Selling electrons is not something that can directly produce profitability to replace fuel margins, at least in today’s environment, and that is no secret to convenience retailers.

Barriers to entry into the electric vehicle (EV) charging market include not just the cost of infrastructure but also demand charges from utility providers, where commercial customers are invoiced not just for the electricity they use, but also for the highest consumption used over a short period of time. This policy was initially made to influence manufacturing to balance the electric grid but is clearly outdated given the demand of electricity that EV chargers require.

We can’t, however, ignore where the future is headed. 

U.S. battery plant investments include $2.5 billion by Toyota Motor Corp. and $4.4 billion by Hyundai Motor Group and LG Energy Solution. Ford Motor Co. has committed $50 billion in EV investments through 2026, and Tesla Inc. has announced that later this year it will begin production of supercharger equipment that will enable non-Tesla EV drivers in North America to use Tesla Superchargers. 

At the federal level, we have seen good progress recently with bi-partisan support urging the federal energy regulatory commission to support the private sector with challenges including utility demand charges. In addition, the Inflation Reduction Act includes a tax credit for consumers of up to $7,500 for new electric vehicles and for the first time ever, a credit for used electric vehicles of up to $4,000. A credit is also included for 15-30% for qualified commercial vehicles purchased. While there are many controversial qualification requirements in the consumer and commercial credit, we will take it as progress none the less.

At the state level, California has announced a ban on the sale of new gas-powered vehicles by 2035 — with many states expected to follow — with a phased approach of EV/hybrid requirements leading to 2035. California also announced it will fine automobile manufacturers $20,000 per new vehicle sold, for non-compliance. This regulation mirrors Shanghai’s license plate fees of $14,230-plus for gas vehicles, which are free to EV consumers, clearly encouraging adoption.

Our industry is also seeing more competition from outside our sector than ever before. Starbucks earlier this spring announced an EV-charging network partnered with Volvo and ChargePoint Inc. that covers a 1,350-mile route from Denver to Seattle. Beyond this, it is not uncommon to see EV chargers in places where gas pumps traditionally have not existed such as grocery stores, shopping malls, movie theatres, drug stores and even IKEA, which announced a 25-location network in partnership with Electrify America, an electric vehicle direct-current (DC) fast-charging-station network.

For convenience retailers who want to future-proof their business but are hesitant given fiscal commitment, the good news is that funding is surging right now.  

A good place to start is by reviewing the National Electric Vehicle Infrastructure (NEVI) plan for the states within which you operate. These state-specific plans capture the $1 billion each year for the next five years allocated to charging infrastructure by the federal government.

While every state plan has different criteria, in general, they include information on qualifications and how to apply to have 80% of EV installation and hardware costs reimbursed to you. Beyond this, an ample volume of incentives exist that can contribute to the remaining 20% of investment from sources that include states, utility companies and Volkswagen’s settlement funding.  

Setting the stage, however, for a successful grant is competitive and time consuming. Some programs are first come, first served, while others include a project narrative. Without getting into the weeds, these project narratives are not about the company story you want to tell. Instead, it’s about shaping the story in terms of what the funding agency needs to hear for their scoring criteria.

Profitability from providing EV charging should be looked at beyond the margin you can earn per kilowatt-hour. With an average dwell time of 23 minutes, you have an incredible opportunity to build the basket from there with some consideration including:

While environmental policy still has a long road of critical change needed for widespread EV adoption, the shift is, without any doubt, coming fast. Total share of fuel gallons will not only decline year over year with continued EV adoption, but further so from efficiency advancements and requirements of internal combustion engines compounded with higher fuel prices.  

Convenience stores are the centers of our communities and offer the amenities that drivers have come to expect. Our desirable locations can alleviate consumer range anxiety, which will lead to advancing EV adoption. While the changes are complex, our industry has the ability to lead in EV transformation and adapt our model from ‘convenience and gas’ to ‘convenience, food and energy.’

Peter Rasmussen is a strong industry advocate, recognized convenience and energy veteran, and CEO and founder of Convenience and Energy Advisors (Convenienceandenergyadvisors.com). He can be reached at [email protected]

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