BP Says Its Car Chargers Will Soon Have Higher Profitability Than Pumps

According to British Petroleum, its quick electric vehicle charges are about to become more profitable compared to filling up a gasoline automobile.

The achievement will be significant for BP, which is looking to diversify its business away from oil and towards power markets and electric vehicles (EV).

EV charging has been a loss-making business for BP and competitors for years, despite their heavy investment in its expansion. The division isn’t anticipated to break even until 2025, but on a margin basis, BP’s quick battery charging stations, which can recharge a battery in minutes, are approaching the levels seen when filling up with gasoline.

“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,” BP’s head of customers and products Emma Delaney said.

She claims that strong and rising demand for rapid battery chargers in the United Kingdom and Europe has already brought profit margins close to those for standard gasoline filling.

Delaney did not provide profit and loss figures for EV charging, nor did he say when the company’s overall profit could surpass that of traditional gasoline. BP reported $3.5 billion in gross margins for retail fuel sales in 2020. In the first nine months of 2021, the customers and products segment produced $2.6 billion in net profit, accounting for around 17 per cent of the company’s overall earnings.

Electricity sales for EV charging increased 45 per cent in the third quarter of 2021 compared to the previous quarter, according to the business.

The standard fuel retail margin at gas stations, according to consultancy Thunder Said Energy, is around 17 cents per gallon, or roughly 0.4 cents per kilowatt hour.

BP, located in London, aims to expand its electric vehicle charging business to 70,000 charge sites by 2030, up from 11,000 presently.

BP’s retail division, which includes fuel sales and convenience stores, is extremely profitable, similar to that of competitors such as Royal Dutch Shell, and is an important part of the company’s energy transition strategy.

“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.

By 2025, Shell hopes to have 500,000 charging stations throughout the world. It unveiled its first ultra-fast EV charging station in London on Thursday, capable of charging a car battery to 80 per cent in under 10 minutes.

BP is focusing on fast and ultra-quick charging technology, while competitors like Shell are investing in a variety of charging technologies, including tens of thousands of slower, low voltage on-street charging sites in the UK and overseas.

“We’ve made a choice to really go after high speed, on the go charging – rather than slow lamppost charging for example,” Delaney said.

while fast charging is charging using more than 50 kilowatt of electricity, super-fast charging uses more than 150 kilowatt. Both are costly to implement since they necessitate a significant investment in heavy-duty power infrastructure.

“Historically, many operators have struggled to make money out of EV charging, that’s been like the worst kept secret in the industry,” said Adrian Del Maestro, director at PwC Strategy.

(Adapted from CNBC.com)


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