The highway service station is getting the face of a bank branch

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Mobility as we know it is changing by leaps and bounds. Today, it still relies heavily on fuels from crude oil. But that scenario is changing. It is not unreasonable to think that a significant part of the fuel retail network in some markets might not be profitable by 2035. With a view to such a future, there is a sector that is preparing to receive the onslaught of the energy transformation: that of service stations, which are already beginning to change their business model to see themselves more and more as service providers.

Although the speed of change will largely depend on the environmental policies adopted by different countries, energy companies have already begun to shape the model of these establishments. The gas stations of the future will be a service supplier that will have to respond to the needs of electric, hybrid, autonomous and shared vehicles. In addition, the percentage of profit from gasoline and diesel will continue to decrease.

A sector accustomed to money coming by itself and faces a loss of its residual value brutal. Because the problem here is that gas stations belong to a type of business that is dying out: businesses with a relatively low barrier to entry of intellectual and strategic preparation, such as bars, tobacconists or similar. And, just like the banks, which have buried billions of euros in digitizing themselves without understanding that the problem is that the value proposition has perished and that it no longer supports the current structure, they have thrown themselves into the arms of technology. Are service stations the new bank branches of the future?

In the first place, as some analysts already point out, the electric car will be increasingly more efficient and cheaper. We are seeing it with a substantial decrease in the cost of batteries. Second, hybrid and hydrogen vehicles are preparing the battlefield for the next few years, having already penetrated virtually all automaker programs. This development poses a huge threat to fuel retailers.

Service station.

And one of the forces that is driving this movement is also the implementation of regulations aimed at limiting greenhouse gas emissions. For example, the UK has mandated that by 2040 all new cars and vans sold in the country must be capable of achieving zero greenhouse gas emissions, a requirement that will increase demand for electric or hydrogen batteries.

Yes, gas stations and service stations have some difficult years ahead of them, due to the need to modernize. Many will opt for a step change, offering fuel and chargers at the same time. Others will want to reinvent themselves from scratch.

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The underlying problems

To delve deeper into the matter, we have interviewed Javier G. Recuenco, CSO of Singular Solvingwho points out that one of the fundamental problems stems from the fact that “the new generations have no interest in the car. It neither serves as a status symbol nor a projection of who you are” and expects that 60% of service stations will lose between 40% and 60% of their residual value in the next 5 years.

The impetus for this disruption will come from a variety of powerful new digital technologies, from artificial intelligence to robotics to the Internet of Things. And all this is likely to change the design of gas stations and convenience stores, somehow taking advantage of new digital tools.

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However, Recuenco points out that what is happening is that “they are trying to turn EESS into places full of terminals and technology without any purpose or value.” “I personally believe that in most of the scenarios that are considered, technology does not solve anything when you have a serious business model transformation problem. It is quite likely that a lot of small entrepreneurs, who are not particularly fluent in understanding value propositions, spend money on a series of technology that is then going to be useless, ”he explains.

Recuenco compares the phenomenon with that of the transformation of the banking sector. “It is the same as with banks, which have spent 4,000 million euros not to move the needle even a single millimeter, because their main problem is the value proposition. Most likely, they will try to update in a technologically haphazard way so as not to completely tackle the problem, ”he points out.

And meanwhile, all the companies are already making moves to draw strategic alliances with companies from other sectors. Repsol, for example, with a network of 3,500 service stations in Spain, maintains a policy of association with companies such as El Corte Inglés o Amazon, with ten gas stations that have Amazon Lockers. Also with others such as Correos, Starbucks or ONCE. Not only her. Cepsa has several agreements with Carrefour, Amazon and Correos. And thanks to its agreement with Ionity, it plans to install up to 100 electric charging points in Spain and Portugal.

Charging a hydrogen car.

“All the historical agreements that have been made in the EESS have never given money, it has only come from fuel. In fact, no one has made any money from the store“, comments Recuenco, who explains that it is not so easy to reconvert a business model where the profit was in the fuel into a series of business models in which the franchise suppliers have their profits tied up before starting That is, they have to make an absolutely insane amount of sales just to cover the entry costs.

