ATLANTA — Providers and servicers of gasoline dispensers, underground storage tanks (USTs) and other elements of liquid fuels infrastructure are increasingly chasing a new growth opportunity: electric vehicle (EV) charging.
According to an annual survey of distributors and contractors by Tulsa, Okla.-based Petroleum Equipment Institute (PEI), the percentage who said they are actively involved in EV charging station installation and/or services more than doubled to 7.9% from 3.5% the year prior.
PEI members who said they were “not yet involved, but planning to” get involved in EV charging rose from 15.8% in the 2018 survey to almost 32% in 2019. “That is a huge shift, and that is a significant opportunity,” said Rick Long, executive vice president and general counsel for PEI, at the 2019 PEI Convention at the NACS Show in Atlanta in October.
Recently, major liquid fueling equipment manufacturers have entered the EV charging space. In October 2018, Gilbarco Veeder-Root announced it had acquired a minority ownership stake in Australian EV charging station manufacturer Tritium and began selling the units in the U.S. In October 2019, Dover Fueling Solutions announced it was partnering with ChargePoint to bring EV charging stations to retail and commercial sites in North America, including DC fast chargers, Level 2 chargers and fleet chargers.
Long pointed to this increased focus on EV charging as the most noteworthy change from the 2019 PEI survey. Meanwhile, other trends that continue to shape the petroleum equipment industry include petroleum’s negative reputation, the accelerating consolidation of distributors and manufacturers, and generational shifts in ownership and management.
Challenges and Opportunities
In the 2019 survey, distributors and contractors overwhelmingly said their biggest challenge was the labor shortage (80.6%), followed by manufacturer relationships (41.8%), customers’ procrastination over upgrading pumps to EMV (28.4%) and profit margins (25.4%).
Distributors and contractors rated current business conditions at an average of 7.22 on a scale of 1 to 10. Businesses that dealt in commercial work, construction and upgrading UST systems reported doing “especially well,” Long said. Growth opportunities for this group include emergency generator fueling systems; lube, lift and car wash; and nonretail equipment upgrades and replacements.
Equipment manufacturers also rated business conditions in 2019 at about 7.2, with new store construction (30%), diversification (21%) and UST system upgrades (20%) as growth areas. A shortage of skilled labor (45%) was their top challenge, followed by outdated plant infrastructure (23%) and customer consolidation (22%).
“Any association that we encounter and interact with, they, too, are talking about the shortage of skilled labor, so that’s across the entire economy,” Long said.
Most distributors and contractors (82%) and manufacturers (77%) were “extremely” or “moderately optimistic” about their business for the next three years. Roughly two-thirds of both groups said they want to hire more employees in 2020.
The number of PEI members who expect growth for E15, the 15% ethanol blend, also grew in the 2019 survey. Most of the 2019 respondents—61.9%—expect a small increase in E15 sales, up from only 37.3% who felt similarly in 2018. Another 3.2% of 2019 respondents expect a dramatic increase in nationwide E15 sales, compared to 0% in 2018. In June, the U.S. Environmental Protection Agency removed a key growth roadblock for E15 when it provided a seasonal waiver to E15, enabling it to be sold throughout the year.
Survey respondents were somewhat less optimistic about the percentage of customers who will have upgraded to EMV by the October 2020 deadline. Participants in the 2019 survey expected just more than 59% of their customers would be EMV-compliant in time, a figure about 5 percentage points lower than in the 2018 survey. Meanwhile, 2019 survey participants said 21% of their customers have no plans to upgrade to EMV.
“It’s a bigger number than I would have thought,” Long said.