Compelling need for fuel stations to get plugged into electric future

JOHANNESBURG – Given that South Africa currently has a total of 867 electric cars registered, according to the Department of Transport, and this figure is likely to increase in the near future, Fuel Retailers can no longer ignore the imminent need to invest in battery electric vehicle (EV) charging infrastructure.

While South Africa still lags in the adoption of electric cars compared to its global counterparts, some progress is being made with major motor manufacturing brands introducing new EV vehicles into the country.  

According to the Bloomberg NEF Electric Vehicle Outlook 2019 report, more than 2 million electric vehicles were sold in 2018 globally. Expectations are that annual passenger EV sales will rise to 10 million in 2025, 28 million in 2030 and 56 million by 2040. Essentially, the report states that by 2040, 57 percent of all vehicle sales and more than 30 percent of the global passenger vehicle fleet will be electric.

It doesn’t take a rocket scientist to conclude that a fraction of these products, coupled with more affordable stock, may find their way to South Africa. The question is – how can the Fuel Service Station sector take advantage of this development?

Currently, there are relatively few EV charging stations across the country, which are situated at strategic public locations, select motor dealers, shopping centres, office blocks, urban areas and across major highways.

In relation to this list, only one of the major fuel service station brands operating in South Africa is currently rolling out its first electric vehicle charging stations in its network – it is only a matter of time until the rest of the industry players follow suit. 

As prominent motor manufacturers and businesses start making visible progress in their EV charging infrastructure investments, fuel service stations must consider getting on this bandwagon.

For a long time, fuel service stations have been among the few business sectors that are fortunate enough to be resilient against tough economic conditions, lower consumer disposable income and exchange rate volatility. However, as the world moves towards a transition to a low carbon future and the automotive industry evolves, local fuel service stations should consider amending their business models.

The growth of the electric vehicle market should not be seen as a threat, but an opportunity for fuel service stations to sustain their businesses while diversifying revenue streams.

One of the biggest challenges fuel service stations will face is increased competition with consumers no longer exclusively relying on them to keep their cars on the road. Therefore, investing in EV charging infrastructure becomes imperative for these businesses.

“The immediate benefit is that EV points take up to 30 minutes to completely charge a vehicle, meaning that customers will spend more time at service stations with a potential to spend more money.”

This development is likely to disrupt the current fuel retailer model, which capitalises on providing quick service and convenient products and services while consumers are re-charging their cars.

As fuel prices continue to increase, coupled with shrinking consumer disposable income, electric vehicles will gradually become more relevant in South Africa. This provides a compelling business case for fuel service stations to start investing in EV charging infrastructure.

Ronél Fester is a brand specialist, fuel, at FNB.

BUSINESS REPORT

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