For BP, car chargers to overtake pumps in profitability race

A BP Pulse electric vehicle charging station is seen in London, UK, July 16, 2021. REUTERS/Peter Nicholls/

Register now for FREE unlimited access to Reuters.com

  • BP focuses on fast battery chargers, executives say
  • Fast chargers almost as profitable as refueling
  • BP and rivals target big growth in EV charging

LONDON, Jan. 14 (Reuters) – BP says its fast chargers for electric vehicles are about to become more profitable than refueling a petrol car.

The milestone marks an important moment for BP to move away from oil and expand its business in energy markets and around electric vehicles (EV).

Charging electric cars has been a loss-making business for BP and rivals for years as they invest heavily in its expansion. The division is not expected to become profitable before 2025, but on a margin basis, BP’s fast battery charging stations, which can top up a battery in minutes, are approaching the level they see when refueling with petrol.

Register now for FREE unlimited access to Reuters.com

“When I think of a tank of fuel versus a fast load, we’re approaching a point where the business fundamentals of the fast load are better than the fuel,” Emma Delaney, BP’s head of customers and products, told Reuters.

Strong and rising demand for fast battery chargers in Britain and Europe has already brought profit margins close to those for traditional petrol filling, she said.

Delaney did not disclose profits and losses for charging EVs or when the company’s overall profits could eclipse traditional fuel. In 2020, BP reported gross margin for retail fuel sales of $3.5 billion. The Customers and Products division made $2.6 billion in net profit in the first nine months of 2021, approximately 17% of the company’s total profit.

The company also said electricity sales for charging electric vehicles grew 45% in the third quarter of 2021 from the previous quarter.

According to consultancy Thunder Said Energy, the traditional fuel sales margin at gas stations is about 17 cents per gallon, about 0.4 cents per kilowatt hour.

London-based BP plans to expand its EV charging business to 70,000 charging stations by 2030, up from 11,000 today.

Like rivals including Royal Dutch Shell (RDSa.L), BP’s retail operations, including fuel sales and convenience stores, are highly profitable and central to its energy transition strategy.

“Overall, we see a huge opportunity in fast charging for consumers and businesses, as well as fleet services in general — that’s where we see the growth and where we see the margins,” Delaney said.

Shell aims to have 500,000 charging points worldwide by 2025. On Thursday, it opened its first ultra-fast EV charging station in London, which can charge 80% of a car battery in 10 minutes.

While rivals such as Shell are investing in a range of charging technologies, including tens of thousands of slower, low-voltage on-street charging points in the UK and elsewhere, BP is focusing on fast and ultra-fast charging technology.

“We chose to go really high-speed, on-the-go charging — rather than slow lamppost charging, for example,” Delaney said.

However, fast charging, defined as more than 50 kilowatts, and super-fast charging at more than 150 kilowatts, are expensive to install because they require large investments in heavy power infrastructure.

“Historically, many operators have struggled to make money charging electric vehicles, which is the industry’s worst kept secret,” said Adrian Del Maestro, director of PwC Strategy&.

The drive to expand electric car charging stations also aims to maintain a strong flow of customers at BP’s gas stations and adjacent convenience stores.

“There has been land grab by charging point operators, including the oil companies, to buy real estate and build infrastructure with a view to generating growth revenues going forward,” Del Maestro said.

Register now for FREE unlimited access to Reuters.com

Reporting by Ron Bousso; edit by David Evans

Our Standards: The Thomson Reuters Trust Principles.

.

Leave a Comment

Your email address will not be published.