Breaking News
Close
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

For BP, car chargers to overtake pumps in profitability race

Stock MarketsJan 14, 2022 14:06
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A BP Pulse electric vehicle charging point is seen in London, Britain, July 16, 2021. REUTERS/Peter Nicholls/

By Ron Bousso

LONDON (Reuters) - BP (LON:BP) says its fast electric vehicle chargers are on the cusp of becoming more profitable than filling up a petrol car.

The milestone will mark a significant moment for BP which wants to shift away from oil and expand operations in power markets and around electric vehicles (EV).

EV charging has for years been a loss-making business as a whole for BP and rivals as they invest heavily in its expansion. The division is not expected to turn profitable before 2025 but on a margin basis, BP's fast battery charging points, which can replenish a battery within minutes, are nearing levels they see from filling up with petrol.

"If I think about a tank of fuel versus a fast charge, we are nearing a place where the business fundamentals on the fast charge are better than they are on the fuel," BP's head of customers and products Emma Delaney told Reuters.

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

Delaney did not disclose profit and loss for EV charging or when overall profit from the business could eclipse traditional fuel. In 2020 BP reported a gross margins for retail fuel sales of $3.5 billion. Its customers and products division made $2.6 billion in net profit in the first nine months of 2021, around 17% of the company's total profit.

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

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

London-based BP plans to grow its EV charging business in the coming years to 70,000 charging points by 2030 from 11,000 now.

Like rivals including Royal Dutch Shell (LON:RDSa), BP's retail business, which includes fuel sales and convenience stores, is highly profitable and central in its energy transition strategy.

"Overall, we see a huge opportunity in fast charging for consumers and businesses, as well as fleet services more generally - that's where we see the growth, and where we see the margins," Delaney said.

Shell aims to have 500,000 charging points globally 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 like Shell are investing in a range of charging technologies including tens of thousands of slower, low voltage, on-street charging points in Britain and elsewhere, BP is focusing on fast and ultra-fast charging technology.

"We've made a choice to really go after high speed, on the go charging - rather than slow lamppost charging for example," Delaney said.

Fast charging, defined as more than 50 kilowatt, and super-fast charging at more than 150 kilowatt, are however expensive to install as they require large investment in heavy-duty 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 drive to expand EV charging points also aims at keeping a strong stream of customers at BP's petrol stations and their adjacent convenience stores.

"There has been a land grab by charge point operators, including the oil majors, to buy real estate and build infrastructure, with a view to generating growth revenues in the future," Del Maestro said.

For BP, car chargers to overtake pumps in profitability race
 

Related Articles

Airline easyJet cancels more than 200 flights
Airline easyJet cancels more than 200 flights By Reuters - May 28, 2022 2

LONDON (Reuters) - Low-cost carrier easyJet (LON:EZJ) is to cancel more than 200 flights over the next 10 days due to airport delays and other restrictions, disrupting travel...

German engineering body scraps 2022 outlook - report
German engineering body scraps 2022 outlook - report By Reuters - May 28, 2022

BERLIN (Reuters) - Germany's main engineering industry association has scrapped its 2022 production forecast, saying even a reduced estimate it made in March would no longer be...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
DOWNLOAD APPApp store
Investing.com
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
or
Sign up with Email