Electric Vehicle Charging - The Risk for C-Stores

V charging is a hot topic of debate among c-store vendors right now.  The decision to add electric vehicle charging facilities on-site at c-stores is not so easy for retailers due to a number of financial and practical risks involved.

Yet, as more electric vehicles are produced and sold worldwide, EV charging ports at c-stores are likely to become widespread practice regardless of these economic ambiguities.

Uncertainties in Revenue Models

First, c-stores face issues with introducing EV charging due to uncertainties in c-store charging station strategy.  This pertains to which charging station provider’s revenue model is going to be the ‘winner’ in the long run.  

There are a variety of EV charging station providers including EVGo, Tesla and Kum & Go currently in operation each with their own style of business.  On one hand, companies like EVGo operate and own their charging networks using “the owner-operator model” as phrased by Garas et al.  In this style of operation, the company manages, supplies and owns its hardware while retaining some amount of control over pricing.

In contrast, companies like ChargePoint prefer to install and operate networks of charging stations but do not retain ownership of these networks.  This is referred to as the “network-operator model” in which the operator sells the EV hardware to host sites which then manage billing themselves.

With different revenue styles in operation at once, many c-store retailers fear investing too much in any given provider in the event that their model collapses or is less successful than another.  So, many c-store owners are choosing to mix EV charging partners and their EV strategies to reduce the financial risks involved.

Business Potential of EV Chargers

C-store retailers wishing to partner with EV charging providers also need to weigh up whether a charging station at their location will actually increase business.  Before installation, Kum & Go’s Vice President Matthew Spackman generally asks:

“Are we willing to give up two to four parking spaces at that particular location?”...”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?”

Therefore, installing EV charging at certain c-stores may be financially inviable for many depending on factors like these.

Equally, there is uncertainty as to whether the EV charging and increased sales for c-stores actually have any correlation.  Realistically, there is no guarantee that someone wishing to charge their EV also wants to buy something from inside the c-store location despite having to wait longer for the EV charge compared to traditional gas refills.

Despite efforts to create loyalty programs and return customer rewards schemes from various EV charging suppliers, this uncertainty with profitability is making some c-store owners leery of committing to installation.

The Cost of Installation

One of the biggest issues with EV charging ports for independent c-stores and larger retailers alike is that their initial cost of installation is high.  DC fast-charging stations  cost around $50,000 each, which independent c-stores may find prohibitive.  

The exact price of installation obviously depends on specifics such as the chosen hardware, specifics of the site and the EV charging provider’s fees.  Yet, some c-store owners are even passing up opportunities for free installation.

Various providers such as EOS Linx in partnership with the Independent Buyers’ Co-op are offering completely free installation due to their commitment to enhancing vehicle sustainability.  Tesla and Electrify America also cover costs of equipment at present.  So, c-stores need to take advantage of these schemes while they are still on offer in order to stay on-trend in the future.

ROI Projections

The returns for each charging station will vary depending on numerous factors including whether it is in a rural or urban location and the amount of EV users in the area.   For instance, California has significantly higher numbers of EV users than anywhere else in the US so charging stations there are likely to have larger returns.  

Labor costs for EV charging stations are extremely low with many being unattended and requiring less maintenance then traditional gas pumps.  These are all critical factors that c-stores must carefully consider before committing to installation.

Current Risks Around Charging System Standardization

C-store EV strategy also depends on the fact that there are three levels of charging an EV based on individual power and speed.  Level 1 is the lowest and generally takes the longest to charge.  Next is Level 2 which is much quicker and generally found at the majority of c-store charging stations at present.

However, the DC fast-charging stations as mentioned above are extremely rapid and rightly nicknamed ‘superchargers’.  This questions the efficacy of c-store EV strategy in the sense that committing to the installation of Level 2 chargers right now (that may become obsolete) relative to the Level 3 chargers in the near future adds ever more risk.

What Will Customers Do While They Wait?

With charge times taking anywhere from 15 minutes to several hours, electric vehicles don’t offer the most ‘c-store friendly’ mode of operation.  The very nature of a c-store is speedy service with customers coming and going constantly.  This leaves the important issue of what customers will do while waiting for their cars to charge.

Tesla is paving the way in retail plans for EVs in California by introducing 24/7 access members-only lounges.  These ultra-modern buildings include access to food and drinks, children’s play areas, pet care zones and stunning outdoor spaces.  Customers can also buy Tesla-branded items inside making the whole EV charging experience appear more ‘chic’ and seamless.

Another example of successful retail plans for EVs is EOS Linx using 75” advertising screens on their charging kiosks.  The digital display is deliberately positioned to give maximum impact to consumers, allowing c-stores to create focused targeting campaigns, exhibit their best deals and allows making creative changes in minutes.

According to EOS Linx, 45% of consumers noticed place-based digital-out-of-home advertising (DOOH) on their charging ports. 70% immediately visit the store after seeing the ad and 89% made a purchase while at the store.  These promising statistics suggest that the advertising screens could aid independent c-store sales enormously, offering a possible benefit to longer wait times.

Summary

While the number of EVs in the US are undeniably rising, electric vehicles are still considered a relatively niche product to the masses.  In 2018, the US saw one million registered electric cars on the road. Yet, projections suggest that by 2030, there will be around 4 million EVs in California alone. While these projections are promising, they are only estimated forecasts that may not actually come to fruition.

Therefore, many c-stores, particularly independent ones that are already struggling to financially match larger competitors, are still showing reluctance to commit to the expense of installing EV chargers and retail plans for EVs.