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? Once you look at the numbers, though, ridiculous suddenly seems brilliant.

When the 800 stations are completed at the end of the year, Walgreen will own 40% of the charging stations in the country. That puts the company in an excellent position to not only dominate market share but to establish itself as the go-to brand for electric charging.

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.