There’s nothing that says ‘squandered potential’ like a treadmill in the corner of a room being used as a clothes hanger…well, until now. A recent Business Week article stated that more than one-third of flex-fuel vehicle owners don’t even know that their cars can run on something besides gasoline (that’s about 3 million cars). Although the other two-thirds of vehicle owners at least know what their options are, they still face an uphill battle of tracking down one of the 17,175 gas stations, of the 128,000 or so in the US, that actually sell alternative fuels (that’s only 2 percent of gas stations).
Just like a fitness trainer teaching you about a healthy lifestyle and helping you put that treadmill to good use, a company called Propel Fuels is on a campaign to help owners of alternative fuel vehicles use their cars for what they were engineered for – to use something besides petroleum to run. Propel has installed its pumps at 26 locations, opened its first independent station this year, educated car owners about alternative fuel vehicles, and launched a system to help customers track their carbon emissions. Adding to its $30.2 million from venture capital (including $12 million in Series C funding) and a US Department of Energy grant, the company recently received a $10.1 million grant from the California Energy Commission to build 100 independent stations in the state by 2016.
For years, Propel has been slowly introducing its alternative fuel pumps that offer 85% ethanol (FlexFuel E85) and biodiesel at existing gas stations as a pathway into the marketplace. So far, the company has studied large metropolitan areas and targeted select sites, with 7 located in the Bay area, 4 in Los Angeles, 8 in Sacramento, 1 in San Diego, and 6 in Seattle, where the company got its start in 2004. But getting gas station owners to allow Propel’s “Clean Fuel Points” to co-exist alongside their gasoline pumps has been a challenge simply because flex fuels are the new competition.
So it only makes sense to build its own stations.
At the beginning of June, Propel opened its first “Clean Mobility Center” station in Fullerton, CA, which offers flex fuels alongside traditional unleaded gas. The center also supports the bicycling community by offering free use of tire pumps and tools, along with maps for routes, buses and trains. In addition to providing information aimed at answering questions about alternative fuels, consumers can contribute $1 at the pump to Propel’s CarbonOffset program, which partners with Carbonfund.org to fund projects that promote renewable energy use and help reduce the carbon footprint. With the recent funding to build 100 more centers and the possibility of adding natural gas pumps and battery recharging in the future, Propel will be in an ideal position to continue to grow, hopefully at the same 300 percent growth it has seen since 2010.
Propel is also embracing technology to bring awareness to its customers and encourage alternative fuel purchases. In addition to a recently redesigned website and mobile site that capture the modern, fluid experience that appeals to owners of alternative fuel vehicles, the company launched a platform called CleanDrive. The system logs renewable fuels purchased from Propel and tracks customer’s carbon emissions, displaying reduction in CO2 emissions and foreign oil consumed in addition to other eco-friendly metrics. While not quite a “gamification” of fuel purchasing, CleanDrive is a first step at giving customers positive reinforcement about how their fuel purchases help reduce carbon emissions.
But, for most people, filling their cars up is all about balancing cost and convenience, and because local gas prices vary little, consumers put minimal mental energy into buying gas.
Propel knows this. In a promotional video, CEO Matt Horton says, “When it comes to fueling our vehicles, most of us are sleepwalking. We’ve been buying from the same places and the same kind of fuel our entire lives.” That’s the grand challenge facing the company: how do you wake consumers up? It’s a difficult position. Even though Propel can leave the marketing of alternative fuel vehicles to car manufacturers, environmental activists, and government agencies, the company still has to convince consumers who own flex fuel vehicles to use a consumable product, not because they must or its always cheaper, but because it’s ethically better.
Arguments for alternative fuels typically run along the lines of how they will diminish CO2 emissions that contribute to climate change, benefit the economy by reducing dependence on foreign oil, promote a more sustainable solution to energy needs, and ultimately save money in fueling costs (when the price is right). But whether these points get any traction in the mind of consumers considering flex-fuel vehicles is not clear. A group of graduate students at the George Washington University conducted a survey in 2011 of 100 respondents (age 34 or under) aimed at assessing choices in the purchase of alternative fuel vehicles. They found that “going green” was a very low priority in purchasing a flex-fuel vehicle but the most important factor was the presence of nearby fueling stations.
In light of this, the company is in an ideal position for business: by increasing the number of its centers and its Clean Fuel Points at gas stations, it contributes to the most important factor for people to buy vehicles that use its fuel: accessibility. So as people see more alternative fueling stations around, their likelihood of buying a flex-fuel vehicle increases, which will cause them to fuel up at those stations, increasing profit to build more stations. That’s the kind of self-feeding mechanism that can lead to exponential growth.
If Propel can better incentivize fuel purchases, embrace mobile technology by creating an app, and complement the “it’s good for the environment” message with a “it’s cheaper and convenient” mantra as more fuel locations arise, the company could build a flex-fuel ecosystem that fosters the same kind of explosive subculture that has led to the success of Starbucks and even Apple.
It’s a long shot, but one that investors and government officials continue to bank on.
Here’s Propel’s video showcasing what the company is all about:
[Sources: Businessweek, DOE, EIA, Propel, SF Gate]
