BP Fast charging Network, About To Be As Profitable As Fuel Pumps, Following Tesla Business Model
It was a matter of time, going to happen sooner or later: the installation, implementation and billing of fast charging points is steadily becoming a lucrative business for many companies; a trend started by Tesla about ten years ago. Back in 2012, Tesla began building a network of 480-volt fast-charging Supercharger stations. By November 2020, Tesla was already operating over 20,000 Superchargers in over 2,100 stations worldwide. The Supercharger is a proprietary direct current (DC) technology that provides up to 250 kilowatts (kW) of power. All Tesla cars except the first generation Roadster come standard with hardware to charge at Superchargers. The navigation software in Tesla cars can recommend the fastest route for long-distance travel, incorporating charging stops.
With more and more players competing for a place on the market, big oil companies are starting to see their EV charging infrastructure business volumes grow. BP has been the first to realize: its charging points will soon outperform the old fuel pumps. When this actually happens (apparently, very soon), we will be facing a very important turning point not only in business practice, but also in technology.
Now, BP is no ordinary, lightweight company: BP plc (official styling BP p.l.c., formerly The British Petroleum Company plc and BP Amoco plc) is a British multinational oil and gas company headquartered in London, England. It is one of the world's seven oil and gas "supermajors". It is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and extraction, refining, distribution and marketing, power generation, and trading. It also has renewable energy interests in biofuels, wind power, smart grid, and solar technology.
For years, electric vehicle charging points have generated more losses than revenues, though with some important exceptions. Faced with this situation, many companies decided to abandon the facilities so far installed, for the sake of more satisfactory and profitable times. That moment seems to have finally arrived, and the fact that one of the world's major oil companies looks so favorably on electric vehicle charging facilities is a very significant milestone.
During an interview with Reuters, Emma Delaney, head of customers and products at BP, commented: "… If I think about a tank of fuel versus a fast charge, we are nearing a place where the business fundamentals on the fast charge are better than they are on the fuel…" In other words, large companies like BP, with greater ease in installing and operating charging points, reach profitability faster than with traditional, fossil fuels.
For BP, car chargers to overtake pumps in profitability race | Reuters
“"If I think about a tank of fuel versus a fast charge, we are nearing a place where fundamentals on fast charge are better than they are on fuel," @bp_plc’s Emma Delaney https://t.co/0jQQti2Ssc
— Simon Moores (@sdmoores) January 15, 2022
Obviously, one thing is profitability and another thing is income. During the interview, Delaney refused to comment on what income BP generates with the EV fast charging business, although it is clear that by volume the profit figures are still very far from those obtained by fossil fuels. However, over time electricity will take its place while fossil fuels lose weight.
The simple fact of not depending on large facilities and logistics networks allows most companies - oil companies in this case - to reach the point of profitability sooner with fast charging points. Some studies estimate a profit of 0.4 cents for each kWh of electric charging. The commercial explosion of battery electric vehicles in Europe in general and England in particular has caused commercial networks to expand very fast.
If we just consider the last quarter of last year, the income generated by fast charging networks grew by 45% compared to the previous quarter of 2021. Given these data, BP expects to reach a total of 70,000 points by 2030, starting from the 11,000 current fast charging points. "Overall, we see a huge opportunity in fast charging for consumers and businesses, as well as fleet services more generally - that's where we see the growth, and where we see the margins," Delaney said.
All images courtesy of Tesla Inc.
Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.