Seize the Coming Transportation Revolution

Former Circle K executive Jacob Schram sees opportunities ahead amid a shift to electric vehicles.

October 02, 2019

ATLANTA—Convenience industry veteran Jacob Schram came to the NACS Show to talk not about a doomsday scenario for convenience and fuel retailers but rather one of tremendous opportunity as electric vehicles, soon-to-come autonomous vehicles, connected vehicles and shared vehicles remake the vehicle fleet in the U.S.—and consumer habits.

In today’s Super Session, “Reimagining Mobility 2020-2030,” Schram took the NACS audience on a journey through the great inflection points in transportation history. Schram, who hails from Norway—the most electrified country in Europe, he said—is senior advisor, McKinsey & Company, and former group president of European operations at Circle K.

Schram predicts that by 2030, the convenience industry will see developments that are as profound as those of a hundred years before. Think the shift from horse and buggy to automobile. It’s what Schram calls “Mobility’s First Great Inflection Point.” Cutting-edge changes are coming even faster this time, Schram said, resulting in a dramatically different mobility—and competitive—landscape.

When it comes to EVs, the U.S. lags behind China and Europe in their uptake, but the day is coming when consumers will choose EVs—or no vehicle at all—over conventional fuel-powered vehicles. How do retailers prepare for a future in which consumers may not need to stop by the gas station or convenience store to fill up their tanks?

First, realize that there will be “huge new job opportunities and new profit pools,” Schram said. “I’m not talking here about doomsday. There is only opportunity here for people who grab it.”

At the present, China is winning the EV race, he said. Schram sees China as the leading market for EVs through 2030. In China, EVs account for about 7% of total new car sales. “There is no doubt to me that the new mobility is coming to China first,” Schram said.

To his international audience, Schram advised, “You will still sell fuel beyond 2030. I’m not saying you’re not going to sell fuel. What I am saying is that the fuel demand will diminish, and you will sell less fuel 10 years from now.”

So when can retailers expect the shift? “When there is price parity” between EVs and conventional vehicles. In Norway, he said, the fleet went from zero to roughly 60% EVs in about seven years. “Nobody, absolutely nobody, believed that would happen when it started,” he said. Schram predicts the U.S. market will see price parity around 2022 as $34,000 is the average price of a new car now. “Don’t talk about price parity being far out in the future. This is coming.” Government incentives and regulations can accelerate this timeline, he noted.

So-called range anxiety is fast disappearing, too, as auto companies introduce cars with higher-capacity batteries. “The tipping point is supposed to be 320 kilometers (199 miles). The Tesla Model 3, for example, has a range of about 544 kilometers before needing a charge.”

Still, EV charging infrastructure needs building out both in the U.S. and Europe. “A key number to remember is if you have the balance between electric cars and chargers is 100 cars per fast charger,” Schram said.

In the U.S., there are 265 EVs for every available fast charger, but in China that number is 20 cars per fast charger, he said.

“Charging is actually good business,” Schram said. At Circle K in Norway, “we have really fast payback on our chargers.”

To remain relevant to EV drivers—and eventually autonomous vehicle users—convenience retailers need to keep up a dialogue with them. Invest in on-the-go charging hubs, create urban mobility hubs and offer in-car services related to entertainment, relaxation and foodservice. “In my view you need to go all the way to home charging,” Schram said. “Grab this opportunity. Don’t let it go.”

At the same time, optimize your current business—focus on developing premium fuel, developing enhanced rewards programs and the like. But keep an eye on the future—don’t miss the opportunity. “You own the space,” he said.

The bottom line is that “yes, mobility will change,” Schram said. “I believe it will happen even faster than when we went from horses to cars. You have a choice of being disruptive or taking the opportunity. You have massive skills. You are the right owners who will benefit from the revolution that’s coming.”