A few years ago, we helped a disenchanted Air Force veteran with a strategic blue-state
evacuation, by liquidating his Illinois truck stop. On the day of closing, he was about as
happy as the birth of his first child, knowing that he and his crew were moving to an oft
dreamed-about red-state nirvana.
His Tesla charging area, with its eight to ten idle charging stations, helped verify my
notions on EV’s long term prospects, given its current approach. I’ll not belabor all the
limitations, from charging infrastructure to motorist demand, or the incessant regulatory
pressure fueled by the illogical green movement intent on forcing this down our throats.
The result is a race to pepper the country with charging stations, in anticipation of a
wave of EV use that may never materialize. I’m sure that the early adopter retailers
know that they are making the investment more for image than any realistic profit
expectation.
Don’t get me wrong, I don’t hate the notion of EV’s, just the way we, as a country, have
been embracing them. Yet there currently exists a much better approach that could be
extremely lucrative for petroleum retailers, if we were to throw out much of what has
already been done and refocus the effort.
I really wish that what I’m about to share involved the Japanese, because I like them
better than the Chinese. But the Chinese were the ones to come up with this EV
technology, so I’m compelled to endorse something positive and unique that they have
going. Besides their commitment to dumping fentanyl and military-aged young men into
our country through Mexico, recent news reports indicate that they are also intent on
flooding the country with EV’s. Now these aren’t your run of the mill government-foisted
boondoggle EV’s with no meaningful profit potential for petroleum retailers. They have
the potential of being a very lucrative money making proposition for our retail industry.
Two Chinese EV car brands, Nio and Geely, have developed vehicles that enable their
spent batteries to be swapped out for fully charged ones in three to five minutes. Think
about the business applications for cars that can be recharged in the same amount of
time it takes to fill up a gas tank. Motorists will no longer have to kill time waiting
somewhere in the middle of nowhere while their car charges, in the hopes that they can
get to their ultimate destination while they are still young. Even better, there is no need
for government incentivized charging stations or the unprofitable investments it takes to
join the EV charging bandwagon.
If the concept of “swap-out’ batteries is universally embraced, the retail profit potential
would be enormous. Imagine the Blue Rhino propane tank exchange concept and
apply it to EV batteries, but with a much higher profit potential. With the time-to-
recharge hurtle largely overcome, EV’s would become much more desirable and
prevalent, making universal retailer adoption of a swap-out program a no-brainer.
Depending upon size and sophistication, participating retailers would have two distinct
revenue opportunities: offering drop-off/swap-out batteries like a propane exchange
program or on-site charging where the retailer manages a greater degree of the
process, swapping-out batteries as part of a battery franchise network.
The crazy thing is that this is not some futuristic pie-in -the-sky concept. The swap-out
battery technology currently exists. Despite its infinite logic, its potential may
unfortunately be unattainable, as the technology resides with the wrong country; the
current impetus of building charging stations may be unstoppable, given the high sunk
costs; and the auto manufacturers vested interest in this approach may be too far gone
to compel anyone to alter this expensive and misguided course. Quite a testament to
why government should never be involved with economic influence.
Despite all these limitations, the swap-out EV approach should be explored further
given the many positive aspects, including the potential for high retail participation and
profit benefits. Maybe a licensing agreement or JV with the Chinese car companies to
explore all the possible angles for a redirection of the current approach. A
comprehensive battery swap-out initiative is probably the only way to compel enough
motorists to embrace EV’s to maintain the relevance of the industry into the future.
Mark Radosevich is a 43 year petro-veteran and recognized industry advocate. He is president of PetroActive Real Estate Services, LLC, offering confidential mergers & acquisition representation and financing services exclusively to petroleum wholesalers. He can be reached by email at mark@petroactive.net and by phone at 423-442-1327.