Does Tesla Motors Really Want To Be Chevron, Rather Than Ford?

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Tesla Supercharger fast-charging system for electric cars

Tesla Supercharger fast-charging system for electric cars

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It's been a great few months for Tesla Motors [NSDQ:TSLA].

The company's flagship product attracted a near best-ever rating from Consumer Reports to add to its trophy cabinet. Its DoE federal loans have been paid, and the company made a profit in the first quarter.

But is Tesla's greatest potential in its Supercharger fast-charging network, rather than the Model S and its future vehicles?

The Wall Street Journal thinks it might be, and the argument is a strong one.

At the moment, only eight Superchargers dot the country, but that number will triple by the end of this month and rise to a hundred by the end of the year.

Superchargers for all

The business case for the Superchargers is currently one of added value for Model S sales. Tesla owners aren't charged a penny to use the chargers, and that's likely to remain the case for the forseeable future. As a Model S buyer, it's nice to know you'll eventually be able to travel the country without spending a dime on fuel.

But Tesla's Supercharger technology is among the best fast-charging tech out there, and stations that can replenish 200 miles of battery capacity in 20 minutes have plenty of potential outside Tesla's realm.

What if, asks The Wall Street Journal, Tesla Motors could expand its network faster than anyone else? And what if other cars were eventually able to use that network?

The paper likens the move to the first network of filling stations across the U.S. These were controlled by--get this--Henry Ford, shortly after the Model T was launched.

It's great having people fill their Model S for free at those Superchargers, but even if Tesla's success continues, it will only ever be one maker of electric cars. There are thousands of other electric vehicles out there with charging requirements, and allowing them access to the national Supercharger network could be a real money-spinner.

Charging: In Tesla's best interests

Tesla is also perfectly placed to control such a network.

Many companies have a passing interest in running an electric network--automakers, utility operators, gas stations--but all have other interests at heart. Tesla's business is only in electric vehicles, so there's all the more to be gained from investing in the technology.

And while there are several competing charging technologies, such as the CHAdeMO standard adopted by many Japanese automakers, Tesla could potentially share its tech with some big automakers like Toyota and Daimler--both of whom have technology deals with Tesla.

Tesla has an exciting product line ahead of it, but The Wall Street Journal sums up the charging situation quite nicely:

"It has proven much more profitable to be Chevron than it is to be GM."

It will of course be hugely expensive to set up a wide-reaching Supercharger network, as investment site Seeking Alpha points out (each station costs around $300K)--but that's all the more reason to expand the network beyond merely free Tesla charging.

A Model S in every garage would be nice for Tesla Motors, but every electric car in the land using their chargers could be even better...

[Hat tip: Brian Henderson]


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Comments (23)
  1. I agree with WSJ. I'm sure Tesla has already thought that through. Seeking alpha! Sad

  2. As far as level-3 charging goes I think we are still stuck waiting to see which standard will prevail. Tesla's Superchargers are awesome but will other manufacturers jump onboard or is Tesla building at great expense a network of chargers that only their customers will be able to use? If like Better Place, Tesla is unable to get car manufacturers to adopt their system the expense of running these stations could be a problem.

  3. This may come across as a bit selfish, but I DON'T want other manufacturer's cars clogging the available supercharger ports at this early stage. Their purpose is to make long distance travel easy for Tesla owners - it is a marketing strategy, not a public service. The operational cost will be minimal with the solar panels, and if they generate more car sales, that cost will be justified. The coming supercharger near Napa is just awesome in my admittedly narrow view, and should sell more than a few cars all by itself.

  4. I'm sure even if other brands did decide to use Tesla's system it would still take a few years to get the properly equipt cars on the road. So your safe for quite a while. Still, when was the last time you were at a gas station that was exclusive to one brand? "Sorry sir this station is for Mercedes-Benz drivers only".

  5. I agree with Norm. The Supercharger network is a commitment Tesla made to their owners. As more ModS and eventually ModX are sold, those Superchargers will be busy enough without the rest of the EV community having access.

  6. After your comment I agree with Norm on the selfish part. Way to look out for your fellow EV drivers, Tesla gives you a perk and now you want it kept exclusive for your convenience. Wow.

  7. Imagine you are taking a road trip, depending on the supercharger network as you travel, and finding all the ports have Prius and Volts in them, because the owners want to pick up a few free kWhrs while they eat lunch. Of course, their batteries are filled long before lunch is complete, so they are not actually pulling any current. But this would never happen because all those fellow EV drivers would be looking out for me, right?

  8. @ Norm, First off Volts and Priuss would never Supercharge, they don't have or need level 3 charging capabilities. And secondly not every thing is going to be perfect Superchargers will not be free forever and Tesla will probably jump at the chance to get more companies to use them because it would mean a huge profit. What it comes down to is Superchargers are still not fast enough, your worried about getting stuck waiting for a charge, you don't want to share because it might take too long. Correct me if I'm wrong but can't you check in to a charger and tell it what time you'll be there so it's reserved for you? Anyway, nothing in life is perfect, sometimes we have to wait in line until it's our turn.

