Cheap Power, Slow Buildout: Ontario’s EV Charging Paradox vs Los Angeles:

08.22.25

Introduction:

This month, I wanted to dive a bit deeper into North America’s EV charging infrastructure—and understand the economics behind installing chargers.

Coming back from LA, and I noticed something interesting in the EV infrastructure story between Ontario vs California. Despite Ontario having some of the cheapest electricity in North America, its grid of EV chargers is severely lacking. My first thought was this felt backwards. It raised me to ask: why does Ontario, with cheaper electricity, lag so far behind California on infrastructure? If charging costs less here, shouldn’t we see more stations? For example, in Canada, for home charging, the difference is striking. Off-peak charging in Ontario can run as low as C$0.09/kWh—that’s about C$5–6 for a full 60 kWh charge. In LA, the average is closer to US$0.28/kWh, or about US$17–18 for the same charge. Public charging follows a similar pattern as well, with Ontario costs ~$0.2 –$0.25/kWh vs $0.35-0.65!

This is likely the result of Canada’s abundant hydroelectric supply versus California’s reliance on natural gas—but what surprised me was how much more advanced California’s charging network is, despite the higher cost trade-off. This then led me down a rabbit hole to understand why.

Surprisingly, the local cost of electricity has little impact on the pace of EV charging network development. Intuitively, you would think lower electricity prices would be the main catalyst for new infrastructure—after all, it's already cheaper to run an EV in Toronto than an EV in Los Angeles.

However, the reality is that other factors are far more influential. The growth of charging networks hinges more on the strength of government incentives, the effectiveness of public-private partnerships, and solutions to the classic "chicken-and-egg" problem (a lack of chargers deters EV adoption, while a lack of EVs discourages investment in charging). From a funding and policy standpoint, these elements are significantly weaker in Canada compared to a place like California. Furthermore, the costs and returns associated with building out network chargers is incredibility tedious and costly, with high uncertainty. This is what I’ll look at in the sections below.

The Basics:

There are predominantly three main types of EV charging, Level 1–3, each dictated by the amount of power output, speed, and the type of connector. Level 1 is the most basic and takes more time – 5 miles per hour, usually overnight, home use (120V from house). Level 2 is the most common, around 240 volts, 15–80 miles per hour of charge – these are your typical modern home charging stations overnight, at shopping malls, workplaces, public areas, etc. Both Level 1 C 2 chargers are AC charging stations – alternating current (bidirectional, electricity moves both ways).

Finally, Level 3 chargers, DC chargers (direct current), provide electricity that flows in one direction – these are the most important because they are the Direct Current Fast Chargers (DCFC). They can charge an EV in 20–30 minutes from 0–80% capacity (or 100-200miles in 20-30mins).

EV batteries only store DC current, so Level 1 and 2 charging requires onboard AC-to-DC conversion. However, most of the grid provides power through AC current, hence the electricity needs to be converted for the battery to work. In level 3 stations (DCFC), everything is already installed at the source of power, hence, it is already converted to DC before the connection, which is why it is much faster. But this also comes at a cost, in that these stations cost way more to install per location vs level 1 C 2 (by a factor of 8x-10x).

While most EV owners have chargers at home, to be on par with the convenience of ICE vehicles, there really needs a mass infrastructure build out for DCFC chargers, as demand for EVs grow. Another consideration and one that explains why the market is ready for larger scale DC fast chargers is that in the last decade, battery technology has improved significantly as well. Cars today can hold substantially more “juice” than before – see below 2025 EV model capacity:

Lay of the Land – how many chargers are there?

