In a post we wrote a few months ago, we delved into the ways electric vehicles were permeating the fuel market. This market shift continues to be a key point of interest to retailers and it is important that electric and alternative fuel sources are factored in when strategizing on site renovations and network expansion efforts, current and future.
As we have mentioned before, there are one or two countries leading the way towards serious adoption of electric and alternative fuel sourcing. It will be illegal to sell gasoline fueled vehicles in these countries — UK and France — by 2040. Now India, Norway and Germany are planning the decline of gasoline fueled vehicles and the rise of alternatively fueled vehicles.
In September of 2017, 42 percent of Norway's car sales were electric. (I will let that sink in for a moment.) Almost half of their new car sales were electric vehicles. If these forward-thinking countries are any indicator, then the trend of abandoning gasoline for more sustainable and environmentally efficient fuels will soon be the new standard. In America, the shift will most likely come in waves of adoption in some places and hesitation in others, but ultimately favor the hybrid option first, prior to full adoption of electric automobiles. California, for example, has the highest uptake of electric vehicles and is driving the electric vehicle market in America.
The $64 million question (much more important that that, in fact) is: when will the tipping point occur? It will be important to be ahead of the curve in order to reap the largest benefits as the trend starts to turn. Five to ten years after that 2040 mark is when there will start to be a material impact on the gasoline industry, but retailers should start making shifts long before that threshold. The ratio between electric and combustibles will be changing every year.
It can be tempting to get too far ahead of the curve. While electric charging stations are fairly inexpensive to install, there is a risk. The drawback of prematurely placing them in your location would be losing parking spaces — and that could be a major drawback, depending on your market and customers. To avoid creating risk, take consumer preference and demand for your other offerings into account and see which locations could stand to lose a spot or two for parking, and which can't.
But savvy retailers are already establishing the factors that provide the greatest chance of success for recharging points. And they are understanding which ‘traditional’ locations are least likely to be appealing to alternative fuel customers.
One way to predict where certain trends will take off is to consider the current demographics of electric vehicle sales. In Norway, a massive percentage of those electric vehicle sales are for Tesla. Tesla is the most advanced electric vehicle option on the market currently, and they sell to a clientele that is not an average convenience store customer. Taking this into account could influence how retailers want to design and market a new alternative fuel location to these customers.
Commercial vehicles are also making the switch, which could be an extremely profitable opportunity for retailers. These fleets need fuel, and to be one of the few places that offers charging stations for those consumers would be capitalizing on scarcity in the market today.
Charging time on electric vehicles is always decreasing as innovative engineering continues; currently the average is around 20 to 30 minutes. This fact should be included when retailers consider changes. How can you offer a convenience store experience that would allow someone to enjoy your station for 30 minutes? How can you ensure that you don't go too far in the direction of comfort over convenience, only to have the technology improve in a decade or two, causing consumers to spend no more than 10 minutes at a time at your location?
Ultimately, this trend towards electric vehicles is an opportunity for innovation and profit increase in the market. Retailers shouldn't shy away from the potential for change. There is no inherent harm in widening your ability to sell different types of fuel to a wider range of consumers — but you do need to analyze carefully. What is your market ready for? Keep your eye on the high-adoption markets to see what retailers have planned and what turns out to be successful. And don't forget to fold in the data; it's perhaps your most important resource as the shift to alternative fuel continues.