Home charging has loan add-on potential

Could a home electric vehicle charger be the latest add-on product at auto dealerships? Charger startup Treehouse and its backer Assurant see potential there, and some lenders have already been willing to bundle the cost of the hardware and installation into an auto loan.

Tenet Energy Inc., which serves as a depreciation-calculating, automated loan application review intermediary for lenders seeking to offer EV loans to consumers, announced a partnership in July to add Treehouse chargers into the auto loans it manages.

"We see some very early consumer demand suggesting that this is the right thing," Treehouse CEO Eric Owski said. He said his company plans to partner this year with a second business on EV chargers integrated into vehicle deals.

Kevin Favro, co-CEO of EV lending startup EV Life, said his company isn't financing chargers along with EVs yet — but it will, and the need will be greater once his company moves beyond direct lending to partnering with dealerships.

"The charger is definite next-frontier for us," Favro said.

Tenet CEO Alex Liegl said some consumers purchase an EV without thinking about how they will charge it. In addition, while a motorist can buy a home charger on Amazon, arranging its installation can be difficult for a consumer, he said. Tenet has sought to eliminate that stress and offer an all-in-one package at the point of purchase.

"I think it's a great idea," Ritch Wheeler, a finance and insurance trainer and president of Eagle Training Academy, said of adding home chargers to the auto deal. "If we can get the lenders in line with letting consumers bundle those into the sale and the financing of the vehicle, it's going to make it a much better experience for the consumer."

Wheeler called such a transaction both an opportunity for the dealership to sell another product and for a lender to make another connection with a customer. "It can be a win for everybody," he said.

Treehouse also sells chargers directly to consumers, but Owski said the future lies in vehicle chargers purchased with the vehicle rather than consumers buying the charger before shopping for an EV.

"We think this is the way it has to be," he said.

An EV owner can plug their vehicle into a standard 120-volt wall socket for Level 1 home charging, but a Level 2 charger using an 240-volt outlet, such as the one on a dryer, is faster and more popular. Eighty-five percent of regular EV charging is done at home, and 68 percent of EV owners use wall-mounted Level 2 chargers, according to J.D. Power.

Owski said Treehouse's average home charger order is about $1,850, and Tenet estimates consumers generally spend $1,000 to $2,500 on a home EV charger, including installation and permitting. That cost is in the ballpark of other F&I products or physical vehicle add-ons financed along with the vehicle in a single auto loan.

With the average EV financed in Tenet's loans costing around $50,000, adding a charger doesn't cause the loan-to-value ratio to swell to an uncomfortable amount for a lender, Liegl said.

"Fortunately, it's not a huge amount," he said, adding that Tenet's lender partners have agreed to and support such additions.

Liegl said a charger offers "a lot of value" to a lender in the event of a repossession — unlike solar panels on a rooftop, which have less value than the cost of removing them after a consumer default.

John Luciano, owner of Street Volkswagen in Amarillo, Texas, said his dealership attaches a $650 home charger and $350 installation to every EV deal.

Street Volkswagen sells the $1,000 package at cost, and he said its partner lenders accept its inclusion within the auto loan just as they fund physical add-ons to the vehicle.

"They're good with it," he said.

Financing the charger could be critical for some consumers to make the switch to EVs. Owski noted that EV shoppers today tend to be more affluent buyers, but a rollout of EVs with sticker prices below $35,000 will attract an audience more sensitive to the cost of installing home charging.

"We think ... that financing is going to be a really critical part of removing an affordability barrier," he said.

Treehouse home chargers are only available in California and Arizona, but the company said Aug. 9 that it plans to expand to more than half the states within 12 months thanks to a recent $10 million fundraising round. Backers included investment firm Automotive Ventures; used-car retailer and lender CarMax; and Assurant Ventures, the investment arm of F&I product provider Assurant.

"As consumers transition to EVs, the charging infrastructure question remains paramount — with many looking for more home charging solutions," Assurant Global Automotive President Martin Jenns said in a statement. "We believe our dealer clients have an opportunity to connect their customers with charging options. One of the ways we're approaching this is by investing in innovators like Treehouse ... to make home EV charger installation simpler."

A CarMax spokesperson said she couldn't comment further on its strategy behind the investment, but "I can share CarMax remains focused on the intention to become the leading retailer of used EVs in the industry."

Treehouse plans to gain dealership adoption by treating its chargers like any other F&I product or accessory attached to the deal, Owski said. The company calculates and guarantees the price of the charger and installation at the point of sale.

"By guaranteeing pricing at the point of sale, that creates space for the dealers to generate additional gross profit," he said.

Owski said it's typically the sales department, not the F&I office, that has been discussing chargers with consumers, and Treehouse sees that as the best place to make the sale. Customers considering an EV might have questions about home charging, and sales staff will need to answer them.

"By the time you get to a finance manager, you're often too far downstream in the customer journey," he said. The topic of charging has already come up multiple times during the sale, he said.

However, Owski said he didn't think chargers would be the universal domain of either sales or finance, and Treehouse also had launches pending within the next 90 days where charger sales would be "primarily finance-led."

At least one major national auto lender has been financing chargers. Others didn't rule out the idea.

Stephanie Scorzelli, a spokesperson for Chase Auto, said the company offered consumers "an option to finance at-home charging stations when they finance their vehicle with Chase, the cost being included in the loan-to-value calculation."

Wells Fargo spokesperson Nicole Huseonica said her bank didn't have anything to share on financing home chargers, but "it is something we are thinking about."

Ford offers consumers $1,310 and $799 Level 2 home chargers. Craig Carrington, executive vice president for Ford Credit North America, said the captive finance company was considering financing such a product.

"The regulatory environment for financing varies by state, and we are learning along the way," he said in a statement. "Nobody buys a car and a gas pump, so in some places the law does not imagine anyone would finance the fueling system along with a vehicle.

"We are in the early days and the framework is not yet fully established."