According to Department of Transportation and Government of Canada website – there are currently ~58,000 DCFC (~200,000 in total – level 1,2, 3) for the US and ~18,000 DCFC in Canada (~35,000 in total). This figure has grown at mid-teens since 2017. In Toronto vs LA – the number of DCFC are roughly ~5000 vs 13,000, respectively. The market is dominated by 4 players, Tesla,

Electrify America, EVgo, ChargePoint and a bunch of smaller mom C pops, with market shares in the range of ~53%, ~10%, ~8%, ~7%, and ~22%, respectively. This market data is collected based on the actual number of chargers they have in Q2, 2025. In Canada, TSLA still dominates, but the smaller players like PetroCan C IVY are also meaningful contributors, as they have the OnRoute partnerships. Understanding who controls this infrastructure is key, because consolidation at the top explains why new entrants’ struggle. With four players controlling roughly ~80% of the market, EV charging is a very difficult business to enter—ROI is slim, capital intensity is high, and the cost to scale is significant.

On top of that, battery technology is evolving quickly. Each leap forward in EV batteries forces the charging infrastructure to keep pace, which only reinforces consolidation as the few players with the scale and resources to adapt gain further advantage.

Outside of Tesla, it’s worth noting that companies like EVgo are still unprofitable (they have been doing this for more than a decade). Although, that doesn’t necessarily make them bad investment, though. In fact, I would argue, it highlights how public–private partnerships and deep technical

know-how can become entrenched advantages over time. The longer these companies operate, the more institutional expertise they build around efficiency and deployment. The hope is that, when mass adoption eventually hits, the market may well resemble a monopoly/oligopoly structure—with a small handful of players dominating the charging landscape. The challenges to sustain this type of business will become clearer as we examine the costs below.

Costs to developing EV Infrastructure:

Coffee drinkers and EV drivers have something in common: a range of options for “fueling up.” You can make it at home with a basic setup, or you can buy from a specialty shop where the price reflects not just the raw ingredients, but also the equipment, packaging, staff, and retail space.

It’s the same with EV charging. Most people assume the cost is just the electricity rate per kWh, the same everywhere. But it’s not that simple. Costs change depending on the type of charger, where it’s located, the local utility rate structure, even the time of day and utilization (how many

customers use that station). That variability is at the heart of EV infrastructure economics—each level of charging carries different cost dynamics.

Fast charging is closer to buying roasted coffee instead of raw beans—you’re paying a premium for speed and convenience. That price covers better equipment, rent for prime sites, heavy utility demand charges, and the people and systems needed to keep the network running.

And just like roasting your own beans at home is almost always cheaper than buying from a professional roaster, home charging is nearly always cheaper than public fast charging—because public networks must recover all those extra costs in the price.

Why DCFC is more “premium” vs. L1 and L2:

Level 1 charging is simple: plug into a standard outlet, like a lamp or blender, and wait 15–20 hours for a full charge. Level 2 is faster—4–8 hours—but requires a 240V outlet (like a dryer) and a home- installed charger. The economics are straightforward: low equipment cost, easy to recover over time – and hence, substantially cheaper. When I spoke to several friends with a Tesla, most have home chargers, but the most common frustration comes when they travel to other urban areas where parking C fast charging is difficult to find.

DC fast charging is an entirely different story. These stations require specialized high-powerequipment capable of delivering up to 1,000 volts and 500+ amps. Inside a single 50kW unit, there can be 2,000+ components versus fewer than 200 in an L2 charger. They need complex AC-to-DC conversion systems, advanced safety protocols, constant monitoring, and compliance with multiple vehicle and safety standards. Development alone can take 2–3 years plus another year of certification. For investors, this explains why DCFC economics are tough: high upfront cost, long development timelines, and slim margins until utilization scales. See below, data from RMI charging. You can see below that even on the low end, its ~100k-150k per charger. Each station typically has 4-8 chargers, hence it’s ~$150k per unit, or $600k–$1.2M for a 4–8 charger station.

On top of that, siting and construction face utility approvals, local permits, and regulatory reviews, each adding cost and delay. Hence for building and scaling DCFC, it is much more capital intensive, highly complex, and slow-moving compared to L1 or L2.