  9. That's assuming Tesla doesn't add more stations to the existing infrastructure. If they somehow expanded the supercharger compatibility to other vehicles they would more than likely look to add capacity, otherwise they would be shooting themselves in the foot.

  10. Only 300K per station !! so 200 million will get you 667 stations, that is only 40 % of Tesla's cash pile. Tesla should get into the coffee business as well.

    I bet a std filling station runs into Millions.

    Someone may not be sleeping well in Houston tonight .

  11. I thought the Tesla Fast Charging plug was unique to Tesla. If so, that should keep those other guys from using it. Since the Supercharger setup is at no charge for Tesla owners, it should be a real selling point. Let the rest of the OEM's, public utilities and government agencies duke it out over what they want to use, the CHADEMO type that is already being built or the it's-coming-soon, someday, probably, maybe SAE connector. As Tesla is funding this out of their pockets, I don't see it as an issue.

  12. You have to admit Tesla would make a massive profit if other manufacturers adopted Tesla's system.

  13. Couple of misunderstandings;

    -Superchargers don't add 200 miles of range in 20 minutes, that's more like 120 miles (which is still great BTW).
    -Superchargers aren't like Ford's gas stations; they are not automatically compatible with other manufacturer's EVs . They will not only have to adopt the supercharger network but also the batteries that are compatible with the charging algorithm.
    -Superchargers aren't like Chevron which of course makes the big bucks with oil production, not with distribution. Tesla might produce all of the power needed eventually but since it competes with home charging it's not like oil.

    All in all a story one would expect on Seeking Alpha rather than WSJ.

  14. I agree with Chris O on this.

    I think the fast charging rate has more to do with the car itself rather than the charging station.

    Also, if the charging station gets popular enough, then the cost of electricity will become more expensive for the station owners. The "industrial/commericial" rate is much higher than the residential rate and the station's peaky load will cause the utility company to levy higher fee on those charging station. Solar panels will only offset small amount if the usage is higher.

    The current network only works if it is limited to Tesla since the users are still fairly limited.

  15. Right now my humble opinion is that the supercharging stations offering *Free* charging for Tesla Model S owners is to drive sales of the Model S. Tesla certainly knows that a strong nationwide charging infrastructure will break down the last argument for not buying an electric car, lack of charging places and it takes too long to charge at low power charging stations to make interstate travel possible with an EV. I have some doubts that Tesla will keep it totally free to charge at it's stations after a while they may charge a fee or sell adapters to other EV makers so they can use their charging stations.
    Remember that there is no such thing as a free lunch and right now Tesla is marketing this as a way to spark interest in sales

  16. Well put Mark.

  17. The purpose of the supercharger network is to facilitate long distance travel (and to sell Teslas). Because of the distance between superchargers, only EVs with a range over 150 miles could comfortably use them for that purpose. So other manufactures would have to offer larger batteries or we would have local drivers looking for free power and degrading the original purpose of the network. WSJ is really proposing something quite different from the existing network plans.

  18. Other manufacturers with offer 150 miles or more one day, until then Superchargers will be exclusive to Tesla, and they could stay that way if no one else buys Tesla's system.

  19. Sorry, will offer 150 miles, not with offer.

  20. If the rumors of a 10-plug supercharger station are correct, then i could see in the future 'preferential' treatment to Tesla owners, but also allow chademo/sae connectors to 'some' of the plugs - ie - queues for the 'others', 'fast and booked ahead of time' service for Tesla owners.

    This could also be coupled with the possibility of the 'grid' based storage options that tesla is hinting at too - where tesla owners could get charged in less time.

    This way, encourage use of the system for all ev owners, and create a dependency on the Tesla network for all evs. once the dependency is on, fees soon follow. It also gives Tesla owners a differentiators in terms of access and/or speed, and brand placement for Tesla to other EV owners.. smart!

  21. WSJ is a NOT a technical paper.

    Any current gas stations can be easily reconfigured into a fast charging station. The bottle neck is on the car side, not on the supply side, yet. Once the demand is in the MW range, then the bottle neck will come back to the supply side.

  22. The tesla charging stations benefit from the 30% federal tax credit for solar installations. Coupled with business depreciation, over half of the cost is covered by SolarCity's credited taxes. Add state and utility incentives in some locations.

  23. I have to say that the merits of Tesla using this strategy are obvious. Is there risk? Well.....duh! The greater the risk the bigger the reward and I like the bet. He uses the funds that were previously diverted to paying back the federal loan to put up the network and effectively wipes out one the largest caveats people have in an electric car purchase (range). If the other manufacturers get on board or not is moot. If he gets enough of a head start on them while they are busy hedging their bets with multiple platforms (ev, hybrid, plug-in hybrid, hydrogen) I think they will have to use his charging network while playing catch up. Furthermore, what's to stop Musk from getting the ball rolling then getting out ala Ford?

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