EVs could make 80% of gas stations unprofitable — report

Source: By David Iaconangelo, E&E News reporter • Posted: Monday, July 15, 2019

 A gas station. Photo credit: Nebulant/Flickr.

A new study says gas stations will have to reshape their business or risk closures as electric vehicles proliferate. Nebulant/Flickr.

The rise of electric vehicles may cause gas stations to shutter across much of the country and force others to reshape their business model, according to a report by the Boston Consulting Group.

Efficiency gains in gas cars are already causing some refueling stations to close, while others feel pressure to spruce up or expand convenience stores and other onsite offerings. In urban areas, especially, a shift toward EVs — and ride-shares and, later, self-driving cars — will only squeeze fuel-retail owners further, the analysis says.

In 15 years, up to 80% of today’s fuel stations “currently constituted” could be unprofitable, the reportsaid.

“We could see major closures of fuel retail stations,” said Tony Portera, co-author of the report and a managing director at BCG.

At present, most early adopters of EVs fuel up at home or at work. As sales grow, it’s not clear that fuel-retail sites will find it easy to transition from gas tanks to chargers. Many have limited space for new infrastructure or can’t suck power off the grid at high voltage. And charger companies tend to prefer supermarkets, box stores and other locations with more abundant ways to kill 30 minutes or an hour.

That means fuel retailers will either need to take “aggressive action” to reinvent themselves or risk going under.

The consultancy, which has worked with fuel and convenience store retailers for years, predicts that by 2030 a third of all new car sales will be hybrid or pure electric. Five years later, almost a quarter of new cars sold will be fully self-driving, it says.

But even in the group’s most conservative scenario, where fossil fuels still make up the overwhelming majority of the market, a quarter to 30% of fuel-retail outlets could be at risk of closing by 2035, wrote Portera and his co-authors.

They also modeled scenarios where electric cars begin to displace the competition, and autonomous vehicles and ride-shares also make inroads, allowing more riders to bypass traditional pit stops.

As much as 60% to 80% of retailers could be imperiled in those cases, they found.

Electric vehicles would be the chief source of distress, said Portera, but other new mobility technologies “go hand in hand” with them.

“Electrification is going to help make the platforms of AVs even more possible than they are today,” he said. “You’re going to see them developing along with each other.”

More self-driving and shared cars could cut customer traffic at fueling sites, because refueling could take place with fewer passengers present — or none at all.

The smallest businesses will probably suffer most. If larger retailers want to weather the transition, they should partner with governments and utilities to deploy chargers and even consider expanding into charger installations or vehicle maintenance, according to the report. Some could strike space-sharing arrangements with offices, medical clinics or fitness centers, or offer parking and warehouse space for AVs or parcel delivery.

“This is a change that’s already in motion,” said Portera, “and it’ll only accelerate from here.”