Super Charger Network - A Future Profit Center

Super Charger Network - A Future Profit Center

I was thinking about the fact that all Model S owners can charge for free at super charging stations for the life of the car. (Or as long as they own the car? Is it transferable?)

That got me thinking about the future of the super charging stations when millions of Teslas are silently transporting us around the country. I don't believe all future Teslas will be given the same free-for-life charging currently afforded the Model S.

Perhaps the future might look something like this:

Super Chargers are free for Model S, and maybe Model X for the next few years. Gen III, perhaps not. I see a gradual shift by Tesla away from free to small charge growing to more significant charge (but always considerably lower the gas) as more and more Teslas hit the road. The model S and X will eventually be retired and then all future Teslas will pay for charging. Tesla also leases the tech to others who pay a little more then Tesla owners (Tesla Grin retained/reinforced.)

So SCers start as a marketing tool (as described by BrianH) to sell cars now and over time morph into a profit center.


Brian H | 25 June, 2013

That you're calling Elon a liar, and that you don't understand the SuperChargers. They are supplied from the grid, with usage more than offset by solar power generated and sold by Solar City (over the course of each year).

diegoPasadena | 25 June, 2013

That strikes me as an odd answer from the usually eminently lucid Brian H.

A) The fact that Elon Musk keeps repeating the "free forever" phrase does, IMHO, not conflict at all with the possibility that this applies only to current models and that future models may not benefit from that. If they were to implement such a program, it would not make him a "liar".
B) I don't see a reference in jjs's post that conflicts with your assertion of how the SuperChargers work. What did I miss?

negarholger | 25 June, 2013

jjs - first the idea is to create more solar then the cars will need. Second install a battery so the solar can be stored until the grid needs it. This formula doesn't have to implemented strictly for every single location, but just on average. And it will evolve over time.

Mel. | 25 June, 2013

diego, the item that I have a problem with, is the statement that my Model S will be retired. I don't think that is going to happen any time soon.

Bighorn | 25 June, 2013

A period marks the end of a sentence. A sentence requires a verb. Please use verbs in your "sentences". We live in a civilized society.

AmpedRealtor | 25 June, 2013

@ Kleist, I don't know where you got the idea that there are batteries powering the Tesla Stations. That's not true. They are all grid-tie and there is no battery storage involved.

Elon Musk was recently asked if he would make Tesla Stations available to other EV manufacturers. He said he's not opposed to it, but that Tesla would have to be compensated somehow by other manufacturers because Model S owners are footing the bill for the Tesla Stations (cost is built into the price of the car). That's why Musk can say they will be "free forever" for all Model S owners - we've paid for the lifetime charging in the price of the car.

@ Brian H, wow.

Jamon | 25 June, 2013

I don't think Elon wants to dominate the EV market. I think he wanted to show that EVs are superior to ICEs in almost every way, and they can make a financially viable business. He wants the competition to create better EVs as a way to foster in the age of sustainable energy transportation.

With that said, I could imagine some time in the future that Tesla cars could be the minority users of Superchargers (assuming they continue to license electric drive train technology to other companies - and others decide it's easier to use Tesla's existing supercharging infrastructure rather than try to build their own from scratch while also navigating Tesla's IP). If this is the case, I think Tesla cars could continue to enjoy free access to superchargers for life (albeit with some of the cost built in to the price of the car), while the company profits from collecting annual license fees from all other EV manufacturers who want their cars to have access to the superchargers.

lph | 25 June, 2013

It is likely that model S and X will never be charged. But that does not preclude any other brands (mercedes and toyota for instance) that use the Tesla battery system from using the superchargers at a cost. Elon has already made some oblique reference to doing this (I believe).

negarholger | 25 June, 2013

@AmpedRealtor - battery was always the concept from the beginning... remember the obelisk? Elon just made recently the comment that even if the grid goes down you can still charge your car (in the future). Tejon has already... other stations I don't know.

AmpedRealtor | 25 June, 2013

@ Kleist, I must apologize as I wasn't aware of this.

scole04 | 25 June, 2013

Hey guys watch the 2013 Shareholders meeting. Elon says that Supercharging being free for life really comes from the fact that Supercharging is actually built into the price of the car. Elon said that when they thought about Supercharging it would be less of a headache for everyone if the cost was just built into the price of the car and your experience at the station does not include $$$.

shop | 25 June, 2013

Yes, the business model for supercharging is that approx. $2,000 of the price of the car goes towards the expected average lifetime usage of superchargers. So superchargers already have a sustainable business model. Other EV manufacturers are welcome to use them as well, but they'll have to pay Tesla about $2K per car for the privilege.

negarholger | 25 June, 2013

@AmpedRealtor - the secret to free SC is the electrical storage. Actually it is much more...
What is the fundamental advantage of oil/gas? You can store it in a bucket... and that concept is around for 5000 years. On the other hand electricity is either use it or loose it. Electrical storage is relative young ( 1745 Ewald Georg on Kleist - first capacitor ) and has been inefficient for power use for a long time. With Li- ion electrical storage is becoming resonable. Solving the electrical storage problem is the key. Store when electricity plentiful (e.g. Solar) and sell for more $ when needed most - that is the profit center.
Tesla is foremost an electrical storage system company, making and selling cars is just the dress for you and me to spend money ( and starting with cars makes sense because over 50% of the oil is used for personal transportation, and here you can readily utilize economy of scale ). The industry he is building is an electrical utility that can satisfy instand electrical demand at highest price... and he is inviting other companies to join is because he wants to sell them Tesla electricity.
That is the puzzle the other car companies failed to solve - Tesla makes no compromises: all kind of adapters to use exsisting infrastructure, Super Chargers, and now battery swap... cover the entire spectrum. Possibilities are endless...

