Fuel sales slump pushes oil companies to EV charging

From the newsletter 

Oil marketing companies in a number of African countries are recording a decline in fuel sales due to depressed economies and the rise of electric vehicles, forcing them to turn to new revenue streams, mainly EV charging and food. In South Africa, a study by Nedbank’s research partner, Trade Intelligence, shows that fuel retail sales dropped 7.6% over the last five years.

• Oil companies' growing investment in charging is key for rapid scaling of infrastructure given their accessible service station networks and strong capital backing.  

• More charging stations, especially fast chargers, could bring charging costs down. Current charging costs remain high as the few private investors in the space race to recoup their investment. 

More details

• More than 3,500 electric cars have been sold in South Africa, which is Africa’s largest car market. While this is still less than 1% of total vehicle sales, EV and PHEV sales are expected to continue their growth trajectory in the coming years.

• Each electric car sold in the country is revenue lost for oil companies. But they are adapting fast, with major retailers in the country like Shell and BP setting up vast networks of charging stations to reduce revenue losses. In addition, fuel stations have a lot of exposed roof space, which makes them naturally suited for PV solar installations.

• BP South Africa recently announced it was transforming its retail outlets into alternative energy stations. The project includes the construction of 40 new retail locations with expanded offerings such as EV charging stations and a low-carbon battery rental service.

• While there are only an estimated 400 charging stations in South Africa, the country has more than 6,000 fuel stations. If a charging station is installed at each fuel station, the country would grow its charging network by more than ten times.

• In Kenya, French oil giant TotalEnergies has established 13 charging and swapping stations through partnerships with Ampersand, Roam, and Arc Ride, focused mainly on electric motorcycle riders. It also launched its first charging station in Ghana in Accra in 2022 and plans to set up in new locations. 

• Globally, oil companies have been acquiring EV charging companies to accelerate their transition into charging service providers. In 2017 Shell also purchased EV charging network provider New Motion, granting them access to its 30,000 charging infrastructure around Europe. BP has also made significant acquisitions, notably purchasing Chargemaster, the UK's largest charging network.

Our take

• As more players, especially oil majors, enter the EV charging space with deeper capital and long-term outlooks, pricing will become more competitive, easing the burden on consumers and undercutting smaller early movers.

• Fuel stations are well positioned to adopt solar PV and battery storage solutions—leveraging their large rooftops—to power EV chargers and reduce grid reliance. We could see bundling of services like battery swaps and rentals, especially for motorcycles and fleet vehicles. 

• In Africa’s vast rural areas, fuel stations could be key starting points for rollout of EV charging infrastructure. This shift could increase the number of charging points within the next few years.