How the economics of gas stations will change in the future of electric vehicle charging

As electric vehicles become more prevalent, some gas stations are making costly upgrades to add electric vehicle charging stations.

In most cases, traditional liquid fuel pumps are not scrapped. But select locations, including an RS Automotive in Takoma Park, Maryland, and a Shell station in Fulham, England, have made a complete switch.

Location, cost, power requirements and conversion time are among the many considerations that play a role in a gas station’s decision to convert all or part of its existing infrastructure to accommodate electric vehicle charging.

“Figuring out how to do this at an active site can be complex and challenging,” said Neha Palmer, chief executive of TeraWatt Infrastructure, which is building a network of electric vehicle charging stations for fleet operations in California, Arizona and New Mexico. “How do you plan the construction process when you have vehicles that might want to refuel there?”

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

The EV fast charging model

Locations such as office complexes, hospitals and hotels typically offer a slower charging option as people tend to stay there for hours. However, gas stations are investing in Level 3 chargers, which are more powerful and typically charge a car in 20 to 30 minutes.

While slower charging stations are often free for drivers, this is generally not the case for fast-charging stations, given ongoing operating costs such as electricity and additional fees charged by utilities in commercial settings, said Seth Cutler, chief operating officer of EV Connect, whose software Tools Help companies build charging station networks.

Major oil franchisors and car dealers are on board

For big oil giants, introducing electric vehicle chargers is both a defensive and offensive move.

The number of gas stations has declined sharply 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. According to consulting firm BCG, there is actually a risk that at least a quarter of gas stations worldwide will close by 2035 without making significant changes to the business model.

The Biden administration has a stated goal of having 500,000 electric vehicle chargers nationwide by 2030, with electric vehicles accounting for at least 50% of new vehicle sales. According to current government estimates, there are more than three million electric vehicles and more than 130,000 public chargers nationwide.

European oil majors are among the energy frontrunners in the global push to charge electric vehicles.

sleeve In addition to the Fulham location, has mobility centers only for charging electric vehicles in China and the Netherlands. The company aims to have more than 70,000 public electric vehicle charging stations worldwide by 2025 and 200,000 by 2030, according to an email statement from Barbara Stoyko, senior vice president of mobility at Shell Americas.

B.P According to Sujay Sharma, CEO of BP’s electric vehicle charging business in the US, “There is also a need for mixed-use hybrid fueling stations and electric vehicle charging stations, in addition to their existing convenience offering, including restrooms, food and beverage,” Sharma explained in an email.

Thanks to the advance of car manufacturers such as B. Franchise car dealers are also increasingly joining in GM And ford.

By the end of last year, 65% of Ford dealers had opted into the EV certification program (just under 2,000, according to Ford), as it has begun to place the role of auto dealers at the center of the EV transition process.

The National Automobile Dealers Association said in a May press release that franchise owners will spend an estimated $5.5 billion on electric vehicle infrastructure across all OEM brands, with per-store costs ranging from $100,000 to over $1 million will lie.

The upfront costs can be staggering, incentives help

Adding electric vehicle charging options is not a dual decision that owners should take lightly. In fact, the return on investment could average seven to 10 years, according to an estimate by Yair Nechmad, co-founder and CEO of Nayax, a global trading and payments platform that offers its services to gas stations.

Fast charging hardware and software can cost anywhere from $50,000 for one charger to $500,000 for multiple fast chargers and dispensers, said Michael Hughes, chief revenue officer of ChargePoint Holdings, a technology company that makes charging hardware and software for electric vehicles to help drivers find local charging stations and amenities. Infrastructure, on the other hand, which includes groundbreaking costs, power, permits and contractors, generally costs about twice as much, he said.

“Therefore, it is advisable to make any infrastructure changes in advance, even if a gas station only wants to provide a few chargers at the beginning,” said Rohan Puri, CEO of Stable Auto Corporation, which helps make charging stations more profitable for companies they own and operate. His advice: “Use as much power as you think you will need in 10 years.”

There are numerous federal, state and utility incentives for commercial businesses to purchase and install fast chargers. This includes the U.S. Department of Transportation’s Federal Highway Administration’s NEVI formula program, which provides generous funding to states for the strategic deployment of electric vehicle charging stations.

Gas station owners can Search for information about incentive programs for which they might qualify.

Location is a key factor in gas station franchise concerns

Even with incentives, there can be barriers to entry, with location being an important factor. According to the U.S. Department of Energy, 80 percent of electric vehicle charging occurs at home, making the introduction of electric vehicle charging less attractive to in-city gas stations, Hughes said. Local gas stations also typically do not have facilities to entertain people while charging their vehicles.

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

In contrast, gas stations along major highways between busy destinations can be ideal for electric charging stations. These locations typically have plenty of amenities and offer people the opportunity to grab a cup of coffee, grab a quick bite to eat, stretch their legs or walk the dog while charging their vehicle, Hughes said.

Convenience stores such as Sheetz, Wawa, Royal Farms and Buc-ee’s, which double as gas station operators, 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 electric vehicles uses , and who is a former Tesla and SolarCity manager. It can’t be “a place where you just walk in and buy a Snickers,” Gore said.

While there may be a first-mover advantage for gas stations, some owners, like Blake Smith, founder of SQRL Holdings, a gas station and convenience store operator, are taking it slow. His company operates more than 150 convenience store gas stations and offers electric charging at select locations in Florida. In contrast, the company has not installed any electric vehicle 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-electric charging could take decades. “We are not flipping a switch so that gasoline vehicles will disappear from the road and there will only be electric vehicles.”