LAS VEGAS -- For convenience-store retailers, the decision to add an electric-vehicle (EV) charging station to their forecourt is not clear-cut. The market is small—EVs currently make up only about 1% of the U.S. vehicle fleet—and forecasts vary widely on how quickly this share will grow.
At the same time, a wave of EVs is coming. In third-quarter 2018, for example, Tesla sold more vehicles than Mercedes-Benz, and its Model 3 EV was the third best-selling car in the United States.
To prepare, some c-store chains have been testing EV charging stations and are learning how much they still do not know about the business opportunity. At an education session at the 2018 NACS Show in Las Vegas, Mike Lorenz of Sheetz Inc. and Matt Spackman of Kum & Go LC shared their experiences and some considerations for retailers who plan to get in the EV charging business. They include …
The winning charging station model is uncertain
Kum & Go is an early entrant into EV charging; it installed its first station—a Level 2 charger—in 2008. Today it has more than a dozen sites, with a mix of charging-station providers, including ChargePoint, Tesla and Electrify America, the charging-station subsidiary of Volkswagen. Matt Spackman, vice president of fuels for the West Des Moines, Iowa-based chain, said this mix was a conscious decision.
“At this point, within the marketplace, there’s an open question of which charging system will be the market winner,” he said. “That’s why we’ve partnered with a number of providers.”
Sheetz, Altoona, Pa., has EV charging stations at 30 sites, also with a mix of partners to “spread the risk,” said Lorenz, executive vice president of petroleum supply for Sheetz. It partners are EVgo, Electrify America and Tesla. Sheetz plans to add another 10 EV charging locations this year to establish itself as an EV charging destination.
“If you’re out of a charge, we’re an oasis,” Lorenz said, adding that Sheetz also gets a “brand halo” for being green and innovative with the charging stations.
Monetization depends on the charging station
The winning charging station model is still up in the air. Does the membership model of EVgo or ChargePoint win out? Will EV manufacturer-specific or manufacturer-agnostic charging stations dominate?
Tesla, for example, has offered free, unlimited charging on its Supercharger network to its customers. Although, beginning in 2017, it reduced free charging for new customers to 400 kilowatt-hours, or around 1,000 miles, per year. For a fuel retailer with a Supercharger location, this creates a conundrum.
“Tesla will not allow you to charge your customers for charging on their chargers,” said Spackman of Kum & Go. “There are some considerations there, and that varies by vendor.”
“The benefit with Electrify America is those chargers will charge any vehicle, including Teslas,” said Lorenz. “EVgo would be the same situation—it charges all. In the case where multiple companies want the same site, we lean toward Electrify America because for that reason—you have more flexibility.”
The EV charging-station provider is in charge
C-store retailers who want to partner with a network to add a charging stations should appreciate one thing: “In the end, they’re driving the bus on this,” said Lorenz. “They’re choosing where they want the sites.”
“These companies do have algorithms to determine where they want the charger,” said Spackman. “From the retailer’s perspective, one question we ask when we’re approached is: Do we want the charger at the location they want the charger?”
To answer this, Kum & Go weighs a few factors. “Are we willing to give up two to four parking spaces at that particular location?” Spackman asked. “Is it an urban location or on a highway? Do we as an organization think there’s a play for c-stores in an urban setting to have business from chargers when there are other options?”
The charging network providers are also still tweaking their algorithms in determining ideal charging station placement. For example, Lorenz said that, in conversations with Tesla, he learned that they have changed their thinking on the spacing of charging stations.
“You’d think if you’re building out a network, you need a charging station every 200 miles. Well that’s not the case because the amount of distance you go depends on the range, the weather, how fast you drive, so lot of other factors,” he said. “You need it actually less than 200 miles.”
The link between the EV driver and c-store sales is unclear
A Level 3 DC fast-charging station takes up to 30 minutes to charge an EV battery to about 80% capacity. What EV drivers do during that time is still uncertain.
“That consumer who comes to us, spends 15 to 30 minutes with us, hopefully they become a customer,” said Lorenz. “It’s a wing and a prayer that the person is coming in and planning on buying something.” Sheetz is attempting to tie the two transactions together to learn more about EV drivers’ shopping habits.
Kum & Go is also working with its charging station partners to better understand that link. “One thing we’re trying to get from them is a partnership so we can join our loyalty data to the customer who’s charging and then the customer who’s coming into the store,” said Spackman, referring to Kum & Go’s &Rewards loyalty program. “No one I’m aware of has made that link.”
EV charger funds are finite
Charging stations are not cheap; DC fast-charging stations can top $50,000 each to install. These costs can increase even more if the retailer needs to break up concrete in the parking lot of an existing site to add charging infrastructure. With that in mind, partners such as Electrify America and Tesla cover the cost of the charging equipment. Lorenz and Spackman urged retailers who want to get into the business to take advantage of these opportunities—while they last.
“Follow the money: If there’s money out there through grants, partnering with other companies that will make the investment, you should look into that seriously,” said Lorenz. “Then you don’t have to worry about the ROI—it’s an easy way to get into the business.”
John Eichberger, executive director of the Fuels Institute, Alexandria, Va., and moderator of the panel, shared that his group has been approached by EV charging providers to play “matchmaker” and help them connect them with c-store retailers willing to host a charging station. Many operators he has spoken to, however, seem uninterested. The c-store industry may be passing up a chance to get a foothold in the EV charging business with minimal risk, he warned.
“I’ve got companies out there who’re investing millions of dollars in EV chargers,” he said. “They could go Walgreens, CVS, Cracker Barrel or a shopping mall. They want to come to you.”