Just to give an idea of how much energy is used at the DCFC charging stations, according to the EIA, a station with four 50kW chargers running at just 35% utilization consumes as much electricity in a year as 35 U.S. homes. Scale that up to four 150kW chargers and it’s equivalent to 100+ homes, and with four 350kW chargers the load matches a neighborhood of more than 230 homes. From a solar perspective, the comparison is even starker: supplying a 4 × 150kW charging site would require a photovoltaic array 47 times larger than the footprint of the chargers themselves.

Furthermore, not only is it more energy intensive, but unlike traditional project finance or infrastructure investments—think buildings, roads, or utilities—where investors can model cash flows with a fair degree of confidence, you can’t reliably predict the demand for EV charging. Combining these points, you get a really challenging problem that makes it difficult to attract private capital from investors. Which is why, partnerships between private-and-public entities play a strong role to supplement the industry. In Canada, for every dollar of public funding, it attracts 1.7x from private investments vs US at around 1.4x – Data from Department of Transportation, 2025 C Office of Canada Governer General.

Unit Economics:

Now that we have a basic understanding of the different cost structures, lets look at the unit economics of setting up a charging station. Major components:

• The cost of electricity – this is the price of electricity paid by the operator (Tesla, EVgo, Electrify America), which is typically a mix of wholesale energy costs +additional utility fees.
• Utilization – this is the number of customers or EV drivers that are going to a particular location where the station is located. The higher the throughput, the more revenue per fixed cost base, which is critical for profitability.
• Demand charges – special utility fees based on the maximum power drawn at once. For DCFC, these can account for 30–50% of monthly operating expenses, since fast charging pulls extremely high loads in short bursts.
• Fixed operating expenses (OPEX) – recurring costs such as site rent, insurance, maintenance, networking, and customer service (things like payment, software etc).
• Capital expenditures (CAPEX) and depreciation – the upfront cost of buying and installing chargers, performing grid upgrades, and securing permits. Spread over 7–10 years, this remains one of the largest cost buckets and creates high barriers to entry.

Using this McKinsey example: Assume 1 station DCFC with 4 chargers (150kW each), Utilization is ~15% (or ~7-8 charges at that site per day), average US electricity costs ~$0.35-0.65 kwh to sell (600,000kWh×$0.45/kWh≈$270,000per year revenue), (600kwh x 0.2kwh is the whole sale price operators purchase at = ~120k per year) – see below:

The figure above really shows the challenges associated with the cost of running a charging station in the US, and without the subsidies, you can see that it is very difficult to achieve the positive operating margin. Even with the wholesale purchase price of electricity at ~$0.2per kWh (which is half of what they are selling back to the customers at), it’s really the peak demand charges (which is~9kW across average states, according to RMI C ChargePoint) and large capex that really hurts the business model.

What is different for Canada:

As mentioned in the beginning, and the reason I investigate this, is that Canada has cheaper energy costs (~$0.09per kwh) vs US, particularly Ontario vs California. Furthermore, in 2025, the Ontario Energy Board (OEB) is launching a new Electric Vehicle Charging (EVC) Rate, which sharply lowers demand charge exposure for eligible DCFC operators. The EVC rate is 17% of the standard Retail Transmission Service Rate (RTSR) for similar-sized users (~50 kW–5,000 kW). This is quite incredible because if you look at the scenarios in the US, the OEB addresses the key challenge in 1) lower wholesale electricity and 2) peak demand rates, putting a cap on it at ~17% the standard rate. Looking at the figures below: assuming the same constraints as the US scenario, but with cheaper electricity (~$0.09) C EVC rates caped at ~17% for peak demand charge, you can see that an EV operator can generate a good level of operating margins, just with playing around with the peak demand +subsidies.

Conclusioning thoughts for Ontario/Canada –

So, despite the 1) cheaper energy costs and 2) the capped EVC rate, the million-dollar question remains is why isn’t there still more infrastructure in Canada – specifically in Ontario? In fact, if you compare Toronto to Los Angeles – where the ratio is 20:1 vs 10:1, respectively, number of EVs per charger). And the answer is that while Ontario has structural advantages, the utilization rates are still low due to lower EV density (1/10 vehicles sold is ZEV vs 3/10 in California). As well, funding is limited, Ontario has plans for ~$180mn in commitments for several years vs California’s ~$1.5

billion (although this has changed since the new administration). Lastly, the income levels in Ontario does not compare to that of California, and because the cost of EVs still have high price points, it’s a tough consideration for the average family (this is not considering the challenges experienced in the winter), and hence, for these reasons, you have less adoption.

