EVs and The Service Station of the Future

Tesla Motors is apparently in talks with Sheetz, Inc. to install electric vehicle (EV) Superchargers in the latter's chain of gas stations. This caught my eye, because I was involved in a much earlier effort to install EV recharging facilities in service stations in the late 1990s. It wasn't just ahead of its time; it was stymied by some of the same economic challenges noted in the Washington Post article, as well as physical and regulatory issues that weren't mentioned.

The logic of an alliance between Tesla and gasoline retailers like Sheetz seems sound. Tesla embarked on its strategy to build a network of quick-rechargers in order to sell more cars. Its Superchargers are likely to be more effective in that role if they're installed in places that are both convenient to highways and offer a variety of other amenities for drivers, while they wait 15 minutes or more to top up their car's range. High-volume fuel retailers like Sheetz have already optimized their sites for convenience of location, and they have a wider range of food and beverage choices than the average gas station.

They also provide another essential feature: space. When Texaco was evaluating adding rechargers for GM's ground-breaking EV1 electric car to its Southern California retail network nearly 20 years ago, the fire marshals with whom we met insisted that high-voltage electricity and pumps dispensing volatile fuels like gasoline could not share the same pump island. They had to be widely separated for safety, and few of our L.A. locations had large enough footprints for that. Sheetz, by contrast, typically has large stations--many in rural or suburban locations--that could accommodate EV charging without endangering customers filling up with gas or diesel.

Another obstacle I encountered at Texaco was that EV rechargers are expensive, while electricity is cheap. Even if you're allowed to charge customers for it--we weren't, for regulatory reasons--it takes a lot of usage to pay back the substantial investment in equipment and installation. With EV sales still occupying a small niche in the market, that calculation hasn't changed much in the intervening decades. However, Tesla's primary motivation isn't to make money selling electricity, but to generate profits and support its stock price by selling more premium EVs. I would hate to see the standalone P&L for Tesla's growing Supercharger network, but that's beside the point.

This resolves a major hurdle for Sheetz and other fuel retailers that might want to add EV recharging to expand their customer base, or "green up" their image to enhance the loyalty of current customers, especially among Millennials. The profitability of such an investment would still be questionable, even if they sold EV owners lots of premium coffee and snacks while they wait. But if someone else is footing most of the bill for the added hardware, the extra revenue in the convenience store is all upside.

The service station of the future has been slower arriving than my colleagues and I envisioned when we developed Texaco's first global scenarios for the future of energy nearly twenty years ago. Sales of EVs and cars running on hydrogen have not grown as fast as we expected, while the improving performance of gasoline cars has raised the bar for alternative vehicles. However, current trends suggest that our vision of facilities offering a diverse mix of transportation energy was more premature than wrong. I will be very interested to see how Tesla and Sheetz or others move ahead with this idea.