Spain is also one of the countries that is betting the most on hydrogen as energy for mobility. In fact, the Hydrogen Roadmapapproved by the Government of Spain, contemplates the implementation of a network with a minimum of 100 hydrogen stations by 2030. In this way, these vehicles are presented as a great alternative to achieve zero emissions with certain advantages such as refueling times similar to combustion, they do not need a plug in the garage, they offer greater levels of autonomy, and less dependence on the battery. So it is not unreasonable to think that the electric car will dominate in urban centers and the hydrogen car on long journeys.

Adapt or die

In Xataka we have also contacted the Group of Retail Sellers of Fuels and Fuels. His secretary general, Víctor García Nebreda, thinks that at this point we have to be realistic. “To supply all the energies that can be present at the same time, it would be necessary to make multi-million dollar investments that in most cases they would not be amortized and it would also be necessary to have enough land to locate them, which in urban stations does not happen in most cases”, he comments.

It also delves into the recharging points where there are already many stations that have them but “the problem is that the electric vehicle generally refuels at night in the parking spaces and that they are not yet a product of choice for traveling due to their short autonomies “.

García Nebreda also agrees that neither the store nor other services can substitute gasoline: “The main income continues to be fuel and, if they are not sold, the synergies with other services will not occur”, he points out. And he emphasizes that the transformation has been taking place for years, but that the logical thing “would be to take advantage of the logistics network that the 12,000 Spanish stations represent to continue supplying the energy used by the vehicles at all times. Something complicated as it is difficult to guess what the final result of the energy transition will be.

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There is another important factor: as shared mobility continues to gain traction, another significant change will support it: the emergence of autonomous vehicles (AVs). There are already numerous companies, including traditional OEMs like Ford and Toyota and new digital players like Google and Uber, are investing heavily in the development of autonomous driving. As autonomous vehicles replace human drivers, shared mobility services will become less expensive for customers and will grow.

And that hits fuel retailers squarely, because refueling or recharging of automated mobility-sharing vehicles will commonly occur while the vehicles are empty of passengers, in AV-only parking areas located outside of urban areas. . The result will be a decrease in customer traffic at service stations.

In this regard, Arturo Pérez de Lucía, general director of the Business Association for the Development and Promotion of the Electric Vehicle (AEDIVE) is clear about it and reaffirms the need to install chargers in EESS. “Unlike fuel, which needs storage tanks at service stations that meet a rigorous ITC and has tightness verification and leak detection systems, recharging infrastructures simply need a connection to the network electricity, which is why the charging points can be installed in service stations or in other locations such as restaurants, hotels, rest areas, etc”, he comments.

Electric vehicle charging point.

If service stations want to continue to be the reference for drivers to stop to fuel their vehicles, whether with fuels, electricity or hydrogen in the not too distant future, they must bet on having this type of infrastructure. “As an example, as a user, when I travel from Madrid to Asturias and vice versa with my electric car, I usually stop at a rest area in Villapando, next to a restaurant where I take the opportunity to eat, have a coffee or a snack while I recharge 10 or 15 minutes, which is a more than reasonable time to stretch your legs and rest on the trip, as stipulated by the DGT. That restaurant has a service station opposite, but those of us who use electric cars do not notice its existence because it does not yet have recharging infrastructures ”, he explains.

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Are gas stations destined to disappear then? “I would not speak of disappearance, among other things, because service stations enjoy strategic locations, especially for roaming, which make them very attractive for supplying any energy source needed to move a vehicle. On the other hand, those service stations that do not adapt to the new, run the risk of not being attractive to users”, says Pérez de Lucía.

With all the possible scenarios on the table, we will still have to wait a little longer to find out the fate that awaits some establishments that, without a doubt, have been part of a consumption habit rooted in drivers for decades. A sector that is facing an inexorable transformation and that will soon begin to step on the heels of all businessmen, if it has not already begun to knock on their doors.

Images | unsplash

Mobility as we know it is changing by leaps and bounds. Today, it still relies heavily on fuels from crude…

Mobility as we know it is changing by leaps and bounds. Today, it still relies heavily on fuels from crude…

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