EV market scenarios for fuel retailers as demands shift

The expansion of electric vehicles (EVs) is reshaping the global fuel and convenience retail industry. The coming decade will bring shifting profit pools, fewer service stations, and new site formats. Specifics will differ by market-driven, for example, by regulatory environment, available technology, and fuel and charging margins – following one of three potential market scenarios by 2035:

1. Fossil is king. The EV market remains small, at around 15% vehicle stock share (share of all cars on the road). Public charging infrastructure and associated convenience retail offerings are limited.
2. The rise of EVs. EV vehicle stock share reaches 30% and infrastructure is developing. The mature convenience offering is evolving toward fresher food and a more personalised experience, serving customers who may not be refuelling.
3. Electric dominance. EVs dominate, with a vehicle stock share of around 55% and a well-established charging infrastructure. E-trucks are emerging in significant numbers, and autonomous vehicles are beginning to gain traction. Convenience offerings are less mature in this market but are seeing significant growth in visits unrelated to fuelling or charging.

Three market shifts impacting differently across scenarios

Three major market shifts will have varying impact across scenarios. The first is that profit pools will shrink where EVs dominate, with profits from fuel dropping by up to 60%. Two growth opportunities may fully or partially offset this decline. Charging will emerge as an expanding business. Charge point operators – who may also be fuel retailers – are projected to capture more than half of total charging profits. Improved convenience store offerings, including locally tailored fresh food, may attract customers beyond those needing to refuel. However, where EV penetration is high, the decline in fuel consumption will be hard to bridge, causing a hit to fuel and convenience retailer profits.

The second shift is that some service stations will close. Where EVs dominate, declining profitability may drive up to one-quarter of sites to close by 2035, especially in rural and residential areas where drivers typically charge at home. Highway and transient sites will likely remain more resilient, thanks to demand for on-the-go charging and convenience items.

The third shift is that the remaining sites will evolve, with four specific formats expected to dominate:

• Quick fuel and out. Sites focused primarily on fuel sales, with minimal charging and basic convenience offerings, typically located on high-traffic roads in urban and suburban areas.
• Mobility and convenience hub. Premium sites offering a full range of fuel types, ultra-fast charging, and improved convenience offerings, typically located on highway, transient or spacious urban locations.
• Low-cost essential coverage. Remote, mostly unmanned sites primarily serving rural and fleet customers who need greater geographical coverage.
• Standalone foodvenience. Possibly co-located with other food retailers mainly in urban and suburban locations, these sites focus on food and convenience offerings with charging at select locations but no fuels.

Next steps – no-regret moves, option plays, and big bets

Companies will need to make site-by-site decisions over the coming decade. No-regret moves are those that make sense in all market scenarios. Companies must, for example, build market intelligence capabilities to track both market-level and local shifts. Complementing this outward focus, they should evaluate their site networks using new tools such as advanced geospatial analytics. They should also take steps to integrate branding and loyalty programs beyond the pump, creating a unified platform across fuels, charging, and convenience.

Companies in markets predicting the rise of EVs or electric dominance should also consider option plays. The most obvious is developing mobility and convenience hubs with charging capabilities. This model also means upgrading convenience offerings for EV drivers who spend more time at the station. Other option plays could include providing fleet charging, for example at customer logistics hubs, or expanding charging services to supermarkets and other destinations.

The third type of action – most appropriate in markets expecting electric dominance – is the big bet. A company could compete head-to-head against traditional convenience stores via pure-play foodvenience formats where energy demand is dropping. It could invest in on-the-go e-trucking hubs, or offer charging across a wide range of third-party chargers and locations, or selectively pursue mobility-adjacent opportunities like vehicle leasing and insurance.

Despite the uncertainties regarding the rate of EV growth in many markets, fuel and convenience retail companies can expect dramatic changes and should begin their preparations today.