric car like that on a road trip? The answer lies in EV charging stations. As electric vehicles continue to grow in popularity, the demand for these stations is on the rise, making it a hot sector for investors.

What Is an EV Charging Station?

An EV charging station is essentially a gas station for electric vehicles (EVs). While most EV owners have charging stations at home, there are tens of thousands of public and workplace charging stations across the country. These stations serve the purpose of recharging the batteries of electric cars.

Think of it like recharging your phone. Just as you might have a phone charger at home but also carry one with you to the office, having a residential EV charger while still having access to public charging stations or an EV charging station at your workplace is ideal.

Are EV Charging Stations Good Investments?

Investing in EV charging stations can be a smart move as the market for EVs and the accompanying infrastructure continues to grow. Electric cars accounted for only 0.2% of all car sales in the United States in 2011. By 2021, that number had swelled to 4.6%. Some projections even suggest that EV sales could make up as much as 52% of all car sales by 2023.

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Apart from environmental concerns, cost savings are also driving the shift to EVs. Studies show that EVs can save drivers up to $12,000 over the lifetime of the vehicle. Fuel savings alone can amount to $4,700 or more in the first seven years of ownership.

Additionally, government policies offer further incentives for EV buyers. The Infrastructure Investment and Jobs Act provides a tax credit of up to $7,500 for EV buyers until 2032. The same bill has also allocated $7.5 billion to build out national EV charging infrastructure.

Given the personal benefits, cost savings, and ongoing improvements in affordability and battery life, it’s clear why investors see EV charging stations as a wise investment.

How to Invest in EV Charging Stations

For business owners, investing in EV charging stations can be a wise move. Although they can be expensive to install, the Infrastructure Investment and Jobs Act has set aside $1.5 billion to help states build and expand their EV charging networks. Look into your state’s EV charging station plan to see what assistance is available to you.

Once you’ve set up your charging station, you can charge drivers for the electricity they use to recharge their cars, following a business model similar to that of a gas station. Moreover, having an EV charging station can also generate income in less straightforward ways. For instance, if you own a restaurant and decide to install a charging station, a driver on a road trip looking for a charging station may see your restaurant nearby and decide to charge their car while grabbing a bite to eat. This strategy can be applied to various retail establishments, including shops, bars, convenience stores, and more.

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If you’re not a business owner or don’t want to create and maintain your own EV charging station, there are other ways to invest. You can invest in companies that create and sell charging equipment and technology, such as Tesla, Chargepoint, or Tritium, by purchasing stock. Another option is to invest in EV-related mutual funds or exchange-traded funds (ETFs).

The Bottom Line

As EVs become more popular, the demand for charging stations will continue to rise. Business owners who invest in EV charging stations can enjoy an additional revenue stream, increased foot traffic, and a new customer base. Individual investors who see the promise of the sector can buy into the market through stocks or ETFs.

If you’re considering incorporating green investment strategies into your portfolio but need advice, consider talking to a financial advisor. SmartAsset’s free tool can match you with up to three vetted financial advisors in your area. Find the right advisor who can help you achieve your financial goals today.

Photo credit: ©iStock.com/Marcus Lindstrom, ©iStock.com/Brothers91, ©iStock.com/Teamjackson

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