A pit stop on a Norwegian highway in the middle of fields between Oslo and the Olympics town of Lillehammer will soon offer a glimpse of the future for the global gas station industry. At the Circle K in Dal, 34 miles (55 kilometers) north of the capital, owners of the next generation of electric cars will within months be able to charge their battery in as little as 10 minutes — about one-third the time it now takes. While they wait, drivers can pop inside and wolf down a made-to-order burrito and other culinary items not usually found at gas station convenience stores.
The new power and food services are two of several pilot projects in Norway by Circle K owner Alimentation Couche-Tard Inc., a Canadian convenience-store company that gained a European foothold with its 2012 acquisition of Statoil ASA’s retail arm. Couche-Tard is using the Nordic country as a testing ground for how to respond to the electric-vehicle boom.
“This is a trend that will continue to grow, so what is important to us is to transform with the market, like we have done many, many times over the last 100 years,” Jacob Schram, Couche-Tard’s head of European operations, said in an interview.
The growing global popularity of environment-friendly electric cars, spurred by government incentives and falling prices, is threatening the core relationship between gas stations and drivers who now have various options to reload their batteries. To keep customers loyal in Norway, where electric vehicles now account for almost 30 percent of new sales, Circle K is even planning a 2018 foray into residential charging stations.
“We should transform much more, from expecting that the customer comes to us at the station,” Schram said. “We should maybe start also coming to them.”
According to Schram, 60 percent to 70 percent of plug-ins take place at home, 20 percent to 30 percent at work and in public places, and only 10 percent at gas stations. That’s forcing retailers to step up their game.
At Circle K’s Dal facility, the new supercharger is part of a European-wide push financed by a group of carmakers including BMW AG and Ford Motor Co. Circle K is their northern European partner, with 60 stations planned in seven countries — 20 in Norway alone — and room for six cars per charging station. The retailer will pocket rent from automakers, as well as a share of revenue, according to Schram.
The Norway experiment is being closely monitored by Quebec-based Couche-Tard. The company, which started with one convenience store outside of Montreal in 1980, has gobbled up rivals to build a network of more than 12,000 stores spanning the globe from Florida to Latvia, with most offering fuel. The anemic performance by the company’s stock this year — it’s up less than 1 percent after more than doubling since the start of 2014 — partly reflects investors’ questions over long-term growth prospects.
In the U.S., most U.S.-based gas retailers don’t show much concern about electric cars, at least so far, said Jennifer Bartashus, a retail analyst at Bloomberg Intelligence in New York. Couche-Tard stands out because its international footprint enables it to study a nascent industry in a foreign market.
“If you think about Norway, it’s small, it’s fairly self-contained, it’s environmentally focused, so it’s a unique market that not a lot of other companies will have that kind of presence in,” she said. “Whether or not we really get there, I think there will be a lot of interesting learning that we can take from the pilot.”
With almost 120,000 electric vehicles for 5.3 million people, Norway boasts the highest EV penetration in the world, helped by long-standing policies that exempt owners from several sky-high taxes. For example, a fossil-fuel car buyer would pay an average of 95,000 kroner ($11,700) just for a one-time acquisition tax, according to the Norwegian Electric Vehicle Association.
Electric-car drivers also enjoy additional perks such as free passage through toll booths, access to bus lanes and complimentary parking and charging in cities, even if some of those benefits are being curbed. Slower charging is offered for free, which has left an opening for faster, for-pay options. In addition to the project with carmakers, Circle K plans to add to its 54 new charging stations next year.
Food and services, which come with higher margins, are also part of the strategy. Despite efforts to offer better coffee, pastries and fresh food, Couche-Tard has been struggling to increase that category as a share of total in-store revenue — in part because of the continued strength of lower-margin tobacco sales.
In Norway, where gas stations typically sell hot dogs and, at times, burgers, Circle K has introduced a Mexican food experiment in a handful of stores, with burritos and quesadillas in the $8 to $11 range. Fresh salads are also available as a more healthful alternative. Later, stations may expand seating space and restrooms, according to Schram.
Meanwhile, at a gas station in Oslo on a recent Wednesday afternoon, Jan-Anders Maao-Ruden, 36, plugged his Nissan Leaf into a 50-kilowatt charger, Circle K’s most powerful option at the moment. He said he didn’t know about the new food concept inside. But with five children to feed, it could be worth trying, he said.
Super-chargers at strategic spots throughout the country’s highway network could also be of help, even if Maao-Ruden’s Nissan is able to cover the 110-kilometer distance from the capital to his home in Bjoneroa when it’s fully charged.
“I bought this car in August,” he said. “So I haven’t really had time to get rid of this low-battery anguish.”
Sources and Photocredits: Bloomberg