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Starbucks' Next Customer Magnet: EV Charging With Your Coffee

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As electric vehicles gain popularity, both EV manufacturers and independent charging station companies are rushing to get more EV charging stations set up.

Currently, many EV owners are unable to take their cars on longer trips due to the lack of sufficient charging infrastructure; one mistake in route planning could lead to an EV running out of charge in the middle of nowhere. Moreover, some people who want EVs are holding off on the purchase because they are unable to set up charging stations at home, especially those who rent or live in multi-family properties.


Some retailers see a massive opportunity here. Perhaps by providing charging stations for their customers to access, they can bring in more business and increase the loyalty of existing customers.

One company that is experimenting with EV charging stations is Starbucks Corp. (NASDAQ:SBUX). The coffee giant is teaming up with Volvo Cars and ChargePoint (NYSE:CHPT) to install DC fast chargers along a 1,350-mile route from Denver to Seattle. If this test proves successful, it could be the next big thing for Starbucks.

The EV economy

What sets EV charging apart from a trip to the gas station is that it takes time. Even the DC fast chargers that Starbucks is installing take about 30 minutes to charge the average EV to 80% battery life.

Now imagine if you had to sit at a gas station for half an hour waiting for your car to fuel up. That would be quite the hassle, and it would certainly require a significant upgrade to gas station stores around the world to keep customers entertained and prevent scammers from taking advantage of a captive audience.

The way EV owners charge their cars will likely shape up to be very different from the stations that gas-powered cars rely on. There may eventually be stations focused just on fast EV charging, but even they will need to provide some sort of upgraded amenities for customers, and people will be more likely to go to the charging stations that provide them with a better use of their time.

Most EV owners charge up at home overnight, though, negating the need for a charge with their coffee. Thus, the attraction of the EV chargers would be mainly for travelers and customers who are unable to install a charging station at home.

Challenges ahead

The main challenge with installing EV charging stations at retail locations in general is that the DC fast charging stations are very expensive, running anywhere from $28,000 to $140,000 each depending on kilowatt capacity.

The high price tag is why the majority of EV charging stations being installed at businesses such as grocery stores and recreation centers are Level 2 charging stations (the fast chargers are Level 3 charging stations). Level 2 chargers give 18 to 28 miles worth of range per hour, which is just enough to provide an emergency lifeline.

For Starbucks in particular, another challenge comes from the fact the majority of its customers do not hang around the cafe, preferring to go through the drive-through or order to-go. This has helped the company lower its retail footprint since it does not need to provide space for most customers to sit down and drink their coffee.

If the charging stations prove popular, some Starbucks locations may find their tables more crowded than usual, and with customers that are spending less money for the time they wait at the location.

Takeaway

Overall, installing DC fast chargers at Starbucks locations could provide iconic stopping points for EV owners who are travelling or who need a primary charging station to go to. This could help increase customer loyalty and also be good for Starbucks brand image.

This plan may prove too costly to implement at most locations for the time being, both in terms of initial investment and in terms of the extra table space that charging customers may take up. However, laying the groundwork would make it easier to scale up charging infrastructure in the future if the prospects become more advantageous.

This article first appeared on GuruFocus.