In many countries, the end of fossil fuels powered cars has been announced. Gas station operators are now challenged to adapt to these changes by rethinking and adapting their soon-to-be-outdated business model.
Scenario 1: Gas station 2.0
Squeezing out traditional principles
Many service station operators will try to exploit their current business model for as long as possible. Typically, this model is based on the sale of fossil fuels, supplemented by profitable offerings of everyday products and car washing, depending on location and customer frequency. "60 percent of all customer contacts no longer have anything to do with fuel," says Aral CEO Patrick Wendeler. Furthermore, these service stations will withdraw from the workshop business, as the trend is toward an increase in commercially used vehicles that are contractually bound to the workshops of operators and suppliers.
The service station 2.0 will offer isolated charging stations for electric cars, primarily to extend the range. That is why these service stations will not be found in city centers, but mainly on the outskirts and in rural areas. In the best case, they will offer fast chargers with state-of-the-art technology, but due to the immense investments, standard chargers are more likely. The service station thus becomes an extended road space where the past and the future - combustion engines and innovative drive technologies - meet.
Scenario 2: Charging Hub
Radical conversion to the post-fossil portfolio
In this scenario, hydrogen infrastructures establish themselves alongside electric charging points. Since the transition is expensive, only the major oil companies or charging providers will follow this scenario. The approximately 1,000 hydrogen filling stations that Germany will need in the future are part of the development in this area. Ubitricity, one of Europe's largest providers of electric charging infrastructure in public spaces, was acquired by Shell at the beginning of 2021 - an important signal. Germany's largest service station operator Aral plans to offer fast-charging stations for electric cars at around 120 service stations by the end of 2021: This will involve providing a total of 500 individual charging points with a capacity of up to 350 kilowatts - enabling electric cars to charge enough energy to travel up to 350 kilometers within ten minutes.
Car sharing, rental cars or delivery fleets will find their energetic home at these hubs, unless they build their own infrastructure near their distribution centers. In addition, charging parks will be needed primarily in the countryside, in peripheral locations, to allay consumers' range anxiety. The most urgent need for these charging stations will be along highways and trunk roads, as this is where the biggest percentile of heavy-duty traffic is traveling.
Scenario 3: Mobility Hub
Radical renewal of the business model
The central factor that will make service stations attractive in the future is their location. However, they will no longer be considered as gas stations in the conventional sense - which is why they will be less and less recognizable as such. Instead, they will be transformed into mobility centers: places with high customer frequency that bundle various mobility offerings, supplemented by offers and information on all aspects of mobility and energy. These hubs have the potential to drive the electrification of urban mobility - and at the same time reduce traffic congestions caused by the transport of goods and people.
What will the mobility hubs of tomorrow look like? They will offer numerous charging points, battery swap opportunities (for cars, bicycles and scooters), service point for autonomous vehicle fleets, spacious lounges, landing platforms for flying taxis, rental and subscription offerings, ideally combined with public transport and/or long-distance travel options. At the same time, these hubs will remain active in some of their traditional business areas. Presumably their function as 24/7 supermarkets will continue to be a major part of their business, they will serve as information centers, and differentiate themselves according to neighborhood and clientele.
Change is vital for survival
As the future begins to take definite shape, the implications for fuel retailers are both clear and severe. Fuel retailers no longer have the luxury to wait and see what happens. In order to meet these challenges head-on, leaders of fuel retail organizations must ask themselves a few key questions:
- What is the environment in the company’s most important markets likely to be in the years ahead?
- What will the service station of the future look like?
- What new products and services should the company offer in and outside its service stations?
Answering these questions will disclose critical areas for action. By seizing these opportunities, service stations can carve out critical roles for their business and they will not only survive but thrive in the years ahead.
Written by: Lorenzo Federici