If fuel inflation has done one good thing it is to highlight why moving to electric vehicles as fast as Australia can do it is a smart thing.
On Thursday, Ampol chief executive Matt Halliday revealed the company’s new EV charging brand AmpCharge, with five pilot charging sites dotted across the country to be up and running in June and July.
Halliday’s plan is for Ampol to be as fundamental to the electricity infrastructure of the future as it is to fuel distribution today. That means not just keeping Australians on the move, but keeping the lights on in Australian homes. It’s an ambitious goal and it all starts with the electric vehicle.
Ampol’s energy trading hub in Singapore gives it deep insight into global flows and pricing as Russia moves to shut off European countries from its gas supply. Halliday says he has never seen a wider spectrum of potential outcomes for fuel prices.
In Australia this week’s shock 5.1 per cent inflation read for the year to March included a whopping 13.7 per cent jump in the transportation input.
Halliday sees a growing number of people wanting to shift to EVs from Ampol’s customer intentions data.
“Fuel prices are high. We are going to see higher energy pricing across the board as we are moving through this phase. The geopolitical situation is exacerbating that.
“All these facets of the market are interconnected to some extent and we are going to see energy price inflation right across the system,” he warns. EV penetration in Australia sits at a paltry 0.14 per cent for 2020-21, according to the latest Australian Bureau of Statistics figures. EVs made up 2.97 per cent of new car sales in the first quarter of 2022.
Over the last decade global carmakers had little interest in growing an EV market in Australia when energy transition seemed a second-order issue.
Matt Halliday says that Ampol’s commitment to roll out 121 EV sites with universal charging points across Australia by September 2023 is a shift in gear that will be noticed by EV manufacturers. “When they see what is happening across the government, across customer intentions and across enabling infrastructure, these kinds of steps are important,” he says.
“The big global (original equipment manufacturers) will prioritise their own needs in their own portfolios but the customer opportunity is here. So absent supply-side challenges that they are all experiencing, they will be looking to get vehicles on the ground here in Australia and they are being snapped up.”
To deliver on the EV infrastructure rollout, Ampol placed orders for 300 charging units across three different suppliers, including local Tritium, to minimise its supply risk.
Hallidy says for Aussies comparing an EV with a petrol car, when upfront and ongoing running costs are considered, parity is achieved by mid-decade. If just the capital cost of both vehicles are considered, without the energy costs, then parity is at the end of the decade.
He puts the inflection point for EVs in Australia at 2030, with a ramp-up before then. “Vehicles are starting to arrive, and some you see in market are impressive. That is helping to drive purchasing intentions from customers. It’s going to be about vehicle availability when you look at supply chains as to when you see the tipping point,” he says.
Once EVs are commonplace drivers will be charging at Ampol forecourts, at shopping centres, at offices and – very importantly – at home.
It is that home charging market which offers a new market – retail electricity.
Ampol will offer bundling for customers to charge at home and on the road in a trial this year. “We’ve applied for our retail electricity licence and it will be integrated into that offer for those customers who have EVs,” says Halliday.
The retail electricity strategy will start small as a test and learn exercise. But expect Halliday to leverage Ampol’s rich network: 80,000 customers use an AmpolCard, and there are three million retail customers a week.
Ampol is preparing for battle to take retail market share from big incumbents like Origin, AGL and EnergyAustralia – first raised by Robert Gottliebsen in December.
Access to customer data and strong marketing skills will be very important. Add to that Ampol’s commodities trading capabilities, which can support the strategy with risk management.
Halliday is using Ampol’s large holding of corporate fleet customers to drive scale in the early stages by offering a package solution.
“The feedback we get is make life easy for us: I can give my employee a fuel card today, a vehicle today so they can go and refuel at an Ampol station as they are travelling around. And look at a solution for how the customer can easily separate what their cost for work is as opposed to their home electricity bundle,” he says.
The good news for Ampol is that high global fuel prices have buoyed refiner margins at Lytton, shoring up a first quarter profit up 50 per cent over the previous year. Cashflow generated from the core business is needed for the inevitably loss-making future energies side. “It’s important in terms of the role that Ampol can play as a distributer of fuels today to become a distributor of a broader set of energies tomorrow. That’s going to require investment as we look to transition and grow the business,” says Halliday.
Extracted from The Australian