The future of Gas Stations: Do EVs dismantle local pumps?
The answer is a lot more complicated than the number of EVs sold.
Photo: Shell
The future of gas stations will require the stations to look to the past. These gas stations won't have time travel at their disposal, but they will need to once again embrace the idea of "service stations" to ensure they remain relevant. Mind you, there are 150,000 of these stations across the US today.
The National Association of Convenience Stores says 120,000 so-called "C stores" also sell fuel, accounting for the majority of gas stations. While the gasoline brings you in, the C store makes the business really work. But the entire business starts to look a bit like a house of cards when you inventory the threats. Boston Consulting Group calculates that between 25% and 80% of gas stations could be unprofitable by 2035.
Sales of electrified cars will exceed that of purely combustion vehicles by 2030, according to BCG. Volvo will be a pure electric brand by 2030, General Motors by 2035. California and Washington state plan to end sales of new combustion engine cars by 2035 and 2030, respectively, and 12 states' governors have signed a letter urging President Biden to enact such a combustion ban nationwide. And while we think pure EVs are the threat to gas stations, hybrids also erode gas consumption.
Permanent expansion of working from home should significantly reduce miles driven (unless it does the opposite), and while some gas stations generate revenue from car maintenance and smog tests, EVs need little of the former and none of the latter. Beyond the changes in cars themselves are other pressures: Local bans on new or updated gas stations, and the expansion of food and meal delivery services that may connect people with those much more fuel-efficiently than all of us making trips in our own cars.
But there are many paths forward for gas stations, largely centered on the idea of a refreshed basket of services. BCG suggests a few ways gas stations can be more in charge of their fate:
Add charging. This is the obvious move, but not as simple as it looks due to infrastructure needs and a big difference in lane time and throughput.
Go digital. Any Chipotle is a decade ahead of any gas station when it comes to being digital. Even something as simple as ordering things from the C store so they can be brought out to you at the pump could start repositioning gas stations.
Mobile fueling. Amazon can deliver to the trunk of your car; Can gas stations deliver to the gas cap? There are technical and regulatory hurdles, but if we learned anything in 2020, it's that delivery has an almost unlimited future.
Enhance the experience. Tedious, smelly gasoline fill-ups are a tepid draw. Flip that model so the overall set of services are the draw, of which liquid and electric refueling are just an important peripheral. Premium fast casual restaurants, an Amazon locker and return location, a dark kitchen for food delivery, or all three are just some ideas for a true "service station" that make sense on the real estate.
One option I'm not sanguine about is turning gas stations into EV battery-swap stations. The idea seems elegant and the most direct analog for a conventional fill-up, but both startup Better Place and later Tesla pulled the plug on efforts to have cars come in for a fresh battery exchange in minutes. It requires more harmony and standardization than is conceivable in the EV industry right now.
Source: Brian Cooley / cnet.com