The rise of electric vehicles has opened up an opportunity to more than just car manufacturers. Below, we lay out the potential opportunity for three types of business: Banks, Supermarkets and Home Utilities Providers.
Cars are entirely necessary to the lives of many UK families. And that translates into big spend. For all the talk of multi-modal transport and car-free cities, the personal vehicle isn’t disappearing anytime soon, particularly in rural areas. Whilst 1 in 3 urban households are car-free, the same is only true for 1 in 20 rural households.
The average UK household spends
£1518 a year on vehicle purchases & financing
£1092 a year on fuel
£515 a year on vehicle insurance
£317 a year on servicing and repairs
£104 a year on parking, garage rent and car washing
Plus ancillary spend on things like driving lessons, spare parts and driving accessories.
The UK government has pledged that half of all new car sales will be hybrid or electric by 2030. Families are familiar with the costs of petrol and diesel vehicles; they understand how to budget for them. Moving to electric would mean grappling with a new arrangement of costs. It would also mean fitting in charging stations and home charging with everyday life. There are opportunities for many businesses - from retailers to banks to utilities providers - to help ease this shift to electric.
Electric Opportunities for Retailers
In the UK, supermarkets sell more petrol and diesel than conventional forecourts. Leveraging this advantage, there is a clear opportunity for supermarkets to fit out their abundant parking space with charging points. Indeed, this is the direction Tesco is moving in, having partnered with Volkswagen to offer 2,500 charging bays at 600 stores by 2020. The benefits are clear: customers leave their cars to charge whilst they do their shopping, attracted by the offer of a free boost. Offering faster charging at a price could replace the revenue hole that declining petrol and diesel spend leaves. In the USA, a free model is in operation at supermarkets such as Whole Foods. Volta charging bays are powered by outdoor advertising, with each bay sporting a miniature billboard. Supermarkets can advertise offers inside, partnering with third parties such as FMCGs.
One pain point that supermarkets could seek to solve is the price mystery in charging up. When electric vehicle owners leave their car to charge, they typically have no idea how much it will cost them, with the resultant sum any combination of connection fees, subscription fees, or cost per watt. The vehicle owner often only discovers the final sum days later. A solution could be for supermarkets to offer a flat cost: £3 of electricity, £5 of electricity etc - or else offer to charge batteries a certain percentage: 60%, 80% etc. Once price mystery is removed, supermarkets can easily tie in offers- such as money off when combined with grocery spend or incentives to use other supermarket services.
Electric Opportunities for Banks
At present, the UK charging infrastructure is convoluted, with over 35 different charging operators, from Chargemaster to Polar. A driver wishing to charge up with an unfamiliar operator will often need to download an app, sign up, and input their vehicle and payment details. This is no good when they are in a hurry in the pouring rain. There is an opportunity for a trusted institution such as a bank to offer simplified and streamlined access to charging points across providers. Imagine a world where a driver can use a single access key - for example through an app - to sign up for and use any charging point they want.
Next, consider fuel as a shared cost. For many families, the car is a shared asset, and fuelling up is a shared cost. Thus the possibility of a shared fuel ‘money pot’ in a shared account would have utility, ensuring both partners contribute to fuel. Each user tops up the money pot with funds, and fuel spend automatically gets pulled from that shared pot.
Another way that banks can help their users with fuel spend is by ensuring electricity bills are easily tagged and kept track of. All electricity spend could be categorised so that drivers can see at-a-glance what they spend on electricity both at home and out and about.
Electric Opportunities for Home Utilities Providers
An electric car in the driveway doubles the electricity usage of a typical household. Multiply that by the number of british households and you have a huge rise in the demand for electricity. In the future, utilities companies will need to manage this demand to avoid overloading the grid at peak times. Peak and off-peak tariffs, which charge customers less for electricity when they plug their car in away from the 7pm rush could go some way to ameliorate the heaviest demand. Going further, utilities companies could introduce vehicle charging management services, only charging a vehicle during off-peak times when electricity is cheaper and avoiding charging a vehicle during peak times whether it is plugged in or not.
Cheaper electricity is likely to be a strong incentive to encourage vehicle purchase. In this vein, utilities providers could partner with OEMs to offer vehicle buyers cheaper home energy (or even vice versa: to offer energy users cheaper vehicle financing).
We have already touched upon the convoluted charging infrastructure in the UK, with over 35 different operators. There may be an opportunity here for utilities providers to offer drivers some much-needed simplicity by providing a single service for a vehicle's charging needs, whether at home or out and about. A driver using the service would simply pay a flat rate for electricity used, wherever they happen to use it. Since electric vehicle owners are likely to be more environmentally conscious than your typical driver, an added bonus for the user could be a promise that all electricity used to charge their vehicle is green.
In this article we’ve touched upon the electric opportunity for just three types of businesses. The electric revolution will touch many more industries, from insurance, to vehicle financing, to parking and forecourts.