Will Electric Cars Save This Pharmacy?

Late last year, Walgreen (NYSE: WAG  ) started to build charging stations for electric vehicles at its stores. In July, it announced that it was sprinkling 800 more stations among its nearly 8,000 U.S. locations, beginning with a handful in Chicago. The third-quarter dividend champion announced last month that its partnership with closely held 350Green is now adding charging stations to 100 locations in and around the greater Los Angeles area.

Prescription for success
Admittedly, the thought of charging a car at Walgreen's sounds ridiculous to me. A company like AeroVironment (Nasdaq: AVAV  ) building charging stations? Sure, that makes sense. I read about ExxonMobil (NYSE: XOM  ) adding charging stations to its normal gas stations; well, that would make sense, too. But Walgreen's? A pharmacy? 

When Walgreen issued this statement in July, its 800 stations would have made up 40% of the charging stations in the country. That would have put the company in an excellent position to not only dominate market share, but to establish itself as the go-to brand for electric charging.  Since that time, according to American Garage Magazine, the number of charging stations in the U.S. has nearly doubled, meaning Walgreen was never the leader it expected to be.

OK, but who has an electric car?
I don't know anyone with an electric car, but I know I see news about electric cars more and more frequently. Last year, the National Academies predicted that 13 million to 40 million electric vehicles would be on the road by 2030. Partnerships like the one Tesla (Nasdaq: TSLA  ) has with Toyota (NYSE: TM  ) may help approach this figure. Tesla made news this summer after it inked a $100 million deal to build powertrains for Toyota's new electric model RAV4.

Other winners
Tesla and Toyota aren't the only companies that stand to benefit when Walgreen improves the charging network. Though it has a gas powered backup system, General Motors' (NYSE: GM  ) Chevy Volt needs a charge every 35 miles to continue running on all-electric mode. Nissan (PINK:NSANY) also has an all-electric model to benefit from the stations, and the visibility of Walgreen's network certainly won't hurt sales.

Visibility is crucial to the electric car industry. Right now, a major downside to owning an electric vehicle is range, or the distance the car can cover before it needs to be charged again. When Walgreen adds these stations, it will be easier for customers in Boston, Denver, Los Angeles, New York City, San Francisco and Washington, D.C., and certain parts of Florida, New Jersey, Oregon, Tennessee and Washington to charge their cars.

Foolish bottom line
Adding charging stations to stores is the type of forward thinking I like to see from a company. In this case, it can serve as distraction for investors who don't want to think about how much Walgreen stands to lose if it fails to renew its Express Scripts deal. But we're still in the early stages of the electric car game, and it's too soon to declare a winner in the charging station race.

Fool contributor Aimee Duffy owns shares of Ford Motor. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors, Ford Motor, and AeroVironment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 05, 2011, at 10:13 PM, nutcutter wrote:

    Full disclosure, I sell the LEAF for a Santa Monica dealer.

    I've been driving an EV for 9 years, 97,000 miles. I charge it from a 3 kW PV system that generates enough energy to power my home and car with a resultant electric bill of about $100 per year. The ROI is pretty favorable as you can imagine.

    The new crop of EVs, the Volt and LEAF for now, but soon to be followed by Ford, Mitsubishi, Volvo, Mercedes and many others, are excellent cars. Those who buy these cars are extremely happy with their purchase. You should interview these people to get a sense of what this technology means to them. The cost of operation is minimal. The feel good aspect of driving a car that doesn't pollute, can be run on 100% domestic renewable energy, and never uses a fuel over which wars are fought, is worth a lot to these people.

    I can guarantee you that electricity will take over from oil much faster than most pundits think. The limiting factor is production, but that's about to take off in 2012 and 2013.

  • Report this Comment On February 04, 2014, at 11:45 PM, elijed23 wrote:

    I think that adding electric car charging stations is both environmentally conscious and customer friendly. It seems like a good combination for their customers. I am happy to see a bigger corporation supporting the environment. This will be great for the pharmacy like http://www.prattscompoundingpharmacy.com.

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