Musk's Master Plan?

Musk's Master Plan?

It seems apparent to me that Tesla owners are not eagerly embracing the battery swap concept. It is more like people were impressed by the spectacle and the technical aspects, but were still left scratching their heads because there doesn't seem to be a convincing reason they'd want use the battery swap. At the same time - and knowing Musk as we do - many of us might still be thinking he has not shown us the whole picture.

And that is the point of this post. The exploration of one possibility I am considering. The whole picture. What's the master plan?

The possibility I'm considering is that Musk is laying the groundwork to license/franchise the supercharger and battery swapping technology down the road - possibly in preparation for GenIII. Perhaps Musk has a plan where battery swap will be compelling for GenIII buyers and therefore the battery-swapping concept would be more attractive to entrepreneurs wishing to get in on the action.

In this scenario, I would think that Musk would finish out the nationwide supercharger network with about 200-300 stations along the main routes as planned.

Then he would stop there and build no more.

This skeletal framework would act sort of like a trunk line - allowing Elon to 'prime the pump' and get some initial circulation along the main routes.

It would then be up to entrepreneurs to fill in the spaces between the gaps provided they PERCEIVED THE OPPORTUNITY. The initial build is all about MAKING IT APPARENT to those looking that THERE IS an opportunity. They'd of course have to buy the rights to use the technology from Tesla if they wanted to fill in some of those gaps and build a station or two.

So, Thursday night's demonstration might have REALLY been about planting a seed in the minds of these prospective entrepreneurs. In about 3 or 4 years, the supercharger network will already cover the U.S., the cheaper GenIII vehicles will be just around the corner, and some of these entrepreneurs will begin connecting the dots. Many of them might think something like this:

"Just because the Tesla supercharger network covers the U.S. doesn't mean it is adequate."

Adding to this picture, G.M., Ford, and many other manufacturers may already be licensing Tesla drive-trains and technology and beginning to use it in some of their mainstream offerings.

With potentially millions of vehicles and only a few hundred supercharger stations in the U.S., somebody is going to eventually put their finger to a specific point on a map and say:

"You know, if I put a supercharging station here...."

Musk thinks big. I would not be surprised if he actually means to force most existing enterprises - Quik Trip, Racetrac, Texaco and BP franchises, etc. etc. - into buying licenses from Tesla so they can put superchargers and even battery swap at their existing stations.

Yes, I think people would pay for supercharging if that station were a couple miles from their apartment as opposed to the free supercharger 25 miles away in the next county.

No, Tesla building the initial nationwide network does not conflict with the goal of licensing the same. The Tesla-owned stations will still be a minimum of 80 miles apart. This minimal network could be considered like the trunk of a tree from which limbs, branches and leaves can eventually grow. These initial company stations will serve to prove the technology and to prove that the blood is flowing to all areas of the body.

Musk MAY be anticipating that someone will see a need for capillaries.

That's my theory as best as I can explain it. I still cannot account for how batteries will be traded around and how that might be translated into a profit for a station owner while remaining compelling for a GenIII, Model S, or X participant. I think there is a workable case, but I'll just open it up for everyone thoughts now. Thanks.

Wayne3 | June 22, 2013

That's one possible theory. I have a different (but not incompatible) theory that has more to do with the near term. I think at this point battery swap is useful for two purposes: (A) addressing concerns on the part of potential buyers (as has already been pointed out many times) and (B) addressing bottlenecks at Supercharger stations. Let me expand on the latter.

Absent the availability of battery swap, as there are more and more Tesla Model S's (and Model X's) on the road, the Superchargers will get more and more use at peak long distance travel times (Friday night and Sunday). This would lead to long wait times and frustrated drivers. Now add battery swap.

Imagine you get to the Supercharger and find all bays full and customers in line waiting for an available one, what do you do? If you're not in a hurry, you queue up and hope for the best. But if you're trying to get somewhere on a deadline or just don't want to wait, you spring for the battery swap (as you would for a tank of gas) and move on.

Now in the aggregate, there is some probability that a given arriving customer is going to choose to battery swap. The probability is low if there are available Supercharging bays, but the probability increases if the bays are full and dramatically increases if people are queued up waiting for a charger.

This has an interesting effect at sites where battery swap is available. For everyone who chooses to battery swap instead of Supercharge, not only is the line shorter by one person, but the half hour they would have spent occupying a bay at some point in the near future is no longer in play, so it also reduces how long the bottleneck at that site lasts.

So in general, the existence of battery swap at a Supercharger makes it considerably less likely that Supercharging bottlenecks will exist, and if they do they won't last long. This is very important as the population of compatible cars increases dramatically over the next few years -- even before the Gen III.

AtlantaCourier | June 22, 2013

Yes, there'll definitely emerge a relationship between the convenience of battery-swap vs. the low cost of supercharging at a Tesla-owned station. The same relationship would exist at non-Tesla station that is licensing the technology.

Btw, I neglected to emphasize in my original post that SURELY Musk must have realized before the battswap demonstration that most current Tesla owners were NOT going to be thrilled at the prospect of letting go of their original battery. Yet, he didn't REALLY address this at the demo, and just let it hang out there.

To me, this indicates that more of this story will become self-explanatory as time passes. Many of us can't make sense of battery-swap as it has been presented to us, and Musk doesn't want to telegraph his master plan, so whats there to do but leave it hanging while the plan matures and develops?

Brian H | June 22, 2013

An issue with entrepreneurs and others setting up swap stations is that they would have to integrate with the network of swap stations so that individual batteries could be tracked and exchanged, returned, transferred, etc. They can't really operate as stand-alones, I don't think.

Mark K | June 22, 2013

As presently conceived, swap is backfill, not the main act.

