As electric vehicles slowly overtake the roads, EV charging stations will become a must-have for gas stations. Even though the infrastructural demands, market uncertainty and regional preferences for fossil fuels will make this transformation a bumpy road, the integration of EV charging stations represents enormous opportunity. In this blog we’ll explore how EV charging could change the industry completely.
HOW BIG IS THE OPPORTUNITY?
It’s huge. From a 3-minute pump for a full tank of gas to up to 45 minutes for a fully charged battery, fuel retailers are poised to have a captive audience at their physical locations. These consumers will be interested in eating, drinking, stocking up on groceries – and a lot more. Fuel stations will eventually be completely transformed. Dog parks, swimming pools, dry cleaning, fine dining, and live entertainment are all ideas that are on the table. However, at a cost of $100,000 to add a single EV charging station and only a small percentage of North Americans currently owning electric vehicles, pulling the trigger on some of these loftier ideas may seem premature. That being said, being the first to market with a compelling offering is a huge advantage. By 2040, 60% of EV charging will happen outside personal homes – but globally our capacity is at a small fraction of the number of charging stations required to meet this demand.
Thinking about such a massive change can be overwhelming. In order to effectively plan, fuel companies with a retail footprint will need to frame the future through more achievable goals.
OPPORTUNITY 1 – TEST BASED ON GEOGRAPHIC ADOPTION OF ELECTRIC VEHICLES
Governments are already subsidizing costs to set up EV charging stations and companies should jump at these opportunities, even if demand is not big enough yet to make a profit. Fuel retailers should invest in EV charging infrastructure sooner rather than later to ensure they become the retailer of choice with early adopters, who will set the tone for others to follow. While the investment may be daunting, taking a smart geographic approach makes sense. Brands establish a presence in areas with higher numbers of EV owners and edge out slowly.
This strategy has two big benefits: one, it allows the brand to develop relationships with the early adopters of EVs, who are likely to have strong influence over their peers. This will place the brand as a leader in the category. Secondly, it gives retailers opportunities to test different concepts, putting them ahead of the game.
OPPORTUNITY 2 – EV CHARGING ROAD TRIP NETWORK
Electric vehicles can only go so far without being charged – and yet highway networks offer spotty coverage. Both the Canadian and American governments have announced federal funding incentives to supercharge the building of EV charging networks across highways, combining for over 6.7 billion in federal funding over the next 5 years. Drivers may have to carefully plan to ensure they don’t get stranded on that cross-country road trip. Strategically placing EV charging evenly across main highways allows drivers more options for long trips. These locations are prime opportunities for entertainment and hospitality offerings to allow travellers to enjoy a break while their vehicle charges. Travellers will need a place to sit down and enjoy a meal, broadening the scope for foodservice partnerships. Local farmers’ markets and specialty food items could help turn what was once an unremarkable stopover into a destination.
OPPORTUNITY 3 – FLEET SERVICES
Whether autonomous vehicles are arriving soon or not, ride sharing is eroding car ownership especially in urban areas. In addition, small towns are starting to leverage ride sharing to replace or support public transit. Fuel retailers should consider the value of a partnership with fleet services. Being an “uber stop” will drive traffic to the location, while additional services such as regular maintenance and cleaning could become a new revenue stream. This strategy can also support underperforming locations, especially those with a large lot size, to be reimagined rather than closed.
Fleet services could also be an opportunity for growth for fuel retailers. Rather than simply providing services for current ride share companies, strategic partnerships or even a branded fleet could be smart investments to consider.
OPPORTUNITY 4 - MINI-SUPER CENTER
Even where traffic volume has rebounded from lock-down, patterns have changed. Hybrid work and work-from-home is likely to continue post covid. Public transit will take years to recover and new transportation habits have formed. While grocery brands did well during the pandemic, some consumers preferred safer shopping options such as curb-side pick-up or visiting smaller stores for quick shops. This has impacted fuel retail and C-Stores significantly.
Many fuel retailers are beefing up grocery offerings including fresh to accommodate shorter trips for essentials such as bread and milk. For some, this includes curbside pick-up. If replacing grocery store trips is already on the agenda, what other goods and services could compliment this shift once consumers are waiting for half an hour? Pharmacy, postal and delivery services, dry cleaning, banking, hair-cuts, and other personal services could all be viable options. Partnering with local companies to boost a sense of community and creating a place for people to connect has the potential to reframe the fuel station as people-centered rather than vehicle-centered. This could have a huge impact on loyalty and growth.
MAINTAINING FOCUS ON PROJECTS THAT SPAN DECADES
Transforming an entire network of fuel stations will require energy to be sustained over many years on an investment that will not pay off in the short-term. Present bias makes it hard for human beings to maintain that kind of vision, even when the logical argument is strong. Especially when leadership changes hands frequently, present and status quo biases may stall innovation from moving ahead. That’s why it’s critical to ground transformation in data and protect long term planning through systems that can overcome leadership changes and personal as well as organizational biases.
Taking a structured approach to transformation, using tools like The Trust Ladder, behavioral insights, design thinking and strategic foresight will allow brands to aim high and achieve ambitious goals. Building a road-map with shorter-term wins, such as key goals around building knowledge and credibility, can support organizations that take a future-focused position as the industry faces inevitable change.