How the economics of electric charging will change in the future

As electric cars proliferate, some gas stations are making expensive renovations to add electric charging stations.

In most cases, they do not override traditional liquid fuel pumps. But select locations, including RS Automotive in Takoma Park, Md. and a Shell station in Fulham, England made the full switch.

Location, cost, energy requirements and conversion time are among the many considerations that influence a gas station’s decision to convert all or part of its existing infrastructure to allow EV charging.

“Finding out how to do this on an active site can be complicated and difficult,” said Neha Palmer, CEO of TeraWatt Infrastructure, which is developing a network of electric vehicle charging centers for fleet operations in California, Arizona and New Mexico. “How do you sequence construction when you have vehicles there that want to refuel?”

Here’s what gas station owners need to know about the EV charging trend and its future.

EV fast charging model

Places like office complexes, hospitals, and hotels usually offer a slower charging option because people generally work long hours. However, gas stations are investing in Level 3 chargers, which are more powerful and generally charge a car in 20-30 minutes.

Seth Cutler, chief operating officer of software tools company EV Connect, said that while slower charging stations are often free to drivers, that’s generally not true for fast charging stations, given ongoing operating costs such as surcharges on electricity and utilities. . help companies build networks of charging stations.

Major oil company franchisors and car dealers are on board

For the big oil giants, adding EV chargers is both a defensive and an offensive game.

The number of gas stations has decreased dramatically over the past three decades, and this trend is expected to continue in the coming years. Shubhendra Anand, vice president of research and strategy at Market Research Future. In fact, at least a quarter of service stations globally are at risk of closing by 2035 without significant changes to their business model, according to consulting firm BCG.

The Biden administration has announced a goal to have 500,000 electric vehicle charging facilities by 2030 in a country where EVs account for at least 50% of new car sales. The current administration estimates there are more than three million EVs and more than 130,000 public chargers nationwide.

European oil companies are among the global leaders in charging electricity.

Shell In addition to the Fulham location, it has electric-only mobility centers in China and the Netherlands. The company aims to have more than 70,000 public EV charging points worldwide by 2025 and more than 200,000 by 2030, according to an emailed statement from Shell Americas senior vice president of mobility Barbara Stoyko.

BP According to Sujay Sharma, CEO of BP’s electric vehicle charging business in the US, it also sees a need for mixed-use hybrid fueling and electric charging stations: “Today’s gas stations are well-positioned to accept EV charging because they are located in high-demand areas.” . , including restrooms, food and beverage, in addition to existing amenities offerings,” Sharma said in an email.

Franchise car dealers are also increasingly getting on board, thanks to a push from automakers like GM and Ford.

As of late last year, 65% of Ford dealers were enrolled in the EV certification program (just under 2,000, according to data shared by Ford) as it began to make the role of dealerships central to the EV transition process.

The National Automobile Dealers Association said in May that franchise owners will spend about $5.5 billion on EV infrastructure across OEM brands, with costs per store ranging from $100,000 to $1 million.

Upfront costs can be daunting, incentives help

Adding EV charging capabilities isn’t one or two decisions owners should take lightly. Indeed, the return on investment can average seven to 10 years, according to an estimate by Yair Nechmad, co-founder and CEO of Nayax, a global commerce and payments platform that offers its services to gas stations.

Fast charging hardware and software can run between $50,000 for a single charger and $500,000 for multiple fast chargers and dispensers, said Michael, chief revenue officer at ChargePoint Holdings, which makes hardware and software that charges EVs. Hughes said. stations and amenities. Infrastructure, which includes foundation demolition, electricity, permits and contractor costs, is generally about twice as expensive, he said.

Rohan Puri, CEO of Stable Auto Corporation, makes it a point to make all the infrastructure changes in advance, even if a gas station intends to deploy only a few chargers initially. owning and managing them. His advice: “Put in as much power as you think you’ll need in 10 years.”

There are numerous federal, state, and utility-based incentives for commercial businesses to purchase and install fast chargers. This includes the US Department of Transportation’s NEVI Formula Program, which provides generous funding to states to strategically locate electric charging stations.

Gas station owners can search for information on incentive programs they may qualify for.

Location is a key factor, a gas station franchise concern

Even with incentives, there can be barriers to entry, location being a key factor. According to the U.S. Department of Energy, 80 percent of EV charging takes place at home, making electric charging less attractive for inner-city gas stations, Hughes said. Local gas stations generally don’t have facilities to entertain people while they fill up their cars.

Real estate can also be prohibitive. A traditional gas station might have two islands with four pumps each for liquid fuel; The same utilization rate would require about 40 charging stations, Hughes said.

Conversely, gas stations located along major highways between heavily traveled destinations may be ideal for electric charging centers. Those places have many amenities that offer people the chance to grab a cup of coffee, grab a quick bite, stretch their legs or walk the dog, Hughes said.

Stores that serve as gas station operators such as Sheetz, Wawa, Royal Farms and Buc-ee are also starting to add electric chargers at certain locations, said Albert Gore, executive director of the Zero Emission Transportation Association, a federal coalition that advocates for EVs. , and who is a former executive at Tesla and SolarCity. It can’t be ‘where you just run out and get a Snickers,’” Gore said.

While gas stations may have a first-mover advantage, some owners like Blake Smith, founder of gas station and convenience store operator SQRL Holdings, are taking it slow. His company operates more than 150 gas stations and offers electric charging in select locations throughout Florida. By contrast, the company has not installed any EV charging stations in Arkansas, where it has more than 60 stations.

“I would never recoup my investment,” he said, adding that the transition to all electricity could be decades away. “We’re not changing the transition to where gas-powered vehicles are off the road, and it’s going to be EV-only.”

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