Articles

In our previous article, we explored the rental model for Electric Vehicle (EV) charger installations, where operators lease parking bays from property owners for a fixed fee. While this model remains commonly used, there are alternative arrangements being adopted across the industry. One such model is the gross profit or revenue-sharing model, which offers a different structure for collaboration between EV charger operators and property stakeholders.

As of 31 December 2024, Malaysia has installed 3,611 electric vehicle charging bays (EVCBs), comprising 2,516 AC chargers and 1,095 DC charger. This figure falls way below the national target of 10,000 EVCBs by the end of 2025, emphasizing the continued relevance of exploring various commercial models as the industry evolves.

Introducing the Revenue-Sharing / Profit-Sharing Model

As an alternative to the fixed rental model, some industry players have adopted a revenue-sharing or gross profit-sharing model, where the EV charger operator shares a portion of the revenue or gross profit derived from the use of the charging facilities with the property owner or management entity. This arrangement can be structured in various ways, including a fixed percentage of revenue or tiered sharing mechanisms.

This model allows property stakeholders to participate in the financial upside of the charging operations without bearing the upfront infrastructure costs. It also offers operators a flexible way to access strategic locations while aligning commercial terms with actual utilisation of the facilities.

Key Terms in Profit/Revenue Sharing Models

Tenure: Typically governed by an agreement with an initial term ranging from 3 to 5 years, often with provisions for renewal. This allows both parties to establish long-term operational viability and revisit commercial terms based on actual utilisation and performance.

Revenue/Profit Share Structure: The arrangement generally involves the operator sharing a fixed percentage of the gross revenue or net profit generated from the EV charging services with the property owner. The sharing ratio may be structured as a fixed percentage throughout the term or implemented on a tiered basis, with different percentages applying based on monthly revenue thresholds.

Payment Frequency: The operator is commonly required to remit the applicable share, whether based on gross revenue or net profit on a monthly basis. Each payment is typically accompanied by a statement detailing usage metrics, total revenue collected, deductible costs (where applicable), and the resulting amount payable to the property owner or management entity.

Operator Obligations: Typically include the design, installation, operation, and maintenance of the EV charging infrastructure, ensuring compliance with all applicable laws and technical standards, maintaining public liability insurance, and providing monthly reporting to the property owner or management.

Property Owner or Management Obligations: Usually include granting a licence to use designated areas within the premises, ensuring access to electricity supply, and facilitating the operator’s ability to fulfil its obligations under the agreement.

Exclusivity (Optional): Depending on commercial negotiations, the operator may be granted exclusive rights to operate EV chargers at the property during the term, preventing competing service providers from being engaged for similar facilities.

Termination: Commonly includes provisions for early termination in the event of breach, prolonged underperformance, or regulatory intervention, as well as obligations for the operator to remove the equipment and reinstate the space upon expiry or termination of the agreement.

Conclusion

This article highlights the profit sharing and revenue sharing model as one of several commercial approaches currently used in structuring EV charger deployments in Malaysia. Unlike fixed rental arrangements, this model allows property stakeholders to participate in the financial outcomes of the charging facilities, with sharing ratios structured either as fixed or tiered percentages.

It is not suggested that one model is superior to another, rather, each structure presents different advantages depending on the site profile, expected utilisation, and the parties’ commercial objectives. As the EV charging ecosystem continues to evolve, having a diversity of contractual models ranging from rental to revenue-based collaboration will provide flexibility in meeting operational and stakeholder needs.

This Article is written by Yeo Shu Pin (Partner) of Messrs. Shu Pin & Associates.

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the author(s) for a specific technical or legal advice on the information provided and related topics.