The future of fuel retail in South Africa: NEVs and solar panels

Zawya

5 days ago

Even though new energy vehicles (NEVs) only make up less than 3% of South Africa's car market, local fuel station operators can still capitalise on the world's drive to embrace cleaner sources of fuel and energy. Rapid international developments, regulatory pressure, and consumer demand for greener mobility are set to reshape the fuel retail landscape.
Image credit: Kindel Media on Pexels
Rapid international developments, regulatory pressure, and consumer demand for greener mobility are reshaping the fuel retail landscape.
The global state of NEVs
The global NEV space is evolving rapidly: The European Union is working to phase out combustion engines by 2035 and is shifting focus to autonomous NEVs.
China remains dominant, controlling most of the global NEV supply chain and having built battery capacity exceeding global demand by 500%.
But according to the Automotive Business Council (Naamsa), South Africa is lagging for several reasons: Without access to Euro-5 and Euro-6 compliant fuels, South Africa cannot authorise or legally sell many modern vehicles.
Currently, 38% of petrol and 67% of diesel are imported, but the Department of Mineral Resources and Energy has committed to making Cleaner Fuel 2 available by 1 July 2027, with indications it may arrive slightly earlier.
The South African NEV market is small but growing, dominated by traditional hybrids like the Toyota Corolla Cross and Mercedes-Benz C-Class.
Full battery electric vehicle (BEV) sales remain limited due to affordability, which is the biggest barrier to growth in this market: most BEVs are priced over R900,000, yet 74% of new car sales in South Africa are under R500,000.
How fuel stations can benefit
More affordable options are coming, with one original equipment manufacturer scheduled to launch a sub-R400,000 battery electric vehicle (BEV) this year.
However, even affordable BEVs face practical challenges. Many consumers – particularly in the lower end of the market – lack solar, inverters, or batteries to charge vehicles at home.
In addition, range anxiety persists, even though most BEVs offer over 200km per charge, and concerns about resale value and long-term performance deter buyers.
Another issue for South African NEV sales is that existing public charging infrastructure is limited, poorly maintained, and inconveniently located: A Joburg to Cape Town EV convoy last year exposed major gaps, with vehicles stranded due to faulty charging stations.
To address these challenges, Naamsa is engaging with the private sector to build a national charging network of 120 sites, providing accessible, reliable charging along key routes throughout the country.
The network will leverage existing fuel stations instead of building new sites, ensuring that drivers can find a charging site within easy travelling distance, which will be public and free to access, without hidden costs.
These strategic partnerships with fuel stations are preferable because of their proximity to main national routes and their existing vehicle-refuelling and alternate revenue stream infrastructures.
To reduce the cost of the NEV charging infrastructure build and increase the speed of installation, these sites will initially operate largely through the national electricity grid, supported by renewable energy.
Fuel stations are, in fact, ideally suited for solar PV installations because they have sizable areas of roof space over their buildings and forecourts, which are generally located in full sun.
So, as increased income streams generated by the new infrastructure boost profits, fuel station owners can increase the renewable energy component of their sites to decrease their reliance on the national grid and thus boost profitability further.
Fuel stations to evolve
EV charging facilities certainly offer great potential for fuel retailers.
It's a natural progression for them as it uses their experience and already-expanding forecourt product offerings while providing the highest potential margin.
A recent study on the future of fuel stations in South Africa by commercial real estate company Cushman & Wakefield | Broll, indicates that fuel stations will evolve into 'mobility' stations within the next 5 to 15 years, offering a wider range of energy sources (electricity, natural gas, petrol, diesel, biofuels, and green hydrogen).
As Fuel Connect points out, fuel forecourts offering much more than fuel is nothing new – as far back as the 1960s, fuel stations have incorporated restaurants, convenience stores, car workshops, tyre fitment centres, and even hotels, and fuel stations have always been an important midway destination on long journeys for family holidays.
But because recharging an NEV takes significantly more time than filling up the fuel tank of a vehicle with an internal combustion engine, extended services such as pharmacies, laundry services, gyms, and co-working spaces will become more common at these sites.
Operators will then become less reliant on income from fuel, as it will account for just 20% of the forecourt's revenue, compared with the 90% it has contributed historically.
A further consideration is that, going forward, successful retailers won't just operate a single site, but instead own between five and 10.
But managing multiple sites brings complexity – more employees, more systems, more human error.
The only real solution? Leveraging smart technology, which prevents fraud, boosts efficiency, and further increases profitability.
The future of fuel retailing lies beyond the fuel pump. As NEV adoption grows and cleaner fuels become standard, traditional forecourts will evolve.
Embracing the opportunities this transition promises, together with smart technology and renewable energy, fuel station operators can future-proof their businesses and thrive in the rapidly changing mobility environment.
All rights reserved. © 2022. Bizcommunity.com Provided by SyndiGate Media Inc. (Syndigate.info).