The EV revolution steps forward

With a number of countries taking steps to make the future of road transport electric, service stations try to become destinations that will appeal to the EV customer. Key questions remain though, such as the profit margins on the kWh.

In a world where 1.3 billion vehicles navigate the intricate web of global road networks, the wheels of transformation are spinning at an unprecedented rate. Electric vehicles (EVs) are taking up a higher share of the mobility market in several markets, mainly China and Europe. As EV adoption accelerates, the demand for electric vehicle charging infrastructure has surged, presenting a pivotal opportunity for forecourt companies if they can fend of competition from new players.

Electric car markets worldwide are experiencing exponential growth. In 2022 alone, sales of electric vehicles exceeded an impressive 10 million units. More significantly, these vehicles accounted for 14% of all new cars sold, a remarkable rise from approximately 9% in 2021 and less than 5% in 2020. The question is where will these vehicles charge? Are fuel retailers well positioned to become the preferred destination for on-the-go charging?

“Competition for charging kWh’s is complex, with home charging, workplace charging, destination charging, and on-the-go charging competing with each other and each with a distant competitive environment. Charging speed and the price of convenience will create further complexity. In the on-the-go segment, charging speed and reliability are the top two key purchasing criteria. With strategic highway and transient locations, fuel retailers are particularly well positioned to play a role and have a route to become the main go to provider,” explains the Boston Consulting Group (BCG).

The shift from range anxiety to charging anxiety in developed markets poses a significant challenge, impacting both consumers and charge point operators as queues become a common sight, leading to decreased utilization rates. To address this challenge, BCG suggests three key strategies: first, implementing pre-booking of charging slots, with the potential for no-show fees, to enhance confidence, reduce wait times, and optimize network utilization; second, utilizing dynamic pricing to incentivize off-peak charging and minimize demand spikes during peak hours; and third, integrating charge point information with in-car navigation systems to efficiently guide users to available charging stations, enhancing network utilization.

MFG's electrifying vision

MFG, the leading independent forecourt operator in the United Kingdom, has embraced the electric revolution with a robust strategy. Martin Symes, EV Director at MFG, clearly outlines their approach: "High powered, ultra-rapid charging in hubs with multiple bays, and encompassing the traditional offerings that you would see across a forecourt retail, such as food to go and Amazon lockers."

The numbers behind MFG's commitment support their words as they have managed to meet their 2023 targets. They have allocated £400 million to deploy ultra-rapid 150kW, 300kW, and 400kW EV chargers throughout the UK. At present, they operate 500 ultra-rapid chargers, accounting for 5.4% of the UK's public charging network. In a testament to the accelerating EV adoption, these chargers have collectively fueled over an 50 million zero-carbon miles in 2023 alone.

MFG are not only investing in charging capability but in the whole customer experience. The company offer multiple payment options, food on the go and other services, but the future of the experience lies elsewhere.

“The future of the EV experience is plug & charge. That’s actively coming to our network and others. For me that’s the biggest differentiator versus ICE vehicles that will make the transition easy. You don’t have to worry about having multiple RFID cards or apps. That’s the biggest difference between today and where we need to be,” adds Symes.

MFG's ambitious roadmap includes the installation of 3,000 ultra-rapid chargers across approximately 500 sites by 2030. It's a massive operation that shows the scale of the transformation occurring in the mobility sector.

Circle K Sweden bets on electric trucks

Circle K is at the forefront of the EV charging transformation. In Sweden, a recent focus has been the heavy-duty transport sector. They have strategically placed 50 charging points for trucks with 360 kW chargers. Soon they will also instal their first megawatt chargers. These energy hubs not only provide fuel and power; they offer essential amenities, including food services, beverages, shops, and secure parking, creating comprehensive rest areas for truck drivers.

“In November we have also received new fundings to build 13 stations with a total number of 56 charging spots, these sites are subsidized with 70% of the cost by the Energy authority. We will put even higher power at those sites, 400 kW. In all this will bring us up to around 140 charging spots for trucks during 2025,” explains Lennart Olsson, Senior Manager Pricing & Biofuel at Circle K Sweden.

Circle K aims to be a holistic solution provider for the evolving transportation landscape. With a commitment to offering integrated charging solutions, Circle K is playing a vital role in electrifying not just passenger vehicles but also the heavy-duty transport sector.

When asked about the business case for charging, Olsson says they have seen an increase in in-store sales.

“We have seen that charging added to in-store sales from the beginning. The sites are getting bigger restaurants and stores. The EV customer stays for longer and buys more. We also try to be profitable with the charging revenues while keeping a fair price,” he explains.

More OEMs join the party

The electric vehicle charging landscape is not just evolving; it's expanding. OEMs such as Mecedes-Benz, Volvo and BMW are now venturing into the charging market. Mercedes-Benz has embarked on an ambitious plan to set new standards in convenient, clean, and reliable EV charging. They've inaugurated their first charging hub at their US headquarters in Sandy Springs, Georgia, marking the initial step in their $1 billion commitment to deploy 2,500 chargers across at least 400 charging hubs in North America by the end of the decade.

In a discussion with PetrolPlaza, Mercedes-Benz acknowledges the challenges of building a reliable charging network and emphasizes the importance of strong partnerships. As they work with industry leaders like E.ON Drive GmbH in Europe, they focus on selecting suitable locations and crafting exceptional customer experiences

“When selecting locations for our charging hubs, the customer experience is paramount. That's why we attach particular importance to a correspondingly premium experience when selecting locations. This means that, in addition to attractive facilities, there should also be places to stay, soft drinks and snacks, but also toilets in the immediate vicinity,” says Nico Dettmer, COO Charging Solutions at Mercedes-Benz Mobility.

The road ahead: A charged future

Despite all the activity, the profitability of EV charging infrastructure is marked by uncertainties, primarily revolving around per kWh unit margins. These margins vary significantly based on factors such as charging location and speed, with ultra-fast highway on-the-go charging yielding the highest profit margins, often more than double that of slow charging across various markets. BCG’s expectation is that EV drivers will opt for on-the-go charging when no other alternatives are available, making them less price-sensitive, which clarifies the path to profitability in this segment as increasing EV density boosts charge point utilization.

As the experiences of MFG and Circle K demonstrate, forecourt companies are not merely adapting to the EV revolution; they are architects of change. These players leverage their strategic locations and existing infrastructure to offer high-powered charging, food services, and additional amenities, crafting a seamless charging experience for EV drivers.

The electrification of transportation is not a distant vision but an accelerating reality. As more companies follow in the footsteps of Mercedes-Benz, MFG and Circle K, the EV charging landscape will continue to evolve, electrifying not only our roads but also our businesses.