It gives rhetorical ammo to soothe nervous buyers, and expands the ZEV credits. It also provokes thought about the cost of gas by having an equivalent at the same cost, juxtaposed with an alternative that's free.

The more important infrastructure is the SC network.

Supercharging will get faster and batteries will get bigger. The combination will mean you'll be able to add a couple hundred miles range in 10 minutes. That's a much more elegant alternative than disassembling your car to refuel it.

If you watch Elon's pitch, he telegraphs what he hopes you will do:

"The only choice you need to make is faster ..., or Free."

When the time is shaved further, Free will win.

tobi_ger | June 22, 2013

@OP: +1 on your thoughts/ideas

There's a transcript of the Q&A session of the swapping demo:
Elon answered there: "Tesla plans on selling the technology to other companies in the future, so there is a good chance of seeing independent stations in various parts of the country."

Swapping stations could also be used/licensed by car rental companies once they offer MS/MX in time, not only inner-city taxi companies.

As I stated in another thread, the swapping technology offers a highly practical value for TM (manufacturing, battery servicing/upgrades). A real-life usage (with a testing phase) is icing on the cake.
If people will use it, the better for everyone, IMO.

mvannah | June 22, 2013

It seems to me that one way to make the next generation vehicle more affordable is to sell the car with a lower capacity battery and then allow a swap to a higher capacity battery for road trips. Once the battery is swapped near the origin, superchargers can be used to make the trip more cost effective than an ICE vehicle. There is also less anxiety about batteries if you could upgrade so easily. Older batteries will be great for grid storage.

rroonnbb | June 23, 2013

Seems to me that the swap immediately makes it more practical to own a 60 instead of an 85. Because you can still go temporarily trade for an 85 battery if you're heading off on a longer trip. So, basically, you've just decreased the average required cost of the car across all buyers. And so they'll sell more cars.

S4WRXTTCS | June 23, 2013

Immediate term - To convince people like me who aren't superrich to get a 60KW versus just saying screw it and buying something else. I don't have anything in writing to convince me a 60KW to 85KW temp swap will be allowed for extra trip range, but once I do get clarification it will go along ways in convincing me to give the Model S a shot. As an aside I'm not exactly sure why an extra $120 or so a month really bugs me. I mean hell I spent $2000 on a 20 min Jet Fighter ride.

Short term - To supplement the charging network. Most of the people who bought Tesla Model S's will have have no issue spending a little $S's versus having to wait a long time for a slot to open. This allows Tesla to focus on expanding the network of superchargers versus constantly having to scale up the supercharging location to meet greater demand. I think they'll be fairly liberal with what they'll allow for in terms of battery "newness".

Long term I can only imagine battery swapping will be used to allow Gen3 people to lease the batteries versus owning it. This solves the problem of being obsessed with getting your battery back.

What I think is interesting is I absolutely hate the battery swap, and I fully expect to be bitterly against ever using it. Like almost obsessive compulsive against it. But. with that being said I can't fault their business plan. I'm totally going to make fun of them the first time I see an out of order sign on the machine as I drive by it.

defmonk | June 23, 2013

Cars are a funny thing. Auto purchases are driven as much by aspiration as by actual need. Supercars, pickup trucks, SUVs , Jeeps and Hummers, particularly around urban centers, all have purpose-specific capacities that most owners rarely use. I could add my Model S to the list. With overnight charging, In two months of driving I've never even come close to exhausting the battery. That's the EV dilemma, the market demands range capacity that makes little sense for 98% of drivers. Tesla's genius is, instead of marketing common-sense reality along with its cars, just giving folks what they think they need. As Elon said, battery swapping simply removes another common objection to purchase. If current owners are a bit underwhelmed (as I observed at the event last week), we're not really the target for this new feature. It's the folks still holding out.

As a technical solution, battery swapping is marginal. As marketing, it's brilliant. It lowers the bar considerably for Gen III (note the comments from Model S owners who would have purchased a 60kWh, had they known about battery swapping).

Eleonor2002 | June 23, 2013

There are multiple advantages of this technology. One of them is the constant time to 'charge' the battery no matter of the capacity of the battery. A 600 mi battery will charge at superstation in 40 min. At that point, I would prefer to pay for swap...

AtlantaCourier | June 23, 2013


Thank you for the link. It might seem trivial now that the technology will be for sale in the future, but wait until electric really catches on. If most auto manufacturers adopt and license Tesla tech for their vehicles, then the cars they build will be compatible with the superchargers and (if they're smart) the battery-swap too.


I think there is much to what you say. Making the GenIII affordable is going to be tough. Also, the point has been made that many of the people looking to buy this car are going to be living in apartments or places where charging options are limited. So, in order to sell cars to this demographic, Tesla needs to demonstrate that these cars can be quickly 'charged' from a variety of nearby locations in a manner that is similar to gas stations being ubiquitous and available for ICE vehicles.

If Tesla can demonstrate this, then the purchase price of the GenIII can be made much lower by offering a battery with something like an 80 mile range. Today, an 80 mile range is a big problem for many people. But I think Musk intends to demonstrate during the next few years, that this is not such a big deal when you take into account the supercharger and swaps.

If Musk succeeds, and he is indeed selling 300,000+ GenIII''s/year, I believe traditional gas stations will be busting down Tesla's door in a MAD SCRAMBLE to buy the rights to use Tesla Supercharging and Battery-Swap tech.

Up until a few days ago, I always thought that Tesla would be striving to include LONGER ranges in their offerings. I always dismissed the idea of a vehicle with an 80-mile range.

But now I can see the sense of offering an inexpensive car like this, especially when it won't suffer the range limitations of the Leaf.