The biggest threat to gasoline is a small electric car recharging station that is being offered for free to retail stores.  A little bigger than a parking meter, these devices are available on what you might call the vending machine business model.  Retailers are told, "Let us put this outside your store at no cost to you and connect to your power supply.  We'll pay you for the electricity that is used to recharge cars and give you a share of the profits."

According to the Orlando Sentinel, a Florida company called Car Charging Group plans to charge about $3 for a full recharge of an all-electric car or $49 for a month of unlimited charging.  At those prices, electric cars start looking pretty good.  And the major automakers are ready with a number of electric and plug-in hybrids scheduled to hit the market this year and next.

Unlike batteries, there are no major technology challenges for recharging stations.  They are essentially a power source connected to a meter with a mechanism for taking payment.  An iPhone app is already available that will give you directions to the nearest recharging station, and you can receive a text message when your car is fully charged.

The real challenge (and breakthrough) will involve the regulatory process and business models.

Electricity sales are subject to different regulatory structures in each of the states, and in many states only regulated utilities may sell electricity.  Companies trying to sell electricity to charge car batteries need some creative business models (sell the parking spot and give away the electricity?), a change in the regulatory structure, and/or a legal team capable of obtaining the necessary regulatory permission to sell electricity in each state. 

Companies installing the recharging stations also have to carry the capital costs with little or no revenues until enough electric cars are being driven where the charging stations are located.  Recharging companies could go out of business waiting for the electric cars to arrive, and those that survive could face intense competition from big box stores and other national chains that will eventually install this type of device in their parking lots.  In fact, Walmart CEO Lee Scott mentioned this as a real possibility during a January 2008 speech.

For those reasons and others, the real rollout will come when Walmart, Target, Walgreens, CVS, and other national chains start installing charging stations in their parking lots.  Large national retailers could install recharging stations at their stores across the country very quickly and add more to match demand as the population of electric cars grew in specific areas.  They also have the scale and sophistication to handle the regulatory process.

Another possibility is the electric utilities themselves.  In New Jersey, PSE&G has been installing solar panels on utility poles in parking lots.  It is not far fetched to think that one day those solar panels could feed power to recharging stations for electric cars.

Traditional gasoline stations will find it difficult to compete in this electric recharging market.  Today we turn off our cell phones and touch our cars to remove any static electricity before pumping gas because a spark could ignite the gasoline from the pump.  Will we really trust a recharging station pumping out 110 volts (or 220V or someday 480V) next to a gasoline tank?  And who will make a separate trip to a gas station when you can get the same electricity at the same or better price at a parking spot in front of your favorite store?  Or in the parking lot of your office building while you work?  Or at home while you sleep?

Electric cars are projected to capture only about 10% of the total car market in the foreseeable future.  But that could change if consumers find the cars attractive, convenient and cost efficient.  We could find out in the next two years as more electric and plug-in hybrid cars enter the market.

Which brings to mind an interesting question:  If we all start driving electric cars, what will we do with all those gas stations?

John Howley
Orlando, Florida

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