Canadian businesses rush to plug a gap in electric-vehicle charging: Don Pittis

The relatively small number of electric vehicles you see on the road today masks what many experts say is a disruptive revolution coming tothe business of refuelling our vehicles.

With someclaiming as many as 80 per cent of conventional gas stations could be driven out of business in 15 years,Canadian companies are at the forefront of figuring out how to profit from the coming transformation of the business model for how we get a fill-up.

And as with the effect ofprevious technological disruptions on suchfirms as Kodak or former music titan PolyGram, unexpected innovations mean there is no guarantee thatestablished players will retain their dominant positionin a market where all the rules have changed.

The increasing number of battery-powered offerings at last week's CanadianInternational AutoShow in Torontoand the many more in the pipelinehint at an energy transformation fuelled byclimate change and startling advances in electric-vehicle tech,meaning the recharging business isnow playing catch-up.

Growing demand

Repeated studies have shown there are not enough chargers even for existing demand, saidColleen Kaiser, who researches the electrification of transport for theSmart Prosperity Institute, a Canadian think-tank studyingmarket-friendly sustainability.

On a life-cycle basis, studies have shown electric vehiclesare already cheaper than their internal combustion equivalents, and competition and better technology is beginning to push prices down.

Experts say that will inevitably push EV sales up.

"What we are starting to see is the more progressive oil and gas companies are now looking at themselves as providers of power to fuel transportation," said Kaiser, pointing to Canadian oilsands giant Suncor, which has already begun to install electric chargers at itsPetro-Canada gas stations.

But as with previous technological disruptions, Kaiser saidnew growth in the EV-recharging business is not simply a matter of replacing gas pumps with electrical outlets. Perhaps the most significant change in the business model is that the many people who currently go to the service station for a fill-up will be able torecharge at home or at work.

As Kaiser says, if we had gas pumps at our houses, we wouldn't be using gas stations, either.

Among the many other complications is having enough power in the right locations. A bank of EV chargers in full use demands as much power as an office building, Kaiser said, and that kind of juicemight not be easily availableespecially in remote areas where chargers are needed.

Even if people switch to EVs as quickly as some forecasts suggest, there will still be decadesof demand for conventional fuelling stations, as existing vehicles gradually wear out and are replaced by electrics.

End of the retail fuel era

Research by theBoston Consulting Group (BCG)suggests that the world faces "the end of an era in fuel retail" as gas stationsbegin to disappear. According to the authors' calculations, many traditional gas stations simplywon't make enough money.

"In a market environment in which electric vehicles (EVs), autonomous vehiclesand new mobility models take off rapidly, up to 80 per cent of the fuel-retail network as currently constituted may be unprofitable in about 15 years," reads thereport.

But that doesn't mean everyone is suffering. Paradoxically, even as existing service stationsface a future profit challenge, new entrants are rushing to figure out ways to make money from a shortage of electric-charging points.

Analysis of Kodak's collapse after the arrival of digital photography helps show why businessdisruption by technological change can be perplexing.

For instance, Kodak did not stubbornly refuse to make digital cameras.Instead, as digital imaging took off, the advantages the company had created with massive investments inthe world's best film technology suddenly became a liability, and nimble specialistsin electronics and software crowded intothe digital photography space.

Experts now say something similar has happened in the automotive business, as electric engines wipe out years of competitive advantage by German carmakers in sophisticated internal combustion mechanics.

Whatever the future of conventional gas stations, Travis Allan, vice-president and general counsel at the EV-charging systemFLO, saidthat his company's system of electric fast chargers is an expanding business.

FLO, which just announced a deal to install chargingpoints at Canadian Tire stations across the country, is owned by the award-winningQuebec-based startup Addnergie.

As well as building out a charging network, the 10-year-old privately held firmlisted in one business directory as an "application software" company makes charging hardware for home and commercial use. It is also an expert in the software needed to regulate the electricity flow and bill customers. And the company is expanding its business into the U.S., including througha recent deal with electricity giant Consolidated Edison.

While Allanagrees that EV owners will charge at home when they can, he saidthere are many reasons besides long journeys whypeople will want access to public chargers.

In urban cores with street parking, such as New York and Montreal, for example, there's a need for street-level charging. Car-share vehicles, ride-hailing companies, plus the eventual arrival of self-driving vehicles will also contribute to commercial charger demand.

The Norway experience

There are reports that the Quebec-basedconvenience store and gas station company Couche-Tard, which operates under the brand name Circle K around the world, is using its subsidiary in Norway to lead the way in global research on how to continue to profit in the new world of EV charging.

Even atexisting gasstations, studies show the associated convenience stores are a bigger source of profit than fuel sales. Couche-Tard is exploring the best way to offer services to a captive audience of customers waiting for their vehicles to charge.

Another new entry into the business is the Ontario-based Ivy Charging Network, currently installing 163 chargers at more than 70 locations across the province. A private business owned jointly by Ontario Power Generation and electricity distributor Hydro One, Ivy will effectively be drumming up business for its parent companies by making it easier to use electric vehicles, saidIvy co-president Theresa Dekker.

"Ontario's electricity system is very, very clean, and so it just makes sense to use our clean electricity in the province to help support increased adoption of electric vehicles and increase use of the product," said Dekker.

As withother electricalutilities across Canada andaround the world, the business urgeto sell more product means there will be market pressure to find ways to keep pumping volts even if conventional gas stations eventually disappear altogether.

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