Not Your Grandfather’s Gas Station: Shell Explores new technologies and business models at its gas station network in Europe
Posted by | Fuld & Company
About a month ago, I was at a conference held in the motor city, also known as Detroit. The conference topic was electrification and mobility with the discussion centered not on “if” the transportation sector was moving toward electrification but “when,” specifically, “how quickly.”
The conference brought together a multitude of stakeholders with a keen interest in ensuring that Detroit would continue as the automotive hub in the post-electrification world – two of the big three original equipment manufacturers (OEMs), federal, state, and local policy makers including Michigan’s junior U.S. Senator, ride sharing service companies, electric utilities, utility regulators, economic developers. Conspicuously absent was a representative of major oil companies.
Conference attendees conceded that those from the oil patch are unwilling to acknowledge the transition occurring in the transportation sector.
Discussion was focused on the issue of building out electric vehicle (EV) charging infrastructure and, ultimately, on who would foot the bill for this infrastructure build. One industry consultant said he was lobbying the automakers for funding. Another attendee suggested that the electric utilities build the infrastructure and recover the cost through customer rates. This latter idea seemed to gain favor until a state utility commissioner flatly disagreed and insisted that other funding sources be explored, “I expect to see some sort of a public-private partnership emerge. We are not going to build EV charging infrastructure on the backs of the ratepayers.”. The conference ended in a stalemate. Everyone agreed that EV charging infrastructure needed to be built to support growing EV adoption, but no one could agree on funding.
Ironically, a mere two weeks later, in mid-October, oil giant Royal Dutch Shell announced it would buy one of Europe’s biggest electric vehicle charging companies, NewMotion. Based in the Netherlands, as is Shell, NewMotion has provided more than 30,000 home-based charging points and 50,000 public sites. Shell’s VP for New Fuels, Matthew Tipper was quoted in the Financial Timessaying “We recognize that one of the themes of the energy transition is going to be electrification. As our heritage is fuel supply, the obvious place to start is battery electric vehicles…and that technology is accelerating.”
Within days of this announcement, Shell launched its “Shell Recharge” rapid electric vehicle charging service in the UK at three stations in London and Northern England and is reportedly planning to expand throughout the UK, the Netherlands, and the Philippines.
What the conference attendees in Detroit failed to recognize is that with EV adoption accelerating worldwide and public policy being explored in several countries, including China, the future use of internal combustion engines is likely to be curtailed. As a result, many of the oil majors are experimenting with new technologies and business models to fortify the value of their long-established gasoline retail fueling networks. Shell is the most aggressive company deploying this strategy, not only embracing alternative fuels, such as electricity and hydrogen, but also experimenting with new business models such as mobile fuel delivery.
In fact, since September, Shell has implemented several innovations in its gasoline fuel retail infrastructure, including plans to build its first “no petrol” station in the UK. The station will offer only EV charging, biofuels, and hydrogen refueling. Prior to its acquisition of NewMotion, Shell established a partnership with Allego, an EV charging device manufacturer. It is through Allego that Shell launched the Recharge service using Shell-branded EV chargers.
In addition to experimenting with new fueling infrastructure, Shell is also exploring new retail business models. Shell executives have publicly stated that the company wants non-fuel sales to account for 50% of its retail income by 2025; to accomplish this goal it plans to convert its gasoline stations into “retail destinations.” In these retail outlets Shell is considering putting lockers where customers can pick up items that are ordered online, launching a home delivery service through which customers can use an app to send a request to Shell to refill their cars at home or work, and even developing dry cleaning services. The home delivery service is currently available in Europe, and Shell is planning to roll it out globally.
While exploring ways to expand its retail sales, Shell is also focused on the ancillary, such as improving and expanding the food offered at its retail sites. Shell has begun selling grocery-story quality food – produce, meat, fish, and prepared meals through partnerships with grocery stores.
Shell predicts that, by 2020, 50 percent of customers in the EU will pay for the fuel via mobile payment applications and is developing a mobile app and connected car platform that provides store location, directions, and the ability to pre-order drinks and food that are delivered when a driver pulls into the station.
While to date, Shell’s investment and innovation has been limited to Europe, it seems likely they will ultimately pursue a similar plan in North America. Let this be a lesson to the folks gathered at the Detroit conference. Don’t count out a key stakeholder.