However, giving what I have learned, I still believe that the economics are naturally more attractive here in Canada, and once you start to introduce EVs at ~sub 30k, the adoption rate should increase substantially over the years. Hence, for operators, Ontario has strong proposition to make them become monopoly like businesses in 15-20years should they decide to invest heavily now. Once the networks are built, the ROI dynamics are so tough that few others will enter, creating a concentrated, defensible market.

References:

California Energy Commission. (2022). California Energy Commission approves $1.4 billion for zero-emission vehicle infrastructure. Retrieved from https://www.energy.ca.gov

Electric Autonomy Canada. (2022, March 9). Understanding demand charges for EV charging. Retrieved from https://electricautonomy.ca

Government of Canada. (2023). Zero Emission Vehicle Infrastructure Program (ZEVIP). Natural Resources Canada. Retrieved from https://natural-resources.canada.ca

Government of Ontario. (2024). ChargeON program: Building Ontario’s EV charging network. Ontario Ministry of Energy. Retrieved from https://news.ontario.ca

Hydro One. (2023). Connecting electric vehicle charging stations to Hydro One’s distribution system. Hydro One Networks Inc. Retrieved from https://hydroone.com

International Council on Clean Transportation (ICCT). (2019). Quantifying the electric vehicle charging infrastructure gap across U.S. markets. Retrieved from https://theicct.org

International Council on Clean Transportation (ICCT). (2020). Charging infrastructure requirements to support electric ride-hailing in U.S. cities. Retrieved from https://theicct.org

Kenan-Flagler Business School, University of North Carolina. (2024). High-powered charging and EV economics: Understanding demand charges. UNC White Paper. Retrieved from https://www.kenan-flagler.unc.edu

McKinsey C Company. (2022). EV fast charging: How to build and sustain competitive differentiation. Retrieved from https://www.mckinsey.com

Natural Resources Canada. (2023). Canada’s electric vehicle infrastructure statistics. Retrieved from https://natural- resources.canada.ca

Ontario Energy Board. (2024). Electric Vehicle Charging Rate design decision (EVC Rate). Retrieved from https://www.oeb.ca

Plug In America. (2023). Understanding demand charges. Retrieved from https://pluginamerica.org

Power Magazine. (2023). The demand charge dilemma at EV charging stations. Retrieved from https://www.powermag.com

Rocky Mountain Institute (RMI). (2020). Reducing EV charging infrastructure costs. Retrieved from https://rmi.org

U.S. Department of Energy, Alternative Fuels Data Center (AFDC). (2025). Electric vehicle charging station counts by state. Retrieved from https://afdc.energy.gov

U.S. Department of Transportation. (2022). National Electric Vehicle Infrastructure (NEVI) Formula Program guidance. Federal Highway Administration. Retrieved from https://www.fhwa.dot.gov

Veloz. (2025). EV Market Sales Dashboard. Retrieved from https://www.veloz.org/sales-dashboard

Vehicle Innovation Network (VIN). (2024). EV adoption and charging ratios in Canada and U.S. Transport Canada C VIN analysis.

Xu, J., C Harvard Business School Battery Innovation Group. (2023). Reliability of public EV charging networks in North America. Harvard BIGS Working Paper.

Disclaimer

I do not own shares of TSLA or EVGO.

This blog (aka "coconutgrapefruit") is for informational and educational purposes only and does not constitute investment advice. I am not a licensed financial advisor. All views are my own and based on personal research, which may be incomplete or inaccurate.

Investing involves risk. Always do your own due diligence or consult a professional before making any investment decisions. I may hold positions in securities mentioned.