Interview with Circle K Norway: "It's difficult to develop a model for the EV industry"

What effect will electric vehicles have in traditional petrol stations? What is the best business model for EV chargers? We sat down with Håkon Stiksrud, Head of E-mobility at Circle K Europe, to learn how the global fuel retailer is using Norway as an experiment.

Global fuel retailer Circle K sees Norway as the laboratory for electric vehicle (EV) charging. “Here we can understand how to become relevant to the EV driver and how to make a profitable business model out of it,” says Håkon Stiksrud, Head of E-mobility at Circle K Europe. EV penetration in Norway is quite unique – last year EVs made up 56% of all new car sales, up from 31% in 2018. In addition, Couche-Tard (Circle K) is the only global fuel retailer with operations in Norway. That is an advantage that they want to leverage to get ahead of the EV charging game. “That's the objective - to learn in Norway and bring the knowledge to other territories.”

What is the current status of your expansion into EV charging?

We have just above 400 fast chargers on our sites in Norway. Around 100 of those are Circle K branded and operated. While the remaining 300 are with partners like Tesla, Ionity and Grønn Kontakt, a local charging company that was our first partner. When we stepped up our focus on EV charging a year and a half ago, we started with around 125 charge points at our sites. We have tripled the size of our charging network since then. The target is to have 500 before the summer.

As you mentioned, Circle K currently has the two models in its network (company operated chargers and others operated by partners). Going forward do you see one clear model?

This is a question we are asking ourselves and that we would like to answer through our Norwegian experience. The answer is not clear yet. There are advantages and disadvantages to both systems. Strategically, it is a benefit to be present in the larger part of the value chain. Charging also needs to fit in with the rest of the company structure. But right now we are working with both models to figure out which is one is more beneficial.

Norway is a very progressive country when it comes to the transition to a greener society. However, did you meet any resistance from your own franchises when you came up with this model?

The reception has been overwhelmingly positive from our store operators because, when you reach the level of penetration we have in Norway with EVs, this can be a major traffic driver and it is also a competitive advantage – being out there before our competition. We are capturing EV drivers that could instead go to other places. Store operators are happy as it improves store traffic.

Rapid chargers require a large cost of installation and one of the key issues is getting that investment back. From Circle K’s perspective, how do you see this issue?

It is difficult to develop a model for this industry. The reason is that it is a new sector, we don't know the customer price sensitivity and we don't have a detailed understanding of the costs (the development of electricity prices, for example). It is highly variable between countries and even regions within countries. It will probably develop when the usage of the grid goes up. We think it is going to be profitable but how much - that's difficult to tell.

The same way we see regular and renewable liquid fuel at the pump station in Europe, will we also see “green electricity chargers” and “regular electricity chargers”?

I strongly believe that is should be green electricity always. We are moving to electricity for a bigger reason - the environment and reducing the effect of climate change. Most consumers in Norway are concerned that the electricity should be green. In other markets where prices may have more disparity it could be different.

What percentage of the electricity that you provide at your stations is green?

It is almost all green as most of the energy produced in Norway is hydroelectric. We are working to ensure that it's 100% green at our stations.

Electric vehicles do not perform as well in extreme weather conditions, as it could be the cold winter of Norway

Driving distances obviously go down when it is cold. That's a known fact. You could say that the range of EVs, although still lower, is sufficient to facilitate the migration from combustion engine to EV. The development of new EVs is about to eliminate this problem, when the range surpasses 300 kilometres it is no longer an issue, at least for the Norwegian population. For the average family car, the practical range in summer would between 350 and 400 kilometres; that goes to down to around 300 when it is cold. It is enough for most trips in Norway. Must people put in a stop in those trips anyway and they can recharge at a speed of around 10 kilometres per minute where there is a speed charger available. So in 10 minutes you have an extra of 100km. I don't think range is an issue even with cold temperatures.

Another issue around the expansion of electric vehicle market is the loss of taxes for governments. This is a debate currently being had in the UK

There are ongoing discussions around this topic but no solution has been found. One of the ideas is paying by kilometre driven regardless of the type of car and fuel. Also, when there is enough penetration of EVs in the market and the price of battery cars goes down, there will be no more need for subsidies.

There's been an effort from Circle K to clarify that installing electric chargers does not mean closing down fuel pumps. From that perspective, how long do you think the traditional fuel station model has left?

Society will depend on liquid fuel supply for a long time still, probably decades, and advanced biofuels from our pumps can be a permanent energy supply alongside electricity. But we foresee a conversion to bigger stores with many charging points – charger hubs. The reason for that is the benefit of scale. It is also good for customers because when you come to such a place there is the probability that the charging points will be taken. That's the philosophy of Tesla – they deploy big charge hubs with 12 to 20 chargers. The goal is to have a good customer offer. That's probably a trend we will see. Another trend will be the improvement of the store offer adapted to a bigger mass of customers and also to longer brakes.

If you want to keep the whole network of fuelling stations, we need to figure out what is the service concept for the future – that’s a challenge for the whole industry.

Leaving Norway for a moment. What plans do you have in other countries in regards to the roll out of EV charging?

We are working on our plans to expand outside Norway. Last year we focused on getting the position in Norway and ramp up our stations with chargers. This year and the following we will see an expansion to other countries. We already have Ionity in Sweden, Denmark and Ireland. They will deploy in the Baltics this year. We also have local partnerships in other countries.

The future of transport will be based around electric, autonomous and shared economy, according to experts such as Jacob Schram, former head of Circle K Europe. Do you agree with that vision?

I agree. The question is how fast, not if. When will we see people sharing vehicles and not owning them. And when will we see cars driving autonomously. The fastest step will be the transition to electricity. How fast the other two elements develop will depend on the market. A factor is also age – for many young people owning a car is no longer a habit. They will be the first adopters. We will see the heavy effects of this in 10, 20 years. Often technological changes come faster that we foresee but you also see that adoption of technology can be slower than expected.

Interview by Oscar Smith Diamante