Gas stations as electrified cars proliferate.
These things you find on just about every corner, they become a little anachronistic, but I believe the way they can cope with that is to return to their roots when they were known as true service stations.
The National Association of convenience stores, says about a hundred and twenty thousand of those also sell gas.
That's the majority of gas stations out there.
Let's round up and say at most, there are a hundred and fifty thousand fuel stations of all kinds around the country.
You look at that and say okay, that's a lot and a lot of good real estate but electric cars, they're a tiny sliver of automotive sales.
What do they got to worry about?
I wouldn't turn my back on the ocean.
Boston Consulting Group says sales of electrified cars of all types, not just pure battery electrics will exceed that of combustion vehicles.
And while we think pure EVs are a threat to gas stations, don't forget that hybrids of all types also reduce fuel usage per mile travel.
So don't just think Tesla versus the gas stations.
It's a much bigger story than that.
Volvo will be a pure electric brand by 2030.
General Motors by 2035.
California and Washington state have announced the bans on the sale of new combustion engine cars by 2035 and 2030 respectively.
A permanent expansion of working from home and a new appetite for delivery services will all tend to be more efficient in tasks accomplished per fuel gallon.
Gas stations have to keep an eye on autonomous ride services as well.
Those pilot efforts may use combustion cars now, but if that industry ever booms it'll almost certainly be all electric, converting a lot of miles driven.
Now you say gas stations do have revenue from service bays and smog test services.
Yes But increasingly electrified cars need less of the former.
Purely V's need none of the ladder.
And I think overall as cars become more high tech proprietary and need special tools and equipment, owners think less about dropping to the gas station for service and oil changes than they used to.
Now let's paint a portrait of the local gas station.
First of all, only 5% of them are owned by the company whose name is on the big sign according to the American Petroleum Institute.
That means 95% are owned by some other business entity, and of those about two thirds are owned by a small time proprietor.
It owns no other gas stations just has the one location.
Average take on fuel sales is estimated to be about $0.12 a gallon.
And then a whole lot of other revenue accrues from the convenience store.
That's why they all have one for the most part, but that convenience store revenue is secondary.
You don't go there, unless you first arrived for fuel.
It's not a destination in itself.
It's a need because the needle is getting toward E. So we get back to the fuel story.
Boston Consulting Group estimates that anywhere from 25% to 80% of gas stations will be at risk of going under by 2035 depending on an array of electrified car scenario Which isn't to say, there aren't some bright spots, for gas stations.
First of all, they could be facing a sorta, thrival of the fittest, in the medium term.
For example, Petaluma, California, about a half an hour north, of where we are right now.
They recently adopted a ban, on new gas stations.
Remodeling gas stations, relocating gas stations clearly hoping for evaporation by attrition, but at the same time, miles driven by gas cars won't drop off that rapidly.
So the few remaining stations if they do start to vanish, get more business in their area.
San Francisco a city famous for a long running war on cars Has almost no gas stations left, but not a big drop in the number of fuel burning cars in the city and passing through the city again, a win for the survivors on each corner.
And in between those two lines Nevada, California, which recently passed an approval for a giant Costco gas station.
Great news for gas stations, you say, not really.
There was rather unprecedented public opposition, and it was only approved when Costco agreed to add ten level three fast chargers.
How many of those sole proprietor gas station owners could afford to do that?
And a lot of the future of gas stations will vary by geography.
Those that sit along big interstates, they've probably got a much better glide path.
Due to lots of long haul drivers and trucking traffic, then one that's tucked into an affluent woke suburb that is all about driving Tesla's and electrified Volvo's, but all these positives and negatives don't change one truth.
Gas stations are the tail on the dog of transportation change.
Boston Consulting Group lays out several ways they might want to try to move up body toward the head and the neck.
The most obvious step is become a charging place, add charging locations to your gas station.
Well, what pumps do you pull out to make room for that?
And what about the throughput problem?
It's three minutes to fill up a car.
It is not three minutes to fully charge an electric car, you have a big problem with lane location and revenue throughput.
Also take a look at what's going on with shells green lots, a division of shell that is all about charging infrastructure.
But gas stations are only one relatively small part of their master plan.
They look to put charging a lot of other places.
And the last problem with just going electric and gas stations is a sourcing issue.
To gas station owners have a competitive market to turn to to get gasoline, lots of refiners and jobbers that compete for their business to sell them gas and put it in the tanks underground.
Totally different with electricity, which comes from a local monopoly called a utility.
And the fuel is not on wheels, the fuel has to be delivered electricity via expensive upgraded infrastructure.
And charging hardware that is not yet universal across the industry the way gas pumps are.
The next strategy is to go digital.
This should be done no matter what.
Any garden variety Chipotle a location is more digital than any gas station for the most part.
Why can't you preorder something from the C store so that while you're pumping your car full of gas, it's brought out to you at the gas location.
Instead of you leaving your car at the island walking in getting in line, all that 1980s rigamarole.
Then there's the idea of going mobile Why do I have to go to a gas station at all?
Why can't that business be one that comes to me and divorces itself with the real estate?
Amazon can deliver packages to the trunk of my car if I have the right kind of car.
Can the fueling industry go mobile?
I know there are a lot of technical and regulatory hurdles, but I would much rather never visit a gas station again.
Just get out of my car in the morning and say, the needles back around F, where I always want it to be.
That also can be a digitized service that I never have to request the car, does it for me if we learned anything in 2020.
It's that mobile delivery is hot.
And finally rethink the entire purpose of that gas station real estate How do you make it a destination?
Not for fueling charging, but for something else.
And while I'm there, I feel in charge.
How about a premium fast casual restaurant that I want to go to?
And while I'm there to top up my car, can it become an Amazon locker center with easy returns counter?
That's interesting, or what about turning into a dark kitchen.
Where maybe a Burger King is doing all of its cooking for a delivery service but there is no walk up area, or having some combination of all three of those.
It's rethinking the whole idea and frankly redefining what we used to call a service station.
All right, about now a lot of you are saying wait, wait a minute.
Why don't these gas stations become battery swapping stations, I pull in, get a fresh battery pack and take off in three minutes.
It seems very elegant, right?
very analogous to how we pull in and fill up our cars on liquid fuel now, but it doesn't work for a lot of reasons.
First of all, car makers do not want to have a common battery pack.
There's too much innovation going on right now.
Battery packs are very much something that defines the design of a car.
And they don't want to all be tied to that together, they hate each other.
And after a hundred years of combustion cars.
They still barely share any common components like engines and transmissions.
It ain't gonna happen with battery packs.
Now you may say what about in China and Neo is doing a lot of this.
Different market with different government decrees that we're ever gonna see here in my opinion.
And this has already been tried out, a better place and MTesla both went hard at it, looked at it and tried to make it work and both abandoned it.
Get away from the battery swap idea.
I don't see it in any shorter midterm.
Bottomline the gas station has to watch not just sales of electrified cars, but utilization miles as those move away.
From those that consume fuel or to ones that consume less fuel.
To gas stations live on miles and fuel consumed, not on pink slips.
The other key is to rethink what is the draw?
And what is the ancillary, once the draw brings you in?
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