Stock Groups

For BP, car chargers to overtake pumps in profitability race -Breaking


© Reuters. FILE PHOTO – A BP Pulse charging station is seen in London (Britain), July 16, 2021. REUTERS/Peter Nicholls/

Ron Bousso

LONDON (Reuters), BP (NYSE) announced that its rapid electric vehicle chargers could soon be more profitable than filling up a gasoline car.

This milestone is significant for BP, which wants to move away from oil and increase operations in power markets.

BP, along with its competitors have been suffering from EV charging’s loss making business over the years. They continue to invest in it expansion. While the company is unlikely to make a profit before 2025, margins are improving as BP’s rapid battery charging points that can charge a battery in under a minute, are similar to those used for filling up with petrol.

Emma Delaney from BP, head of customer and product services told Reuters: “If you consider a tank fuel versus a rapid charge, we’re nearing a spot where the business fundamentals for the fast charger are better than those on fuel.”

She said that the strong and growing demand in Britain for fast battery chargers has brought profits margins comparable to traditional petrol filling.

Delaney failed to disclose any profit or loss on EV charging. He also did not mention when the overall profit of the business might surpass traditional fuel. BP’s gross margins in 2020 for retail fuel sales was $3.5 billion. The net profit of its customers and products division was $2.6 billion, or 17% of total profits.

Additionally, the company stated that electricity sales for electric vehicle charging increased by 45% over the quarter before.

Thunder Said Energy estimates that traditional fuel margins at petrol stations are approximately 17 cents for a gallon. This is roughly 0.4% per kilowatthour.

The London-based BP intends to increase its EV charging business to 70,000 charging stations by 2030, from the current 11,000.

Like Royal Dutch Shell (LON) and other rivals, BP’s retail business includes fuel sales as well as convenience stores. It is also a key part of its energy transition strategy.

Delaney explained that overall, there’s a tremendous opportunity in fast-charging for businesses and consumers, as well fleet services more generally. This is where we see growth and the margins.

Shell plans to open 500,000 worldwide charging stations by 2025. It opened London’s first fast EV charging station on Thursday. This can charge up to 80% of your car batteries in just 10 minutes.

Shell, Shell, and others are investing in a wide range of charging technologies. BP is focusing more on super-fast charging technology.

Delaney stated that they have made the decision to pursue high-speed, on-the-go charging rather than slow lamppost charging.

The installation of fast charging is more costly than superfast charging. This requires heavy investment in the 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&.

The goal of expanding EV charging points is to maintain a steady stream of customers at BP petrol stations and adjacent convenience stores.

Del Maestro stated that there was a “land grab” by charge points operators (including the major oil companies) to purchase real estate and to build infrastructure with the aim of generating future growth revenue.