The fuels value chain is a very mature one and has developed gradually over more than 100 years to support the expansion of the automobile. As roadside retailers develop charging networks, alongside existing fuels and retail offers, it makes sense to reflect that we are still in the early years of development, mistakes will be made and there are considerable challenges as well as opportunities on the road ahead.
Insight Research has always believed that the best way to chart the future is by staying close to the best global retailers (who by definition have got to be very customer-centric) and, from real life experience and study, deduce what works and is likely to grow fastest globally. Over recent years the ‘frontier’ for EV development has been in Norway and we’ve spent more time there than in any other market.
While this approach still works and closely following Circle K’s excellent strategy development in Norway has been and is highly informative, we do however think there are also other unique and complicating ‘local’ factors in the ‘EV revolution’ which make the way this new value chain develops in different markets more unpredictable than would normally be the case for other market innovations. Chief amongst these factors are variations in national de-carbonisation targets, OEM strategies and the broader technological disruption sometimes summed up as ‘mobility’.
The UK Government’s decision to end sales of petrol and diesel cars by 2030 is closely related to where it is on its de-carbonisation timetable. In working out how aggressively your own market is going to regulate on the manufacture of new petrol and diesel cars and how quickly you need to get into the EV charging business, it makes sense to pay attention to where your market is on its own de-carbonisation journey.
According to the experts, unless the UK does something substantial about transportation (oil) and home heating (gas), the UK Government will miss its own legally mandated 2030 target. Governments don’t like to miss their own targets and as a result we saw the tough UK move. This pressure point looks like meaning that the UK EV charging network will have to develop much more quickly than will be the case in some other countries. This could, of course, mean more opportunity for roadside retailers who invest in the right locations and are ready. And, remember that we may see more UK Government market interventions down the track than we are currently expecting as 2030 is an aggressive goal.
In other countries de-carbonisation targets may be easier to hit through other measures (Germany and the US still burn a lot of coal for electricity generation) other markets (Latin America) have put considerable efforts into biofuel and some other markets don’t see the same de-carbonisation priority. As a result, there may be less regulatory intervention to influence the pace of change and the new electric charging value chain will take longer to develop.
Of course, another big consideration for our industry is not just how quickly the new EV charging value chain will develop, but the fact that we are really talking about a new mobility product entirely when we think about the latest EVs and this especially applies to Tesla of course. Volkswagen Group chief executive Herbert Diess had some interesting things to say about this when he was interviewed last week on the Economist podcast channel:
“Electrification is a big chance for us to rebuild the brand. The car is really becoming over the next 10 years really a software product. Software is something much harder for us … this product at the end will work like a smartphone.. part of the software actually is not even in the car, but in the cloud.. this change is probably for the German car industry much more challenging than the change over into electric cars.”
When retail executives in our industry consider the evolution of the new roadside charging opportunity, they not only need to be thinking about the charging on the go needs of the EV driver, they also need to be asking themselves how this new product is itself going to change the behaviour of the customer now and in the future?
Because if the car industry is now more like the consumer electronics industry, we can be sure that these products are going to evolve very rapidly indeed in ways which may not even be apparent yet. This explains why retailers have become so interested in vehicle autonomy which looks likely to be one of the first of a series of mobility revolutions to arrive, at least within this decade. Much more is to come..