Gas stations, truck stops and convenience stores are the essential infrastructure that allow Americans to leave their homes, drive to work, the store or from coast to coast without fear of running out of liquid fuel, supplies or a safe spot for when nature calls. Many gas stations are open seven days a week, 24 hours a day — and stations are where the National Association of Convenience Stores estimates 40 million gasoline transactions take place every day.
That dependence has turned the transportation sector — which also includes the trucking and airline industries — into the country’s leading source of greenhouse gas emissions. Transportation Secretary Pete Buttigieg has said the future of a green U.S. economy is dependent on this “once-in-a-generation opportunity to spark an electric vehicle revolution.”
The revolutionaries seem steadfast. Automakers have pledged to only produce electric models in years to come. President Joe Biden has touted, since the beginning of his campaign, the goal of installing half a million electric vehicle charging stations across the nation’s highways. But there might be bigger challenges — and expenses — the gas stations strung along the nation’s roads can take on.
Today, 80% of direct current fast charging and “Level 2” charging stations — the fastest way to charge an EV — are located at 10 facility types, according to the Department of Energy’s Alternative Fuels Data Center. The majority of that 80% is hotels and apartment buildings, car dealerships, shopping centers and parking lots — not gas stations.
Mehdi Mahmoodi owns 12 fuel stations across the Bay Area. He has not invested in installing an EV charging station at a single one, nor does he plan to any time soon.
“We haven’t looked into it because there’s not really much profit,” he told CBS News.
Mahmoodi said he hears lots of politicians talk about the rise of electric vehicles, but is not factoring in any major changes to his business model for another fifteen years.
Retailers who install charging stations today are taking a risk. Electric vehicles, while more popular than ever, still only make up 1.8% of the market share. Charging stations are expensive to install. And unlike liquid fuels, retailers in most states only have one electric supply from which to buy: utility companies, which can sell the energy directly to consumers.
This relationship puts gas station owners at a disadvantage as they look to an electric future.
There’s no reliable way to know if or when EVs will permeate a retailer’s market, said John Eichberger, executive director of the Fuels Institute, who is actively researching ways to make the forthcoming energy transition as smooth as possible.
Retailers who want to be EV charging early adopters risk owning antiquated technology in just a few years. Eichberger said this uncertainty leaves owners to make “observational, anecdotal and speculative” decisions when it comes to embracing the electric vehicle market. Do they invest early, build and wait for the demand to come or bide their time yet risk losing out on opportunity?
Hani Hamadi is embracing the future of EVs, but only lightly. He is installing one charging station at one of his seven Michigan gas stations — and it’s not the property he owns around the corner from a Ford plant making electric F-150 trucks.
Hamadi was approached by Detroit-based DTE Energy while he was renovating one of his properties. DTE and the state of Michigan offer incentives to retailers who install EV chargers. A DTE rep told Hamadi a charging station at his location would be a “goldmine.”
Even with their enthusiasm, Hamadi was hesitant but wanted to test the market himself.
“It’s not going to work everywhere,” he said. “You can’t have a charging station across the street from another charging station. It wouldn’t be worth it because the investment is so big.”
His EV charging station will cost $125,000 to $150,000 to install. That’s “no comparison” to a double sided gas pump, which can be constructed for $20,000, Hamadi said.
He expects it will take seven years to start making money off the charger, whereas a new gas pump would turn a profit in less than a year.
Plus, gas station owners will have to get used to a new business model. Not only will they have to rely on public utilities for the energy, Eichberger said fuel retailers will have to figure out what convenience they can offer customers when most EV owners will be able to charge at home.
Add to the challenges that low EV batteries take much longer to fill than a liquid tank. Commercial charging stations can take 10 to 45 minutes depending on their speed and source to fully charge a vehicle. As a result, Eichberger said, retailers will have to offer customers amenities like meals, free wifi and better customer service as drivers wait for their cars to recharge. This could mean more space inside stores, but also for outdoor lots.
Space for retailers is now at a premium. Hamadi said he’s received unsolicited offers to buy his properties and recently sold one in less than two weeks. Eichberger said deep-pocketed investors are in “acquisition mode” looking to “gobble up” properties that can be built up to provide customers with all the space, convenience and fuel options they need.
But mega-convenience stores can’t thrive everywhere. Given the range of most EVs — typically from 200 to 300 miles fully charged — travelers looking to drive cross country need the same fueling options as liquid fuel vehicles. And with many adopting a wait-and-see approach, Biden’s goal of a half a million stations could be years in the making.