Every business chooses a main path to maximized profits. For some, the strategy is high traffic (perhaps with loss leaders), making up for lower margins with large volumes. Others serve fewer buyers, but their upscale products maximize the profit from each affluent customer.
What if you could boost your profits by adding a little of both these strategies to your current operation? By installing charging stations for electric vehicles (EV’s), you can bring more customers who have more money to spend. Let’s look at three basic business questions: Is there a market? What is the market’s profit potential? What is the cost to reach and retain them?
Is There a Market?
The market penetration of EV’s is strong and picking up speed. The fleet increased by 70% last year despite total car sales being down almost 15% due to the pandemic. Experts estimate at least 40% of American cars and light trucks will be electric by 2030, and major manufacturers such as Hyundai and Volkswagen have announced they will go full electric by 2035.
All these vehicles will need charging. If you provide charging stations, customers will take advantage of it and of nearby shopping and entertainment opportunities.
What is the Market’s Profit Potential?
The majority of EV owners earn more than $100,000 per year and have at least a four-year degree, making them the type of affluent customer who can boost your profitability. The largest chunk of them (43%) are in their prime earning and spending years, 24-54 years of age. Though the majority of owners are male, a Fuels Institute study found the top demographic is men whose households include a wife and young children, with multiple vehicles.
But you don’t have to cross your fingers and hope these potential customers show up. Charging takes 30 minutes to an hour, with 36 minutes being the average. Emerging research shows that when customers have access to shopping, meals, or entertainment while their car is charging, they spend time and money on those opportunities. For example, Kohl’s and Target found that EV drivers spent more time in the store while charging. Kohl’s customers spent 20 additional minutes; Target customers tripled their time in the store. Kohl’s also found that EV drivers spent at a rate of $1 per minute while they were onsite.
What is the Cost to Reach and Retain Them?
The good news is that the costs are minimal, and may essentially be zero, depending on your circumstances.
- In areas where EV’s are common, it’s recommended that developers equip 10% of parking spaces to charging stations, a relatively small commitment.
- EV makers offer apps to their customers that direct them to charging stations, sending them to you.
- A number of EV manufacturers will install stations for free. This means they make life easier for customers (and sell more cars) while you reap all the benefits without any upfront cost.
- If you do have upfront expenses, they can be offset by a federal tax rebate for up to 30% of the project cost. Unfortunately, these incentives will end on December 31st of this year (and currently the credit is not included in the new infrastructure bill) so the time to make a move is now.
If you’re ready to take advantage of this new wave of change, or even just have some questions, Thayer Energy Solutions is glad to be your advisers. Get in touch, and we’ll help you create a strategy to power you to greater profitability.