Brian H | 25 June, 2013

He was specifically asked about that, and said all future Teslas would be SC-capable and would use it free forever. He has not wavered on this point.

The $2000 covers the construction and upfront costs. The ongoing power costs are not relevant to car price; they are covered and managed by Solar City, which sells to utilities to more than compensate for power purchases. Costs Tesla nothing.

jjs | 25 June, 2013

Brian H. Calling me out as accusing Elon of being a liar? Really? Could it be that I just did not know he said all future Teslas would be able to use it forever? Is that plausible?

I have enjoyed your lucid, insightful comments on this site. You have an great understanding of Tesla and what they are doing. Overall you are a great addition to the forum.

However, IMHO, you do occasionally go over the top. This is one of those times.

I don't know for sure if Elon has said that all future Teslas would be able to use the super chargers for free or not. I will take your word for it. If indeed he has said that I will take him at his word as I have yet to be disappointed by him. He is refreshingly candid and honest.

All that said, the underlying premise, SCers eventually becoming a profit center is still a possibility as they can be leased to other vendors. Or does this assertion also cast aspersions on my character?

lph | 25 June, 2013

Even if we just use half of the 2K. Recon that the actual hardware cost is $500 - $1000 per car. We get the remainder of $1 to $1.5k to go directly to the stations.
$1k x (25+45+60k) cars (for this and the coming two years of car sales) amounts to $130 million. That is good for 430 supercharger stations at 300k each. Or if we use $1500 per car we get almost 250 charging stations with battery swap too (at 300k+500k=$800k each).
To put it another way, at this rate, Tesla could keep building these supercharger stations at one per 200 - 300 cars sold. More like 550 - 800 cars per station if battery swap is used too.
Of course this does not include any land rental, but that kind of thing is negotiable and may not amount to much considering that Tesla will be bringing business to the neighborhoods.

S4WRXTTCS | 25 June, 2013

The future as I see it is you can charge (any Tesla) for free at superchargers, but more often than not there will be a huge line. So your forced to use battery swapping or a third party charger.

The third party charger might even have supercharger capability, and if it does a small part of the money will go to Tesla.

Basically it follows the rule that there is always a catch.

HenryT2 | 25 June, 2013

I think a lot of people are assuming that Elon Musk's primary motivation is profit. Unless I'm missing something, that's not near being his primary motive. I'm sure he wants Tesla to survive long enough to usher in the Age of Electric Cars. And he may be interested in piloting the course of that age. And, I'm sure he's not entirely AGAINST the idea of making a profit. But I suspect his strategy is geared towards making electric cars (all of them, not just Tesla) the dominant form of transportation on the roads. That may require making compromises so that the company is as successful as possible to make this happen, but I do not think that he would undermine his own goals of making electric cars successful by putting the profit of Tesla first.

He's all but said as much about Space-X. I don't think he can say so outright about Tesla as it is a publicly traded company. But I think that if you think this guy is driven by money and the pursuit of profit, you're going to be surprised quite often.

Brian H | 26 June, 2013

important point. Profit is a necessary means to the end, the goal, and not the goal itself. He doesn't even seem to be like the Buffetts of the world who are using wealth as a status scorecard.

It allows him much more freedom to play the long game, IMO.

cfOH | 26 June, 2013

Given Musk's recent re-branding of them as "Tesla Stations" (watch the swap event video), I expect they'll continue to become increasingly important to the Tesla (and EV in general) revolution.

A great many people who can afford $50K cars (GenIII...maybe X) live in apartments or condos and have no convenient way of charging their cars at home. For them -- and that's a LOT of people -- even considering an EV will be dependent upon a convenient array of charging solutions.

If Tesla is long-run successful, I see the Tesla Station network as a very profitable and nearly ubiquitous side-business that will rival the car company on revenue all by itself at some point.

As I've said (not here) before, Musk is like Henry Ford, JD Rockefeller, and William Boeing all in one.

alfafoxtrot1 | 26 June, 2013

Much larger profits will be realized as a consequence of Elon's long term vision. The SC network and swapping provide necessary infastructure, leading to wider adoption and more sales.

bsimoes | 27 June, 2013

HenryT2: That is exactly what I was going to say! It's not about profit; it's about saving the planet from ourselves. Elon has said that he hopes more companies start building EV's. He wants to end the era of ICE's, and if the Superchargers are a carrot--great!

Brian H | 27 June, 2013

The MS will have a negligible impact on the planet, but it's "the best car - ever!"