Is It Profitable for Gas Stations to Install EV Charging Stations?

The number of electric vehicles (EV) on the road in America is expected to double in 2022. However, experts predict that it will take some time before electric vehicles become mainstream across our country.One of the primary causes for the delay in adopting electric vehicles comes from the lack of supporting infrastructure. For example, you can easily charge your EV at home, but what if the charge runs out when you’re driving? What if you need to drive longer distances than the battery capacity of an electric vehicle? This is called range anxiety and it is the leading concern among those looking to make the switch from gas to electric.

Many analysts predict that it will still take a few years before better EV charging stations are widely available across the US, which will be needed to encourage people to go electric. One potential opportunity is by installing EV charging stations at existing gas stations. There are over 150,000 gas stations in the US. Of those, over 120,000 are technically food stores that also offer fuel. Why? Because 65%+ of their profits are made from the retail store, not fuel. With that in mind, will gas stations soon make the shift and offer fast EV charging infrastructure alongside their fueling stations? Let’s take a closer look.

The Cost of Installing EVSE

If the lack of charging infrastructure is a major barrier to the adoption of electric cars, what’s preventing gas stations from deploying more EVSE charging stations? For a typical gas station, it’s much easier and less expensive to add a new gas pump to their system than to conduct heavy electrical upgrades to support new electric charging infrastructure. However, with the development of less expensive charging technology, the setup costs are decreasing. For larger gas stations, these lowered installation costs will help to drive the adoption of electric charging infrastructure.

Are EV Chargers Unprofitable?

Electric vehicle companies and charging station manufacturers operate the majority of charging stations. These companies have a clear advantage in this as it increases the popularity of their brands. Yet, for third-party providers, charging stations have yet to become profitable. Many gas stations only break even with electric charging stations but providing them to customers presents new revenue opportunities for gas stations that have food centers, restaurants, or coffee shops.

What Makes Charging Stations Profitable?

To understand what makes charging stations profitable, you have to look at the business model of gas stations. Roughly 80% of gas stations make more money from their food stores and retail than from selling gas. The stats indicate that some consumers prefer grocery shopping at gas stations because of faster service.

The increase in gas station coffee stalls has also moved from being limited to remote gas stations and fresh-stops to inner-city stations. Customers are moving towards convenience, and many people prefer to visit these “gas station cafes” instead of waiting for service at a regular coffee shop. This makes sense as Starbucks recently announced that it will be providing charging stations at its coffee shops. With this in mind, it’s important to understand that many gas stations are turning greater more profits with their restaurants and retail shops than with gas sales.

A Unique Opportunity For Gas Stations

In essence, the business model of gas stations is not to simply sell fuel to customers. Rather, it’s to create an atmosphere where customers are willing to spend time- and possibly have a cup of coffee, some snacks, or even a full meal. EV drivers statistically have more spending power than non-EV drivers and will be willing to spend more on retail. While EV chargers may only achieve break-even by themselves, they will generate revenue and bring customers into the retail storefronts and food and beverage areas. This is the primary reason why many gas stations, including Shell, have started to invest in EV charging facilities. So, for gas stations to be profitable, they should consider providing the following supporting services:

– Cafe’s

– Convenience gas station stores

– Restaurants or fast food outlets

– Kids play areas

It’s important to note that many gas stations already have one or more of these supporting facilities and installing EV charging stations is a great way to improve profitability. Installing EV charging stations is not only great for improving profitability. Here are two additional benefits that arise from providing EV charging.

1. Better Sustainability Ratings Gas stations can improve their sustainability ratings with electrification. It also supports the electric vehicle industry and may improve the brand image of a gas station.

2. Share of the EV Charging Market Even though home charging ports come with most electric vehicles, 36% of people still prefer to charge their cars at charging stations. As a result, gas stations with these ports can get a larger share of this market as the popularity of electric cars grows. In the long-run, gas stations can increase profits with EV infrastructure, consolidate their market position and reposition their brand image.

So, why get stuck in the past when the future is already here?

About the Author

Robb Monkman is a mission-driven entrepreneur who is passionate about making the world a better place. Robb is a serial entrepreneur with experience launching multiple hardware and software products at early-stage companies. Robb is an active angel investor and advisor helping companies that are making a positive impact in clean energy, electrification, and IoT.

Written by Robb Monkman