The adoption of electric vehicles (EVs) will change the face of today’s petrol stations as we know them, requiring a transition to become ‘mobility stations’ of the future, offering a wider range of power sources and convenience services.

Fuel stations as an asset class have held their value and seen limited disruption during the past decade. In a highly regulated environment, the sector has traditionally been competitive with limited movement in the buying and selling of service station sites.

This landscape is in the process of changing significantly due to a combination of factors - inconsistent fuel volumes post COVID affecting the value of the asset, global oil price hikes and the renewable energy revolution taking flight.

These factors are influencing how petroleum companies are thinking about their real estate strategies and capital planning in order to future proof their retail networks, said Natasha Bruwer, Managing Director of Occupier Services at Cushman & Wakefield | BROLL and key account lead for petroleum sector real estate. 

Factors driving fuel retailer location strategies

A recent study on EV adoption and the future of fuel stations in South Africa by Morgan Knowles, Transaction Manager of Occupier Services at Cushman & Wakefield | BROLL, highlighted the need for fuel retailers to determine renewable power generation and storage strategies as a key factor driving location selection. Other factors include EV car registrations to determine the primary nodes EV consumers are located in, evolving battery lifespan technology dictating drive times and the number of charging points needed to be deployed, and the power required for those chargers,” said Knowles,

“It is not if but rather when, EV disruption will impact petrol stations, based on adoption trends in South Africa,” Knowles said. “Disruption risk will vary based on the location of current fuel stations and the ability to expand or relocate, customer needs and segmentation, demographics, local government regulations and existing infrastructure.”

Forecourts of the future

In the next five to 15 years, consumer demand for convenience, coupled with wider mobility and energy trends, will enhance the role of services, said Knowles. “Fuel stations will evolve into mobility stations, offering a wider range of sources (electricity, natural gas/CNG, gasoline, diesel, LPG, biofuels and hydrogen). “This will require adjusting physical layouts (tanks, batteries, pumps, etc.) and coming up with innovative strategies to provide smooth fuelling services to a variety of customers.” Innovative solutions for the additional time needed to be spent at mobility stations include package pick up points, pharmacies, laundry services, gyms, grocery pickup points and co-working spaces. Knowles said the forecourt of the past offered a very singular-service line with 90% fuel makeup. “Today, convenience and ‘to-go’ culture has shifted the consumer demand towards retail shopping and adjacent services rendering fuel only 50% of the offering. The forecourt of tomorrow will adopt wider mobility and energy trends and, as such, enhance the role of services offered resulting in fuel making up only 20% of the forecourt’s offering.”

EV sales accelerating – but slowly

Global EV sales jumped by 41% in 2020 despite the Covid-related worldwide downturn in car sales in which global car sales dropped 16% – and this trajectory is expected to continue with many countries worldwide shifting their policies towards accelerating EV uptake. 

According to the National Association of Automobile Manufacturers of South Africa, 205 electric vehicles were registered in South Africa in the first half of 2022, while for the whole of 2021, only 218 were sold.

South Africa but lacks the subsidies or incentives to accelerate the development of the EV market. “We have not yet joined the ranks of those countries experiencing a steep rise in EV uptake and the development of the ecosystem and value chain around EVs. However, this is likely to change and fuel retailers need to start adapting now to operational, locational and retail considerations to be prepared to overcome the decline in fuel revenue,” Bruwer said.