Electric vehicles could change the face of Retail Real Estate
As electric vehicle sales grow, they may change how cars are sold and the places people shop.
- James Cook
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EVs could change retail real estate
The cost of gas has been on a roller coaster. But if it weren’t my job to track consumer prices, I might not have noticed. That’s because I drive a car with an electric battery. And I’m not alone. EV ownership is on the rise.
The total number of EV sales in America jumped 66.4% in the past year. If this trend continues, it could disrupt retail real estate in two big ways.
Disrupting the dealer model
As EVs grow in popularity, they may change how cars are sold. EV showrooms are often put in places that resonate with a car’s branding – typically Class A centers or high streets.
- Since 2019 Tesla has sold cars online only, supported by a network of over 200 retail showrooms and service centers. Often, the showrooms are found in the nation’s best retail streets and centers, like Miami’s Design District, Santana Row in San Jose, CA, and New York’s Meatpacking District.
- Rivian, which sells pickups and SUVs, opened its first Rivian Hub in Venice, CA. The location is a few minutes’ walk from hip shopping on Abbot Kinney Boulevard. The Rivian Hub is a public gathering space with a coffee bar, meeting spaces, a garden, and yes, cars on display.
- For its first brand experience center this year, luxury EV brand, Fisker, chose a location that conforms with its brand image, leasing space at The Grove, LA’s premier lifestyle center.
Lucid, which manufactures luxury EV sedans, has 21 studios in the US, which support its direct-to-consumer strategy. The experience centers feature VR driving simulators. Lucid too has opened in many class A centers, including Fashion Island in Newport Beach, Seattle’s University Village and Yorkdale in Toronto. It also has a handful of street locations, in places like Boston’s Seaport District and New York’s Meatpacking District.
Image: Lucid Studio at Cherry Creek Shopping Center in Colorado
VinFast - a Vietnamese brand with a plan to break into the California EV market - opened six showrooms in July and wants to eventually have 30 across the state. The showrooms are situated primarily in class A shopping centers, including Santa Monica Place and Westfield UTC.
Leveraging existing dealerships
Polestar is a Swedish performance car brand, formerly owned by Volvo. Polestar operates showrooms, called Spaces, which are staffed by non-commissioned specialists, while the cars are purchased online. But unlike Tesla, Polestar has chosen to partner with established auto dealers for sales and service.
While a handful of Polestar’s 22 locations are in Class A centers like Scottsdale’s Fashion Square Mall, most are found within existing auto dealership campuses, often Volvo franchisees. The Polestar model may be the easiest path to quickly sell a new brand in many cities since direct-to-consumer auto sales are prohibited by law in most states.
Established automakers rushing to an EV future
Ford, whose F-150 Lightning electric truck has met with high demand, announced intentions to eventually sell vehicles fully online at a nonnegotiable price. In the future, Ford dealerships will not keep an inventory of EVs on the lot and will primarily be service centers and showrooms.
EV Sales in North America
Gas stations could see declining sales
The second potential EV retail disruption will be to gas stations, convenience stores and highway retail. Retail nodes are organized around the needs and capabilities of the typical family car. But with EVs, those patterns could change over time. Many EV owners would be able to charge up cars at home or at the office.
Gas Stations with Convenience Stores
2021 Industry Revenue: $457.4bn
If gas sales decline, this would quickly impact stores that sell it. Regular gas alone makes up 59% of revenue for gas stations with convenience stores. And while the profit margins on gas are relatively thin, it’s the need for a gas fill-up that drives consumers to the store where they purchase items with healthier margins like prepared foods.
There’s no profit in EV charging stations…yet
There are some real advantages to adding a charging station to a store or shopping center. 89% of EV drivers make a purchase while charging at a retail location. But there aren’t nearly enough EV drivers in the U.S. to make charging profitable. And without an ample network of chargers, more people won’t buy EVs. That’s why the U.S. government has allocated $5 billion in infrastructure spending to help build a national EV charging network.
But many retailers have not been able to tap into these funds. And furthermore, adding charging stations to a retail location is expensive. Level Three fast chargers, which are the only ones which don’t take hours to charge, could cost $40,000 to $50,000 to install a single charge port.
Travel centers, supermarkets and Starbucks are testing charge stations
Despite the difficulties, some retailers are forging ahead with test programs. Pilot is partnering with GM to add 2,000 new fast charging stations to 500 Pilot and Flying J travel centers. The chargers will be spaced out at 50-mile intervals along major highways. Installed by 2025, the chargers will be open to all drivers, however GM owners will be able to reserve chargers in advance.
In another test program, Starbucks is adding chargers every hundred miles between Denver and Seattle, in partnership with Volvo.
Kroger has announced it will add more than 350 stations in 20 states. Other supermarket chains, including Stop & Shop, Giant Food, Albertsons, and Vons have announced adding charging stations in a handful of stores.