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Making Sense of the EV Charging Math

While profits may be higher, the costs may be too, EV industry consultant says
Photograph: Shutterstock

ATLANTA — While retailers may be pondering the opportunity of installing electric vehicle (EV) charging stations, enough comparative numbers exist to help business owners begin the review process, an EV consultant said during a packed educational session at the 2019 NACS Show in Atlanta.

The disparities between gasoline and EV charging can help retailers make clear choices, said speaker Glen Stancil, president of Houston-based eMotive Solutions, which provides advisory, development and operational services to companies in the EV industry. The main issue affecting potential profit for the retailer is its local utility’s demand charges, the additional fees levied for drawing power during periods of peak electricity demand. Typically, a retailer may make significantly more profit on every kilowatt sold vs. an equivalent unit of gasoline. But a significant monthly demand charge could destroy that margin, depending on where a retailer does business, Stancil said.

For example, while a unit of gasoline can wholesale for 10 cents, an equivalent unit of electricity can cost a retailer only 2 cents, Stancil said. So in this case, the difference in wholesale price is substantial, and it favors electricity. 

Electricity's advantage, however, can be lost with a demand charge, which can cost as much as $2,200 a month depending on the electricity provider and where the store hosting the EV charging station is located. Ultimately, electricity has greater margins, but it can cost a retailer more to provide to customers on a practical level.

In addition, while retailers may need fewer EVs charging at their locations to make a profit, reaching that threshold may be an issue, Stancil said, because there are not many EVs on the road yet. There are currently more than 1 million EVs in the United States, according to the Edison Electric Institute (EEI) and the Institute for Electric Innovation (IEI). The groups project that the next 1 million EVs will hit the road as soon as 2021, and they expect more than 18 million by 2030, although the EVs likely will be concentrated in particular regions.

Meanwhile, while a gasoline station with a proven volume may need more vehicles buying fuel to generate the same profitability, its potential customer base is much larger. There are more than 272 million vehicles on the road today, with 92% powered by gasoline, according to the U.S. Energy Information Administration.

In terms of upfront costs for EV charging, Stancil estimated that equipment and utility costs could run in the range of $150,000 per charger, with each station needing one and a half parking spaces.

Ultimately, retailers have to gauge the demand growth in their markets, Stancil said. However, the longer they wait, the more their competitive advantage over other channels such as quick-service restaurants dissipates.

“Other channels can offer [charging stations],” he said. “There’s a lot of flexibility. But the key is customers are used to coming to you. You have the best real estate, so it’s yours to lose.”

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