Will Gas Stations Survive the Evolution Towards Electric Vehicles? NMA E-Newsletter #722


We still need gas stations as long as we drive internal combustion engines (ICE). That’s obviously a given.

 

According to Kelley Blue Book, though, automakers sold 576,000 EVs in the last nine months–a whopping 70-percent increase during the previous year. If we continue buying electric vehicles (EVs) at this pace, we will need electric chargers on a much larger scale. 

 

The Biden administration is pushing the electrification of half of all new cars by 2030 and plans to give funding to build a network of half a million fast-charging stations in the same time frame. Seven years is a short time frame to make all this happen. 

 

EV industry consultant Loren McDonald explained to the Los Angeles Times that a large chain could add chargers at a lower per-unit cost due to economies of scale. Chargers cost $70,000 to $150,000 per unit. He said that once installed, electric chargers need two to five years to become profitable, mainly in part due to their infrequent use. McDonald noted that chargers are currently only used about five to ten percent daily. 

 

Until recently, most states had laws preventing businesses other than regulated electric utilities from selling electricity. A proxy battle has already started between electric utilities, EV charging-provider companies such as EVgo and ChargePoint, truck stops, convenience stores, and traditional gas stations. Offices, restaurant chains, and even stores are also joining the EV charging trend. 

 

In a recent post, Politico claimed gas station owners and other businesses who put in chargers find themselves at the mercy of an opaque, regulated, and monopolistic electric utility system that is unlike the gas supply system. The gas price fluctuates based on market conditions. If an ICE owner doesn’t like the price at one station, they can drive down the street and find the price of gas per gallon they want. 

 

An electric charge costs what it costs, and there’s no use trying to find a different price point. Three thousand local electric utilities in the US determine how much each charger can charge depending on its geographic location in the individual utility network. Right now, EV owners are just happy to find a charger. 

 

Reason Director of Transportation Policy Bob Poole recently pointed out in his November 2022 email that electric vehicle charging, even fast charging, can ‘fill up’ only one-sixth as many EVs in a 14-pump scenario. The 14-pump electric charge station would only be able to charge 1,680 EVs in a 12-hour cycle. If it were gas instead, 14-pumps could refuel 70 cars in five minutes, and in 12 hours, it could handle refueling 10,080 vehicles. If the average price for a charge were the same as gas, the station owner would lose money. 

 

Of course, gas stations are no longer the gas stations of the 1970s. Eighty percent of all gas is now sold at convenience stores, which make their real money on other goods and services. If folks stick around because it takes longer to charge, then convenience stores can make up for some of the difference by providing more goods and services.

 

Unfortunately, expanding stations to accommodate more electric charging will be challenging because affordable land adjacent to gas stations is likely unavailable in many scenarios. 

 

Also, chargers need standardization, which currently does not exist. Owners need a similar payment system, pricing information, and charging speeds to make EVs easier to use and own. The Biden administration announced last summer that drivers need real-time information on station pricing and location to better plan trips to help alleviate ‘range anxiety.’ Stations will also need a minimum number and type of chargers.

 

Home charging and charging during the day at places of work might also hurt the bottom line of the ‘gas station’ of the future. 

 

In the meantime, several cities in California will no longer allow the building of new gas stations to discourage the use of gas vehicles in the hopes of curbing climate change. Northern California’s Marin County is the hotbed of banning stations. Novato’s city council will vote in a few weeks to enact a ban. The town currently has 12 stations and two more pending construction. In March 2021, the nearby community of Petaluma was the first in the country to enact a ban on gas stations. Since then, the Bay area cities of Cotati, Rohnert Park, Santa Rosa, Sebastopol, and Windsor have all followed suit. 

 

In August, the California Air Resources Board (CARB) voted to require all new cars and light trucks sold in the state to be zero emission by 2035. More than 5,000 mom-and-pop gas stations dot the state, and many have indicated this zero-emission requirement will expedite the closing of their businesses. 

 

Even after the new car mandate, CARB predicts the number of ICE vehicles in California will drop to less than 16 million by 2035. Currently, 24 million are registered in the state. 

 

Despite what you read in the press, gas stations will survive even in California. They might all be national or regional chains that can afford to have a dual gas/electric charging system in place. As electric charging speeds increase and a comprehensive networked system comes online, more people will buy EVs and likely still make a run to the ‘gas station’ as needed. 

Not an NMA Member yet?

Join today and get these great benefits!