There are few certainties todaywhen it comes to EV charging and catering to EV customers, and the questions regarding how retailers should tailor their strategy far outnumber the answers.

Karl Doenges took a stab at addressing these questions in the NACS State of the Industry Summit session “A Practical View of the Future of EVs.” Doenges, who represents NACS on the coming disruption in mobility and EV charging infrastructure, and how that affects convenience retailers, noted that there is a global priority for decarbonization. European lawmakers have approved what is effectively a 2035 ban on new fossil fuel cars. President Biden has claimed that climate change poses a greater threat than nuclear war. From a carbon standpoint, 27% of U.S. greenhouse gas emissions come from transportation, and of that 82% come from the on-road vehicle market.

However, despite an aggressive push in that direction, decarbonization does not automatically mean electrification, nor does it provide clarity on how these goals will play out.

And while retailers need to be forward looking, Doenges stressed that forecasts can be quite unreliable. He illustrated the adoption patterns of household technologies from 1816 to 2019. These ranged from the flush toilet to the smartphone. As early adopters morphed into the mainstream, none of the transitions were smooth. “They’re ugly,” said Doenges.

However, while there are uncertainties with EV adoption today—and questionable profitability currently—retailers need to start looking through the technology stack and thinking about how they can lay the groundwork so that in the future, it’s not just about selling electrons but trying to convert the EV customer into a store customer.

“You’re seeing a lot of significant players that are jumping in and they’ve been very candid,” Doenges said. “They see this as an opportunity to increase basket size, and then on top of that the customer is going to be there for at least 30 minutes.”

EV Adoption

Doenges noted that Americans bought 1.1 million BEV’s in 2023, representing 7.2% of all light-duty vehicles sold. For comparison, Americans bought more than 1.6 million internal combustion engine pickup trucks during the same period. Sales of EVs slowed towards the end of the year.

While there are an abundance of EV options entering the market from a range of manufacturers, the EV market is heavily concentrated with the two bestselling EVs in America—the Tesla Model Y and the Tesla Model 3—representing more than 52% of the market. Globally, Tesla has approximately 19% of the market share while China’s BYD group holds 16.5% of the market share.

“They’re the only two that have been able to accomplish full top-to-bottom, over-the-air software updates. They’re the only two that have proven they are complete software companies,” Doenges said. “The others have only been able to do it partially. They can do the infotainment system,” for example.

Fleet Turnover

Another broad issue regarding EV adoption and carbon reduction is vehicle cost, and this is not exclusively impacting EVs. The average price of a new vehicle in May 2023 was $48,000, while the median U.S. household income in 2021 was $71,000. Further, higher interest rates increase monthly payments—and these are a more important decision factor than overall price when it comes to a vehicle purchase.

All of this tends to impact the fleet turnover of existing vehicles, not only in terms of replacement by EVs, but also with replacement by newer, less-carbon-emitting internal combustion engine alternatives.

“Not too long ago, about half of vehicles were still on the road after 12 years. Now that’s 16 years,” Doenges said. “The turnover rate of the existing fleet has significantly slowed down. That means we’re going to be selling refined products for a very long time. We’re going to have these cars for a very long time.”

Doenges noted that even under an extraordinarily improbable mandate where 100% of vehicles will be EVs starting in 2035, some 40% of the fleet would still be ICE by 2050. So, retailers have to plan on meeting a range of customer needs for a considerable time into the future.

More Work Underway

The Transportation Energy Institute (TEI) continues to develop a variety of EV-focused initiatives, largely with guidance from TEI’s Electric Vehicle Council.

“We’re basically building this airplane as we’re flying it, and there are a lot of questions,” said Doenges. “Where are we on that S curve of adoption? When do I jump in? How do I enter the market? Do I want to own it myself? Do I want to test the water and let someone else do it and I just rent my space? How much power do I need and how much are the utilities willing to give you? There are technology solutions you must consider around that, and so many more questions.”

TEI’s “EV Charger Deployment Optimization” report conducted deep-dive case studies on different markets in the United States. “The purpose of this was to teach people how to analyze data sets to determine demand in the market and how you slice, dice and cross reference the data figure out what’s right for your use case,” said Doenges.

TEI’s recently published “Demand Charge Mitigation Strategies for Public EV Charger Profitability” report addresses what is most often the largest expense—demand charges from utilities. These can impose significant costs on the retailer, especially if there is insufficient customer demand/transactions.

“The demand charge is the bane of many EV charging sites’ existence,” said Doenges. “The more powerful your EV charger, the more concentrated your energy draws off of the grid, and the more you get hit with demand charges.”

A demand charge holiday can be critical in low-volume locations as adoption slowly moves forward. However, the volume throughput can reach a point where it’s cheaper to have the demand charge, and retailers need to understand where that point is and the dynamics that affect it.

TEI’s Charging Analytics Program (CAP) is run in partnership with the Center for Sustainable Energy. The objective is to optimize the profitability of EV charging. To do this, CAP studies and reports on when a market is ready to support more EV chargers and determine how to optimize installations where demand is strongest and transaction volume can be highest. It also works to evaluate charger performance and identify site characteristics that drive profitability so that retailers can enhance revenue by developing the best sites to attract EV drivers.

“Basically, we have to understand how we can make EV charging profitable, and we have to use real-world metrics and quantify all the information and not use anecdotal and qualitative assessments,” Doenges said. “So, we set out to build an analytical tool that took in all the charging data and all the data relevant to EVs and did two things: First, we want to study when the market is ready and when is the right time to deploy EV charging; second, once you’ve got EV charging in the ground, we want to look at trends to see what is happening.”