Konect: Transforming Australian Service Stations into Multi-Fuel Convenience Hubs

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In a sign that the future is indeed electric, Gilbarco Veeder-Root has announced that it is launching a fully integrated electric vehicle charging ecosystem for fuel retailers in Australia — Konect. GVR describes it as an “end-to-end electrification offering” in Australia. They are encouraging service stations to take up this “golden opportunity to deliver the EV charging experience Australians crave.”

“Gilbarco Veeder-Root, a Vontier company, is the worldwide technology leader for retail and commercial fuelling operations, offering the broadest range of integrated solutions from the forecourt to the convenience store and head office. For over 150 years, Gilbarco has earned the trust of its customers by providing long-term partnership, uncompromising support, and proven reliability. Major product lines include fuel dispensers, tank gauges and fleet management systems,” the company writes.

It is highly likely that wherever you are in the world, you have filled up your car using a GVR pump. GVR has a 60% fuel technology market share. To maintain that share as the globe transitions to electric requires GVR to transition with it. Konect aims to “help service stations become ‘multi-fuel convenience hubs’ that meet the various needs of visitors and local communities.” In a rapidly changing environment, how can servos attract customers, not just for refuelling, but also for slushies, toasties, and coffee? EV owners seem like the perfect captive audience.

To capture the business in this moment, servos will, in my opinion, need to move quickly and provide great convenience. In my area, two servos have high-speed chargers, but so does the shopping centre, not to mention the free ones provided by the council at the library. We never use any of these, as we charge at home. I expect a slow reduction in servos as more people go electric and discover that you don’t have to go anywhere to charge. Now is the time for servos to capitalise on people’s habits of going to the servo for fuel, etc.

It is a different story from the highways, where lone chargers in the middle of nowhere are giving way to banks of superchargers at shopping centres and tourist destinations. In my humble opinion, competition will only get fiercer. Konect hopes to help servos meet that competition.

A great place for an EV charger would be the little country town that had no public toilets, where we had to stop after being stuck in a traffic jam due to a jack-knifed semi-trailer. We were not the only EV to be caught in the jam and the large servo with toilets was a welcome sight. There was a queue and a sign — to use the toilets we had to go through the shop and buy something. Fair enough, but if they had a charger, we would have topped up. Businesses can’t be expected to provide a service without some sort of remuneration.

Konect is in a prime position to support Australia’s EV transition (currently sitting at a penetration rate of 10%). But it must act quickly and with careful planning if it wants to help servos capture the demand. Despite the fact that some companies are still building new service stations in suburbia, I do not see a lot of demand — locals can charge at home. The chargers at the local Woolies supermarket are always in use, the one at the BP very rarely has customers. People need to have something to do at the charger location. Another trap to avoid is the installation of CHAdeMO chargers — the market in Australia is overwhelmingly CCS2. Learn from Ampol’s experience. In Norway, you can charge at Macca’s. Will fast food restaurants replace servos, just as getting cash out at the supermarket has replaced bank branches and ATMs?

Servos close and transition as motoring technology changes. When the population reduced at a small town on the way to Warwick, and car range improved, the local servo closed. This was many years ago and has nothing to do with EVs. But it was a great photo opportunity and a lesson for the future about adaptability. Some old servos have become shops, some restaurants, there are many uses for prime real estate. Konect tells us that “The number of service stations in Australia has reduced from 25,000 in the 1970s, to approximately 7,000 today.”

How would Konect price its electricity? Would we have a big lit up board with the costs of different fuels? If so, how will the customer react to the cheap, consistent price of electricity vs the constantly changing yet ever high price of fossil fuels? I had an interesting chat with my son-in-law last night. I was very surprised. I haven’t filled a car with petrol for five years. (Thank you, Tess.) Although I am aware of the petrol cost in my local neighbourhood, I am not aware of the range of prices up and down the highway.

He was complaining, and rightly so, that it is cheaper for him to drive from his home 15 km away to my home suburb to fill up with petrol. On a tank full, he is saving AU$10. Well worth the time and trip he thinks. I think it is ridiculous. How can petrol cost $1.67 a litre in Bracken Ridge and $2.32 a litre 10 minutes up the road?

