In 2023, BP Products North America Inc. bought TravelCenters of America (TA) for $1.3 billion. The acquisition is part of BP’s growth strategy to go beyond petroleum. It aims to expand convenience, alternative fuel, and electric vehicle charging options. It’s also preparing to provide renewable natural gas, biofuels, and hydrogen to fleets and passenger vehicles.
TA can support BP’s vision in several ways. TA is the United States’ third largest operator of travel centers. These travel centers are conveniently located along bustling interstate highways. They serve as a second home for drivers, providing refueling and maintenance services, hot meals, and other essentials. BP saw immense value in that.
BP to Take Advantage of TA’s Massive Network of Travel Centers
TA has a massive network of over 280 travel centers across 48 states in the United States. It has strategic locations on the busiest highways, complementing BP’s off-highway network. TA’s travel centers cover around 25 acres each, totaling roughly 7,000 acres. Aside from its impressive network, TA also boasts a well-established customer base. It caters daily to the largest trucking fleets in the country.
BP can look forward to higher revenues thanks to its acquisition of TA. TA’s convenience business and other services make up around 70% of its gross margin. That’s an estimated $1.3 billion yearly, which is double BP’s convenience gross margin.
TA also sells roughly 150 barrels of fuel daily, and around 90% of that is diesel. The diesel demand in the United States will remain high in the coming years, and the truck freight industry will continue to boom. That means BP can expect to profit greatly.
BP and TA Seek to Decarbonize Customers
According to BP, it expects traditional fuels to remain an essential product among its customers. But it also recognizes the growing shift toward lower carbon solutions, as it has observed in its fleet customers. To support this change, BP is scaling its low-carbon products in the following ways:
- It acquired Archaea Energy, one of the largest producers of renewable natural gas in the United States.
- It aims to provide more electronic vehicle charging options through BP Pulse. It’s set to invest $1 billion in EV charging in the country by 2030.
- It aims to scale its biofuels through co-processing and other biofuel projects.
- It’s working to provide hydrogen to the heavy trucking industry.
TA is also taking the initiative to decarbonize its customers, proving that the acquisition was a smart move on BP’s side. TA announced that it partnered with Electrify America to provide EV charging at select TA travel centers. It will be deploying the first stations this year. TA is also collaborating with Nikola to build hydrogen fueling stations for heavy trucks. They’re testing the waters with two TA sites before expanding.
The Bottom Line
BP and TravelCenters of America seem to have similar visions for the future. Both companies seek to support their customers in their desire to shift to low-carbon alternatives. The acquisition can pave the way for a more sustainable trucking industry.
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