Electric vehicles (EVs) are coming. Tesla has surpassed Toyota as the most valuable car company in the world. It is worth more than Coca Cola, Procter & Gamble, and Disney. Clearly the market believes that electric vehicles have a future.
And there is no good reason to think that this is temporary. EVs make sense. The internal combustion engine (ICE) uses dirty, asset-intensive, hard-to-find fuels. The drivetrains on internal combustion engines have about 2000 parts. The same drivetrain on an EV has 20 parts. Battery power is getting better and every major car company is pledging to have a large part of its fleet be electric by 2030.
A new vehicle today has a life expectancy of eight years. So even if every single new car on the road next year were electric, we would still have a large proportion of ICE cars for the next eight years. Right now, only 2% of the cars on the road are EVs. Given that widespread electric adoption is likely 10+ years away, gas stations are probably safe in their current incarnation for at least 15 years, but fuel volumes will likely be declining over that time period.
What about the real estate? Let’s look at McDonald’s for a comparison. Ray Kroc was good at making hamburgers. But he understood that McDonald’s was and is a real
estate company that happened to sell hamburgers. Similarly, gas station owners need to understand that they own valuable real estate that just happens to sell gas.
estate company that happened to sell hamburgers. Similarly, gas station owners need to understand that they own valuable real estate that just happens to sell gas.
How should c-store owners adjust to the new EV future?
Are gas stations just going to become electric charging stations? This is not likely at this point for two reasons: First, charging can take place at many different locations; home, retail stores, supermarkets, restaurants, lodging, parks. C-stores could lose a large part of their customer base as EV become popular.
Second, the fastest charges take 10-20 minutes, and you can put a charging station in any parking space with access to power, making it likely that grocery stores, restaurants, and shopping malls – any place where a customer is likely to spend a little more time than at a gas station – will all get in on the charging game.
Gas stations on or near highways will likely be able to monetize their charging to a significant degree but most others will end up providing it as an ancillary service.
Now is the time to start thinking about ways to add more offerings at your locations to diversify your cash flows, and also to determine whether you have good alternate uses for your site. CSI can help you review your current situation and determine your best path forward.