Shell (SHEL) has announced that it will divest from 1,000 retail locations within the next two years. Instead, the company will focus on expanding EV charging stations, particularly where demand is highest in Europe and China. At current gas filling locations, the company will offer more chargers.
Yahoo Finance Reporter Pras Subramanian joins the Live show to break down how Shell is positioning itself in the green energy transition.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
AKIKO FUJITA: Well, Shell out with an announcement that it'll be transitioning to improve its place in the EV market, and shrinking its retail footprint. Let's bring in Yahoo Finance's Pras Subramanian to give us the details. So, Pras, are we talking about basically using the Shell footprint swapping out the pumps for chargers? Or are we talking about shutting down those stations altogether?
PRAS SUBRAMANIAN: Well, hey, Akiko, they want to shut down around 500 Shell locations in 2024 and 2025 over the next two years, so 1,000 locations there. But the thinking here is they kind of want to optimize how they roll out their EV charger. They call it the Shell Recharge product.
They see a big business for that, especially in China and in Europe, where demand is higher. They want to expand that to, I think, around 200,000 chargers. So, the deal here is that, yes, they're going to divest some properties here, but they're also going to possibly expand with more charger plugs at current locations, close those lower-performing gas stations or filling stations, add more chargers at mobility hubs.
So I think things like supermarkets and coffee shops. And they may just install more chargers, Akiko, at the current gas filling stations they have, and they have 47,000 locations currently. So, closing 1,000 is about 2%, so not that much, but that's 1,000 stations that are gone.
AKIKO FUJITA: Pras, what does that tell you about where Shell sees its place long term? You know, all this talk about slowing growth in EV sales, slowing adoption rates. And yet, you still got companies who are saying, look, even though that's the story right now, 10 years, 20 years down the line, the adoption, that transition to EVs is still very much intact.
PRAS SUBRAMANIAN: Yeah, you know, it's not just Shell. BP also getting involved with the charger game, too. But I think what they're seeing is that they need to put these chargers in really high-traffic areas, also areas where fleets will use them. Because if there's too much downtime, it's not worth their trouble to invest hundreds of thousand dollars at each location to build these DC fast chargers, in some cases.
But I think they also see the fact that if you have things like coffee shops and small retail shopping, and other things that people can do at these locations while they charge, it makes a lot of sense. Again, the less downtime, the better for them. And I think that they believe that the way that their footprint exists now globally, especially in Europe and China, they can actually make money on the business. And they're looking at a 12% sort of rate of return on this business down the line.
AKIKO FUJITA: Yeah, it's going to be interesting to see what kind of experiences pop up on the back of these charging stations. Pras Subramanian, thanks so much for that.
