#1: Electric vehicles will bring change
A recent headline on the Politico website asked this challenging question: “Electric vehicles are changing the way Americans fuel up. Will it mean the end of the gas station?”
Hopefully not. But in all honesty, gas stations and their modern equivalent, convenience stories, could be in trouble. Powering vehicles by electricity instead of fossil fuels will involve tremendous change, and Politico dug into a lot of issues that remain undecided — starting with the very sale of the electricity for batteries.
The first thing to do is acknowledge that the revolution is upon us. Kelley Blue Book reports that automakers have sold 576,000 electric vehicles through the first nine months of 2022. That is 70% more than January through September of 2021.
Ford and General Motors have set a goal of 50% electric sales by 2030. Other automakers are certain to follow that lead — or aim higher. The Biden administration wants to build a nationwide network of 500,000 charging stations.
“Who controls those stations and the fuel coursing through them is the flash point of a fight between the electric utility and the convenience store,” Politico reported. “The outcome will impact where Americans charge their EVs and how much they pay.”
As electric vehicle sales increase, they will create a profound shift in the fuel supply. Today the supply begins underground, with oil drilled, followed by gasoline sold on public markets.
Electricity is completely different. It is a more regulated industry, and the biggest utilities have territorial monopolies in which the law makes them the only supplier. In one of many possible scenarios, if that more complex system holds, those who sell electricity to recharge batteries will gravitate toward locations with lower costs.
Advocates for utilities and convenience stores are already butting heads about the issue. It’s far too early to know how this will end, but Politico may be correct when it says the two competing interests could reach agreement on many issues that allows convenience stores to make money recharging batteries.
On the other hand, it also is possible that drivers of the future will recharge their vehicles at home, work or a coffee shop. The need to stop at a convenience store would be eliminated — replaced by a more convenient facility that allows you to recharge a car while you’re doing something else. A separate stop to refuel and grab a bag of Fritos would no longer be required.
There is early evidence that this is happening already, as Politico quoted a convenience store operator who installed battery chargers but has had very few electric cars stop by to refuel.
However, that alone should not mean the demise of convenience stores.
What is to stop these operators from transforming themselves from quick stops to higher-quality, coffee-shop-style, sit-down places to get a snack or a meal? The answer to that particular question is “nothing,” but the answer to the question about what will change as electric vehicles arrive appears to be “everything.”
— Jack Ryan, McComb Enterprise-Journal
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#2: The economics of electric cars
Forgive a second consecutive editorial about how recharging electric vehicles is poised to change decades of refueling habits. But the topic affects every driver and deserves further exploration.
The previous editorial, based on a story from the Politico website, discussed how the rising acceptance of electric vehicles is likely to change drivers’ quick-stop relationships with convenience stores. This one is about the high-stakes, big-money battle over the economics of electricity.
Specifically, convenience stores that have installed electric charging stations are crying foul about a common utility billing practice known as a demand charge. It is not applied to residential customers, but instead to businesses like manufacturers that use a lot of electricity.
“The fee is assessed on the few minutes of the monthly billing cycle when the customer is using the most kilowatts,” Politico reported. “Power companies have always charged this kind of fee as a means to recover the substantial cost of providing service to the customers who need a lot of electrical infrastructure. But the rationale goes haywire when applied to electric vehicles.”
That’s because a electric vehicle fast-charge station requires a lot of current to put more power into a battery quickly. The story quotes an Iowa truck stop operator who has installed two fast-charge stations. When both are in use at the same time, the two chargers use as much electricity as the truck stop’s six restaurants, 56,000 square-foot store, gas pumps and offices combined.
If that happens regularly — and it’s going to, because every forecast says that sales of electric vehicles will continue rising — a convenience store/recharging station could become a gigantic electrical user. And a utility’s demand charges will hit them hard.
Utilities believe the demand charge burden on convenience stores is temporary. They say that as electric vehicles become more common, charging stations will be in use more time each day. That means more customers will help pay for the demand charge and the store will be able to make money on the electrical transfer.
Some utilities also are offering “demand charge holidays,” where they waive or reduce the fee for a period of time to ease the transition to electricity. Store owners, however, smell a rat, suspecting they still won’t be able to make any money once the holiday ends.
Wrestling matches like this don’t get much publicity in the electric vehicle space. Demand charges are a more difficult topic to discuss than the rise of Tesla or emission-free driving or saving the planet.
One of the many challenges of this automotive transition is to make it appealing for drivers. Many won’t buy an electric vehicle if it’s 25% more expensive than a gasoline-powered model. And it is essential that, over time, the cost of recharging gets below the cost of a tank of gasoline. Otherwise, why bother?
— Jack Ryan, McComb Enterprise-Journal