Perhaps as the low price of electricity vs. petrol is clearly demonstrated, it will accelerate the transition to EVs in Australia. I hope so. However, multiple fuels will need to co-exist for decades to come. Even Norway, the world leader in the transition, is taking some time to transition the on-road fleet. There are now more EVs on the road in Norway than petrol cars. How many years it will take to transition the entire fleet is unknown, though. Konect will have to do the maths to demonstrate return on investment.

Konect outlines its plan: “As a supplier of end-to-end electric vehicle charging ecosystems, Konect will help Australian service stations retain their frequently visited status in an age where a combination of fuels will coexist. Located on neighbourhood corners and city-to-suburb corridors, these businesses will become hubs of convenience, where waiting for an electric vehicle charge is not a daunting prospect.”

If Boston Consulting Group is correct, 80% of the current fuel retail network will be unprofitable by 2035. They ask the question, “Is there a future for service stations? And what will it look like?”

“Fuel retailers must develop a comprehensive response that adjusts the products and services they sell, adapts their network and business model, alters the layout of their service stations and convenience stores, and harnesses new digital tools.”

BCG offers four scenarios. The fourth one is what is happening right now in China, where 50% of new cars sold are electric, and Norway, where that figure is +95%. I have been to Norway and to China. The future has already arrived there. Scenario 4 posits that “Mobility moves beyond fossil fuels. In the most advanced of the market environments, EVs are dominant, and the AV revolution is well underway. About 10% to 20% of all new cars sold will be both electric and fully autonomous. Fossil fuels will power only about a quarter of all road mobility energy needs. In addition, the infrastructure needed to serve a growing fleet of AVs—to transport goods and people throughout the day, and to charge overnight and during idle times in dedicated areas—will be in place. On-demand mobility will account for nearly 30% of all passenger kilometers in cities, as more and more people opt for shared mobility over vehicle ownership. … The market environment will require fuel retailers to make even more dramatic changes: in the absence of changes to the current model, 60% to 80% of the network may be unprofitable, and the average ROCE (Return on Capital Employed) for the sector will be negative by 2035.”

As for retail … “the shopping experience will reach its maximum level of online and offline integration. Drones and autonomous robots will be commonplace, bringing products to customers’ doorsteps from urban micro-hubs. Humans will participate directly in only half of all last-mile deliveries.”

And that was written in 2019. Would love an update if anyone has seen one.

The timeframe is short. The predictions for EV uptake are very conservative. Decisions will have to be made under some duress. One of the features of EVs used to be that you had to hang around while the car charged, creating an opportunity for servos to market to a captive audience, but with the rapid development of superfast charging (BYD has announced charging speeds equal to the time it takes to fill up with petrol), this opportunity will no longer exist.

Australia has set ambitious climate goals. To meet them, EV penetration rates must reach 30% by 2030. With the influx of high-tech, inexpensive Chinese EVs, this goal is eminently achievable. The current Australian government has committed to building 50,000 public charging stations within that timeframe. However, we have an election next month and the anti-EV forces are gathering. Stay tuned.

Om Shankar, Vice President & General Manager of Konect, says: “Australia is a market brimming with innovation, passion for progress, and favorable conditions primed to drive positive growth in electric-vehicle take-up in the years to come. However, fuel retailers need the right tools to make that growth a reality — and critically, to make the enterprise a profitable and sustainable one for them. The energy landscape is evolving, and fuel retailers require a trusted partner to navigate the transition to EV charging infrastructure.”

“Konect’s EV charging ecosystem is designed specifically for the forecourt environment, and empowers fuel retailers to deploy their own robust, profitable infrastructure. This unique turnkey solution includes support with site selection and funding applications, installation and integration on-site sales and energy management systems, and comprehensive in-life technical support utilizing GVR’s experienced field team,” Shankar added.

Konect aims to do charging better, enabling seamless integration with existing fuelling, payment, and service offerings. Its end-to-end EV charging ecosystem makes it easy for drivers to stay mobile, and makes it effortless for charge point operators (CPOs) to focus on their core operations. Konect understands the challenges of managing a mixed-fuel environment.

I wish Konect well. It is difficult to plan for an accelerating future change. The company has realised and is now showing service station operators that the future is bright and electric. If they want to participate, they need to future-proof their businesses.