FRAMINGHAM, Mass. -- Famed economist Joseph Schumpeter coined the term “creative destruction” to describe the process where capitalism through technology and consumer needs destroys some businesses but in the process, gives birth to new industries and companies to fulfill those needs and take advantage of the new technologies.
This process is going on in the motor-fuels industry. The concern over hydrocarbon emissions has created an attraction of some people to electric vehicles (EVs). That, in turn, creates the need for an electric-charging infrastructure apart from traditional fueling sites.
Here are four ways this development presents an opportunity for fuel marketers ...
Currently, there are only 150,000 battery EVs (BEVs) in the United States among 30 million vehicles. EVs made up more than 10,000 of the 1.5 million in new-vehicle sales for June. Not surprisingly, California leads the nation with 2% of the EV stock, while the Northeast, including New York, New Jersey and New England, are less than 1%. The rest of the nation hovers under one-half of 1%.
But as subsidies increase and technology and insurance issues are resolved, we could see the numbers accelerate, especially as EVs become second family vehicles.
A typical charging station costs $3,000, which includes installation and the ground lease.
There are opportunities for marketers to brand locations at universities, public arenas, sit-down restaurants, movie theaters and shopping malls. Payment would be through prepaid cards (no transaction fees) and a one-time subscription charge. A typical card would be loaded with 200 kilowatt-hours (kWh) and cost $20 (10 cents per kWh), which would provide 500 miles of travel.
With an annual subscription charge of $200 and a variable $5 charge per reload, a marketer should sell 1,000 cards per year, with 25 reloads per year for $325,000 in gross margin per year. This is enough to finance 100 locations with a one-year payback.
There are also cross-branding and loyalty revenue opportunities that can be linked with the prepaid card and charging station. With local, state, federal and utility subsidies, the return on equity (50% leveraged) for invested capital exceeds 45%.
Siemens, AeroVironment, Leviton, Schneider and GE make exceptional fast chargers priced under $1,000. Net Spend, Green Dot and Blue Pay and some utilities are among the providers of card payment systems.
There are no firms better positioned than fuel marketers to lean on their brand and credibility in capturing this opportunity.
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