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September 21, 2023 by Adam Malik
Petro Canada fast charge EV charging station in Rocky View County, Alberta. Image credit: Depositphotos.com
The growth in annual electric and plug-in hybrid electric vehicle sales is forcing a major transition among gas station operators, according to a report.
DBRS Morningstar observed that the consumer shift to EVs is necessitating rapid growth in fast and reliable charging infrastructure. This is pushing gas station operators globally to adapt and future-proof their retail business.
The group expects that as gas station operators make plans to integrate reliable EV charging infrastructure into their service offerings and adapt other aspects of their business, this will mean higher capital investment requirements going forward.
“Furthermore, over the longer term, operators would need to evolve and address challenges around intensifying competition, their changing business and operating model as well as infrastructure concerns, in order to maintain market share, profitability and relatively stable credit risk profiles,” DBRS said in its report, Electric Vehicle Charging: A Slippery Road Ahead for Gas Station Operators.
“Conversely, the transition also provides a growth opportunity for those gas station operators that address these challenges and execute a successful transition.”
The group observed that global EV sales were up 55 per cent in 2022. Granted, growth is compared to a smaller starting point, but electric light commercial vehicle sales worldwide increased by more than 90 per cent in 2022 as well. It also noted that not only do major eocnomies like the European Union and United States plan to cut ICE sales and push EV in the 2030s, but both regions are also part of 27 countries that have pledged to achieve 100 per cent zero emission vehicles bus and truck sales by 2040.
Charging infrastructure — that is also reliable — is a key concern for consumers to switch from internal combustion engines to EVs. Gas stations are seen as playing a key role as they are numerous and advantageously located.
But there are challenges for them. Gas station numbers have seen a rapid decline across Europe and North America over the last two decades as intense competition and lower margins hurt operators.
“The transition to EV charging is likely to result in further declines and consolidation in the sector,” the report said, noting that gas stations in the U.K. and U.S. have dropped by more than 35 per cent from 2000-2022.
“For gas station operators to remain relevant, they need to adapt and future-proof their business by addressing a number of key challenges, including significant capital investment requirements, intensifying competition, and a changing business and operating model as well as infrastructure concerns,” the report said.
DBRS offered four observations. One being that significant capital investment will be needed. While big players like Chevron and Shell have made investments, government incentives and forming partnerships with third-party service providers for installation, maintenance, and repair, which could reduce their capital investment burden.
“That said, finding the right partner for operational ease, technology upgrades, as well as scalability of operations will be critical,” the report said.
Gas station operators won’t only be competing against their traditional peers for EV drivers, but also the government, utility companies and automakers as they install public chargers.
Another observation included the greater need for highway stations, rather than urban ones.
“Urban gas stations, especially those with limited space and no other value or service offering, are more vulnerable to alternative charging service providers, including the ‘in-house’ option available to households with personal charging units,” DBRS’s report said.
Finally, drivers may prefer public chargers to all be fast chargers with their home ones can charge more slowly over a longer period of time.
“As such, grid reliability and infrastructural support could be a concern for gas station operators, especially for more remote or highway locations, while more urban charging needs could increasingly be covered by non-gas-station operators,” the report said.
How EVs are impacting gas stations
Report offers a look at how electrification is impacting operators
Petro Canada fast charge EV charging station in Rocky View County, Alberta. Image credit: Depositphotos.com
The growth in annual electric and plug-in hybrid electric vehicle sales is forcing a major transition among gas station operators, according to a report.
DBRS Morningstar observed that the consumer shift to EVs is necessitating rapid growth in fast and reliable charging infrastructure. This is pushing gas station operators globally to adapt and future-proof their retail business.
The group expects that as gas station operators make plans to integrate reliable EV charging infrastructure into their service offerings and adapt other aspects of their business, this will mean higher capital investment requirements going forward.
“Furthermore, over the longer term, operators would need to evolve and address challenges around intensifying competition, their changing business and operating model as well as infrastructure concerns, in order to maintain market share, profitability and relatively stable credit risk profiles,” DBRS said in its report, Electric Vehicle Charging: A Slippery Road Ahead for Gas Station Operators.
“Conversely, the transition also provides a growth opportunity for those gas station operators that address these challenges and execute a successful transition.”
The group observed that global EV sales were up 55 per cent in 2022. Granted, growth is compared to a smaller starting point, but electric light commercial vehicle sales worldwide increased by more than 90 per cent in 2022 as well. It also noted that not only do major eocnomies like the European Union and United States plan to cut ICE sales and push EV in the 2030s, but both regions are also part of 27 countries that have pledged to achieve 100 per cent zero emission vehicles bus and truck sales by 2040.
Charging infrastructure — that is also reliable — is a key concern for consumers to switch from internal combustion engines to EVs. Gas stations are seen as playing a key role as they are numerous and advantageously located.
But there are challenges for them. Gas station numbers have seen a rapid decline across Europe and North America over the last two decades as intense competition and lower margins hurt operators.
“The transition to EV charging is likely to result in further declines and consolidation in the sector,” the report said, noting that gas stations in the U.K. and U.S. have dropped by more than 35 per cent from 2000-2022.
“For gas station operators to remain relevant, they need to adapt and future-proof their business by addressing a number of key challenges, including significant capital investment requirements, intensifying competition, and a changing business and operating model as well as infrastructure concerns,” the report said.
DBRS offered four observations. One being that significant capital investment will be needed. While big players like Chevron and Shell have made investments, government incentives and forming partnerships with third-party service providers for installation, maintenance, and repair, which could reduce their capital investment burden.
“That said, finding the right partner for operational ease, technology upgrades, as well as scalability of operations will be critical,” the report said.
Gas station operators won’t only be competing against their traditional peers for EV drivers, but also the government, utility companies and automakers as they install public chargers.
Another observation included the greater need for highway stations, rather than urban ones.
“Urban gas stations, especially those with limited space and no other value or service offering, are more vulnerable to alternative charging service providers, including the ‘in-house’ option available to households with personal charging units,” DBRS’s report said.
Finally, drivers may prefer public chargers to all be fast chargers with their home ones can charge more slowly over a longer period of time.
“As such, grid reliability and infrastructural support could be a concern for gas station operators, especially for more remote or highway locations, while more urban charging needs could increasingly be covered by non-gas-station operators,” the report said.
