What will happen to gas station business after electric cars?

Mudassir Ali
Feb 15, 2020 04:53 AM 0 Answers
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Mudassir Ali
- Feb 15, 2020 04:53 AM

I will adjust the wording of your question to “convenience store business” rather than gas station business.

Once the convenience store business finally gets on board with the idea that EVs are real and start installing charging stations, they will thrive! I mean they are always complaining that they only make a penny per gallon on the gas and they make all their REAL money by getting people to come inside the store. They even resort to tricks like not changing the paper on the receipt printers to requiring customers to go into the store in order to use their credit cards as a way to get people to stop paying at the pump.

Put up a few charging stations and bam! You’ve got a captive customer for 20–30 minutes. They are almost certainly going to wander into your store and buy something (if you have the right products). Sheetz, a US gas station chain that actually has “restaurant” food and eating areas has finally figured this out.

Not only that, but it’s a win/win for the charging station providers because electricity is relatively cheap, except for demand charges that tend to make providing fast charge services expensive. To combat demand charges you need to spread out the cost over a large number of customers, but unfortunately it takes longer to charge an EV than it does to fill a car with gas…plus you don’t have 16 pumps on the premises, but rather only 1–2 charging stations. So it’s hard to make a good profit on just the charging. Therefore, if you can get customers to reliably come into your store to buy the high profit margin items, you can afford to lose a few cents on the charging (you’d probably want to still charge a relatively high price for the charging but print out a coupon good for a purchase inside the store).

Okay, a few caveats on this overly rosy outlook for the convenience store industry:

You certainly won’t need 1–2 of them on every street corner like we have today with gas stations. 95% or more of EV charging takes place at home, so we are basically talking about drivers on a long distance trip. You can get by with FAR fewer outlets…but they do need to be located in fairly convenient locations.
Convenience stores will need to clean up their act a bit. The Sheetz model is a good example, but that’s a pretty high-end gas station. They are going to need to up their game to a similar level to consistently attract customers to come inside the store.
You simply can’t get the same throughput of customers as you would a traditional gas station with 8 or more pumps. BUT, given that most people today just pay at the pump or go inside to quickly pay, at least the customers you do attract are more likely to spend some time (and coin) in your store. Again though, you need to have something they want.
The net is that I see a compression of the overall convenience store industry, and the stores themselves will have to adapt into a higher profit margin model (maybe more like a fast food restaurant hybrid model) to sustain themselves.

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