The Future of C-Stores: Electric Car Accommodation
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Originally Posted On: https://www.itsallgoodsinc.com/insights/the-future-of-c-stores-electric-car-accomadation
According to the National Association of Convenience Stores, more than 80 percent of the 150,000 convenient stores nationwide sell automotive fuel. This is a huge business that generates billions of dollars in sales each year. Between 2019 and 2020, fuel sales fell about 26 percent due to impacts of COVID-19 pandemic as fewer motorists commuted daily.
Even as people return to the office, a new threat is emerging – the electric car. This could have a huge impact on c-stores who rely on traffic from consumers looking to refuel their vehicles. On average, consumers visit gas stations once or twice each week to refuel. These visits account for two-thirds of the average convenience store profits. C-store operators need to understand how electric vehicles will impact their business and what they can do to adapt.
Drivers Impacting Electric Vehicle Charging at C-Stores
A lot has changed since the Toyota Prius became the first mass-produced hybrid-electric vehicle in 1997. Today, dozens of manufacturers offer hybrid and full electric vehicles. In fact, the global automobile industry is expected to have nearly 100 different EV models to choose from by 2024. Many manufactures have set goals to stop the production of gasoline-powered cars altogether in the next decade or so. There are many factors that continue to drive this change.
First, most people acknowledge that oil reserves and other fossil fuels are in limited supply. It’s critical for companies to start thinking about alternative ways to power vehicles. Consumers are also becoming aware of the harmful effects of fossil fuels on the environment.
Technology is improving making electric vehicles more affordable. Plus, more charging stations are enhancing the range that these vehicles can operate. According to the US Department of Energy, there are currently over 40,000 electric charging stations available to the public.
Despite their popularity, electric cars account for less than 2 percent of vehicles on the road in the US. This is expected to slowly shift in the future. The US Energy Information Association predicts that electric vehicles will make up about 10 percent of all new vehicle sales by 2040.
Current Situation with Electric Vehicle Charging at C-Stores
With the slow adoption of electric vehicles, c-store operators will fortunately have plenty of time to prepare. It’s important that they understand the current state of the market to help them decide the timing for making the switch from fossil fuels to electric.
- Electric Vehicle Costs – Electric vehicles are still relatively expensive. Even the cheapest models start at $30,000 to $40,000. This is out of reach for many consumers, especially those that are most likely to visit convenience stores.
- Incentives – Some states and government agencies are providing incentives to build electric charging stations through grants and tax deductions.
- Leading Companies – Back in 2019, RS Automotive became the first US gas station to fully convert to EV charging. More and more major brands are embracing this change. 7Eleven is one of the innovators in the space and has committed to installing 500 rapid charging stations at 250 of their locations by the end of 2022.
- Variable Charging Times – Charging times at different locations vary significantly from 30 minutes to several hours.
- Strategic Partnerships – Some c-store brands are forming partnerships with charging companies. ChargePoint, a company that has installed over 110,000 charging stations across North America and Europe is partnering with 7Eleven and IGA Convenience Stores.
Challenges for C-Stores Providing Electric Vehicle Charging
There are still some major hurdles that c-store operators will need to overcome if they want to provide electric vehicle charging stations at stores. While the technology is improving each year, there is still a long way to go.
- Installation Costs – Installing charging stations can be expensive and cost up to $100,000 for each station. This is especially true if the installation requires major construction to access the electric utility. This cost could be prohibitive for smaller c-store operators.
- Low Demand – While electric vehicles are becoming more popular, they are nowhere near the usage levels that would provide sufficient return on investment in most areas.
- Increased Competition – Historically, going to a convenience store or gas station for vehicle fueling was the only option. With electric charging, it is much easier for other business types to provide this service. Businesses like car dealerships, banks, malls, parking garages, and healthcare facilities are starting to provide EV charging at their locations.
“For convenience retailers, right now they have a monopoly in selling transportation energy… If you want to move your vehicle, you have to go to a gas station. That’s going to change” John Eichberger, Executive Director, Fuels Institute
- Boredom – Most convenience stores don’t feature spaces where customers want to hang out for hours waiting for their vehicle to charge. This could drive customers to seek out locations with more activities, entertainment, and amenities like a shopping mall.
- At-Home Charging – More and more people will likely add charging ports to their homes which could eliminate the need to stop at fueling stations unless the driver is on a long trip.
- Profitability – Adding charging stations doesn’t necessarily mean more money for convenience stores. Depending on the agreement, charging fees could be paid directly to a 3rd party that owns the charging station. Also, electricity typically has peak hours where prices spike to discourage usage and reduce stress on the grid. These spikes could be difficult for a c-store to predict and could result in them selling electricity for a loss.
- Limited Space – C-stores have limited property for charging stations. They have to decide just the right time to remove regular fuel pumps in exchange for EV charging. If they do this too early, they could miss out on valuable fuel sales.
Expected Future of Electric Car Charging at C-Stores
Electric vehicles are still in the early stages of development. Challenges such as affordability and convenience of charging times will lead to new innovations and products. Increased competition between auto manufacturers is expected to decrease the cost of new electric vehicles. New cars are being developed to charge at higher kw (kilowatt) ratings which will decrease charging times. Also, charging stations will likely get cheaper as more companies enter the market and the technology gets cheaper to produce.
While this should help c-store, businesses feel more comfortable with providing electric charging, c-stores will need to provide more amenities to avoid losing their customers to other locations including lounges, Wi-Fi, secure and well-lit locations, and restrooms.
Some EV charging companies are exploring wireless charging that uses a pad or base which allows drivers to charge without getting out of their vehicle. This could force more c-stores to embrace curbside delivery. Brands can take advantage of their existing customer loyalty programs or apps to help deliver this service.
It’s clear that the reduction of fossil fuels is set to change the way c-stores look forever. C-store operators who adapt well to this change could help revolutionize the industry.