Forecourt Evolution: The Road to 2030
28 March 2023
The UK government has set an ambitious target to end the sale of all new petrol and diesel cars and vans by 2030, with all vehicles to be 100% zero emissions from 2035.1 The auto industry’s opinion is divided as to whether this target is achievable. Some say it will take Herculean effort, whilst others are more optimistic acknowledging that, with considerable investment and concentrated industry focus, the electric revolution could flourish.
The Direction of Focus
A key focal point in meeting this target will be infrastructure and, more specifically, the UK’s charging network. Auto industry leaders2 and consumers alike cite the lack of and reliability of charging points as a crucial impediment to the adoption of electric vehicles ('EV'). Accordingly, fuel stations will play a critical role to facilitate the EV transition.
The Future Forecourt
To remain relevant, the forecourt as we know it will cease to exist. The changes in technology needed for EV adoption will require owners of future forecourts to adjust their real estate layouts and come up with strategies to provide smooth fuelling services to different customers. Larger sites will also be necessary to cater for customers staying for longer periods of time. A typical electric car will take eight hours to charge from empty at a 'fast' 7kW charge point.3
Acknowledging that half the fuel station profits in developing countries are non-fuel related,4 the conversion of forecourts into diversified retail centres seems most likely. Whilst petrol customers will continue to refuel and grab a bag of crisps in a hurry, EV owners may look to take advantage of bookable meeting pods whilst they wait for their EV to charge. Hence, forecourts will need to adapt to a broader set of customers and their new demands.
Whilst parts of the traditional forecourt will remain such as onsite convenience stores and fast-food outlets, future forecourts look set to feature a range of other retail and commercial spaces, coupled with green, relaxing areas for work and socialising. This suggests an increase in long leases of forecourt land and, resultingly, the opportunity for forecourts to generate more revenue. If the UK’s first bespoke EV forecourt5 is foretelling, the primary purpose of future forecourts looks less like a mere pit-stop and more like a destination serving the local community.
Investment
Where investors may have once said, ‘what if no-one turns up?’, the government’s 2030 roadmap has altered that narrative to 'people will turn up; they have to'. Is this changing narrative alone powerful enough to trigger immediate investment in new forecourts? Perhaps it is -- amongst those already investing is the global asset management firm, Aviva Investors. Aviva completed an investment which will see it invest up to £110 million in Connected Kerb, an EV infrastructure specialist.6 Alongside its equity investment, Aviva has also appointed Connected Kerb to roll-out EV charging infrastructure across its portfolio of real estate assets.
Despite the planned sale ban in 2030, petrol and diesel cars will be around for a while to come, so navigating the period in which we have both will be key for investors. It remains to be seen whether the old and new worlds will sit harmoniously on one site -- can current petrol stations really transform, or will they become white elephants as the old world of petrol slowly fades?
With the inevitable evolution of forecourts and its resulting increase in the number of long lease tenancies creating opportunities for increased fixed annual rent, is 2023 set to see greater investment in forecourts?
1 Rt Hon Grant Shapps MP, UK Government Consultation 'The consumer experience at public chargepoints' updated 25 March 2022
2 Alex Smith, managing director of Volkswagen Group UK, Guardian article 26 January 2022
3 Octopus, A guide to electric car charging times
4 Arthur Little, The forecourt of the future
5 GridServe electric forecourt, near Braintree in Essex
6 https://www.avivainvestors.com/en-gb/about/company-news/2022/09/aviva-investors-invests-110-million-in-connected-kerb-ev-charging/
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