There's a tsunami coming, and gas station owners and investors need to take note of the warning signs now so they can not only survive but thrive in a changing world. Electric vehicles are reaching the point of mass adoption worldwide, with consumers, businesses, and governments all making the switch to electric cars. Most predictions say it will take a minimum of 10 to 15 years before consumer adoption and production can meet climate change goals. But by considering options now, implementing them ahead of time to capture the growth, and optimizing additional income streams, investors in this area of commercial real estate should be able to weather the storm with minimal impact.
The future is electric
Electric vehicle adoption has been growing consistently for the last decade, and widely accepted predictions see the growth continuing. This leads to the question as to what the future of gas stations and travel in general will look like. With charging station competition from grocery stores, restaurants, malls, and other retail stops that potentially offer better entertainment or higher-quality services while waiting for a charge, the future of gas stations may appear bleak. In fact, a study by Boston Consulting Group found that around 25% of gas stations across the globe risk closure by 2035 if significant changes to their current business models are not implemented.
Will gas stations become obsolete?
Luckily, with some accommodations, gas stations are positioned to do just fine as more electric vehicles hit the road. Gas stations are a known, dependable stopover for road trips, even in unknown locales. In most countries, you can rest easy knowing there's a gas station strategically placed between long stretches so that you can refuel with gas or diesel.
Currently, that assurance is lacking with electric vehicle charging stations. Gas stations, especially if ready to accommodate the longer times consumers must spend there, can alleviate that hesitation many would-be owners of electric vehicles might face.
Although big shifts are happening as people switch from fossil fuels to electric vehicles, there will still be the need for gasoline and diesel for the foreseeable future, even with mass adoption. Not everyone will be able to afford to make that switch in the short run, and a good majority simply may choose not to. Those classic cars, beater trucks, and paid-off vehicles are still worthwhile to many, even with government incentives to buy electric. There will also be lag time in efficient technology for larger work vehicles, public transportation, tractor trailers, and other industrial transportation.
What can be done to stay ahead of the curve?
In email correspondence with Lisa Woodruff, vice president and global head of retail for Turner & Townsend, a leading independent consultancy for construction and capital projects, she stated that “gas stations that look to build up their charging network will now need to change the retail services and products they offer as their customers transition from being on-site for 5 minutes (for traditional fueling) to 25 to 30 minutes (for battery charging).”
There are opportunities to be had in offering value-added services customers can enjoy. Income streams can potentially be generated from expanded or higher-end food, beverage, and tobacco sales, which currently account for at least a third of nonfuel gas station sales. Gas stations potentially could make coming in more of an experience or a sit-down atmosphere, whereas now, most gas station models are a grab-and-go type of setup. There are also ad revenues that can be generated as people sit comfortably in their cars at the charging stations.
The Millionacres bottom line
With proper preparation, most gas station investors will be able to meet the growing demand and potentially even capitalize on it by offering higher return on investment (ROI) services that don't make sense in the current market. But some considerations need to be taken into account, including available space for longer charge times, the physical act of and downtime associated with infrastructure improvements, and properly accounting for the costs of running the charging stations, as well as inevitable maintenance and technological improvements over time. Luckily, investors have years to contemplate and implement these changes to keep with the times and profit from the change.