Infrastructure needs to accommodate increased sales of electric vehicles
A total of 867 electric cars are registered in South Africa and with this figure 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 behind in the adoption of electric cars compared to its global counterparts, Ronél Fester, brand specialist in fuel at FNB, says some progress is being made with major motor manufacturing brands introducing new EV vehicles in the country.
Bloomberg’s NEF Electric Vehicle Outlook 2019 report states that more than 2million electric vehicles were sold globally lat year. Expectations are that annual passenger EV sales will rise to 10m in 2025, 28m in 2030 and 56m by 2040. Essentially, the report states that by 2040, 57% of all vehicle sales and over 30% of the global passenger vehicle fleet, will be electric.
Therefore, it “doesn’t take a rocket scientist” to conclude that a fraction of these products, coupled with more affordable stock, could find their way to South Africa, Fester says.
The question is how the fuel service station sector can 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, Fester says fuel service stations “must consider getting on this bandwagon” to avoid missing out on additional revenue opportunities in the future.
“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, South African fuel service stations should consider amending their business models to avoid being left behind.”
Fester says 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 they 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 therefore likely to disrupt the current fuel retailer model which capitalises on providing quick service and convenient products and services while consumers are filling their cars. She says strategies will gradually focus on improving the fuel service station ecosystem to include more partners and brands to satisfy various consumer needs and experiences, from socialising to shopping and meetings.
“Coupled with EV infrastructure development, the buildings and designs of fuel service stations might need to be upgraded to include more facilities, such as bigger rest rooms, wi-fi and larger parking spaces, to accommodate consumers.”
Fester adds: “As fuel prices continue to increase, coupled with shrinking consumer disposable income, electric vehicles will gradually become more relevant in South Africa as they typically consume less energy per kilometre.
“In my view, this provides a compelling business case for South African fuel service stations to start investing in EV charging infrastructure,” she says.