Up with profitable swappers, down with free Supercharging

Up with profitable swappers, down with free Supercharging

Astonishingly, quick-swapping has been demonstrated and promises have been made to install this capability at a number of facilities. Lines of Teslas at Supercharging stations now seems so.....old-fashioned.

Well, why not run with swapping and give Tesla the biggest competitive advantage. There are some reasons why this might be a good idea:

Supercharging is not free. It is subsidized by the cost of the car and this may prove to be counter-productive because it raises the cost of the car, makes it heavy and everyone is waiting for magical batteries. Tesla is now on the hook to build untold numbers of these Supercharging stations and to provide free charging as well.

If you use a home charger and I use "free" Supercharging stations, you are paying both for your own charge and part of mine. Thanks!

Smaller, lighter and cheaper batteries could be used if you could FULLY charge your Tesla by swapping out every two hundred miles in ninety seconds at any one of a huge number of swapping stations.

People without home chargers, who can't install one, would be able to gas up like anyone.

Fleet use would be advanced. Even police and highway patrol cars could be electric as they would only be out of use for a couple of minutes a day.

The battery is the World's Most Expensive Gas Tank. Let Tesla own the damned thing and I will pay to fill it up as required.

If there was a profit to be made in swapping, then franchises would pick up the load and let Tesla just build cars. There would be vastly more stations, everywhere. The profits do not need to be huge as stations make little off of gas and depend on their mini-marts. The swapping facilities would result in more people coming in, and keeping old customers who don't buy gas anymore.

Used batteries could be charged at off-peak hours whereas most Supercharging use is at peak hours.

Swapping stations everywhere, like gas stations are, would completely remove any objections to electrical vehicles. One could still charge up at home, but now every home renter, fleets, everyone, would have access to quick swaps. People renting Teslas at airports...who wouldn't want to do that?

A turn-key ramp system produced in volume would be much cheaper than the custom pit units now envisioned. They could be installed in the back lots of gas stations, etc. in a few days.

People would not care if the swapping stations are near compelling destinations, on expensive real estate, since it is a drive-through and they will only spend ninety seconds there.

While other electrical car drivers will be lined up at glorified milking stations, trying to kill time, calling the police over cutting in line, abandoning their cars and all, Teslas will be done in a minute and down the road.

People will accept paying for a swap as it should be far less than gas if it is a universal application.

Tesla could promise to introduce updated batteries over time. The battery warrantee would be forever. This future-proofing would be a competitive advantage.

The Supercharges now being built are not a waste. They are necessary to get Teslas more universally accepted. Later, when swappers are ubiquitous, the Supercharging hardware can be used in remote areas and for emergency use. One would think that a percentage of cars will have damaged batteries and could only charge externally. Same for home units, not a waste because they are perfectly useful for typical commutes and for the first leg of a long trip, and users pay for off-peak electricity without the profit that swapping stations would require.

Swappers might give Tesla the greatest competitive advantage right now, not having to wait on magical batteries. To date battery advancement has been disappointing at best, so why not simply work around that and eliminate the range issue using what is available.

Of course, if there are indeed magical batteries that Tesla knows will be available in a couple of years that either have great range or very quick recharge abilities with Superchargers, then swapping would not make sense, except in perhaps a few locations.

teslajolt | 6 July 2013

Why you trying to mess with Elon's Master Plan? it is working perfectly.

tes-s | 6 July 2013

I think they are covering all bases.

A swap-station is probably more expensive than a SC.

Unless they are going to have a huge inventory of batteries, and a lot of stoarge space, I think the swap station will be charging all the time - not waiting for off-peak. It will be hard enough to keep up with demand - if they swap a battery every 5 minutes, and it takes 2 hours to get a full charge, they would need 24 batteries just to keep up with demand. And that would service 12 vehicles an hour - about the same as an 8-bay SC station.

Time will tell; I don't think they could afford to open the number of swap stations necessary to achieve what they are doing with SCs. Besides the cost of building a swap station, they also have to stock it with 24 batteries in my example - more if they wanted to charge the batteries off-peak.

Brian H | 6 July 2013

Starts out wrong, and continues: "Supercharging is not free. It is subsidized by the cost of the car".


The stations are a (very low) marketing expense. And the power is paid for and recouped by Solar City. Nothing to do with "subsidization" by the cost of the car.

negarholger | 6 July 2013

Brian H +1

GeekEV | 6 July 2013

@Brian H - I hear you, but I do kind of agree with the OP a bit. On the 60kWh pack, at least, supercharging is a $2,000 option. While I don't know for sure what goes into it, I have a hard time believing there's $2k worth of extra hardware in it. That would seem to be born out by the fact that they decided to include the hardware for everyone and make it unlock-able. They wouldn't do that if there's was much to it or they'd lose money on it. All of which does, to my mind, make it seem like you're subsidizing the supercharger by paying for that option. Granted, on the 85 it's included, but that's because they're trying to entice you to get the larger, more profitable pack. But I completely disagree with the notion that the swap stations are the better way to go.

Brian H | 7 July 2013

There are manufacturing considerations; switching setups and processes may have been the costlier option. The $2K is a recovery of the incremental costs that remained. IMO.

It's a slightly different calculation for the invitation to other makers to use the system after making a (per car? per model?) contribution. The marketing benefit/write-off for TM would no longer apply, so must be compensated for.

And it's necessary (though difficult!) to keep in mind that TM is not in true competition mode, but is trying to inspire/force the market to 'go electric'. This leads to apparently irrational ceding of market advantages (to worthy contenders).

cloroxbb | 7 July 2013

Model S needs a big markup in order to keep Tesla in business. Once economies of scale are to the point that cost is very close to what customers pay, the Superchargers will still be free.

You can say that Model S owners right now, paid into the Superchargers, but that is just semantics because of the amount of profit Tesla garnered from the sale.

I am actually looking forward to being able to utilize the charging network when I get my Model S (and later X, that the wife wants). Honestly, I really do not want to swap out a battery pack. There are points in a trip anyway, that the wife and I get hungry, have to use the bathroom, need to stretch our legs... Im fine with it.

EvaP | 7 July 2013

I think we are missing the point here. We are talking about a guy who wants to go to Mars and wants to change the world. He has a vision and he is not doing it for profit.
It doesn't mean he won't make any, as his vision is lined up with that of the big picture: sooner or later oil runs out and everybody will have to switch to electricity.

Yes, it sounds crazy to talk about vision when I have invested in his stocks, but I think his guess of where the auto industry is going is a sure thing. Only question is: can he and his team pull it off? And I think he can.
He seems to have a Midas touch whatever he touches. Everything he does is part of a larger vision and he works out the details as he goes.

If you haven't heard of it yet, google hyperloop. It shows that what he has in mind is to change the way traffic, commuting and transportation works on the whole planet and I am sure he has one of these maps in his head about what the electric car net should/will look like.

Question is: do you want to be with him on his journey or not? I am fascinated by his vision of the future and therefore I believe in him enough to invest my money in his stock. I can't afford a Tesla car yet, but that is not the point.
Visionaries see things we do not. Steve Jobs figured out how to make phones that can do more than talking. When he was told nobody would be interested in having one, he proved them wrong. Elon will figure out how to change the transportation system on earth.
Do I sound like a dreamer? Yes, but I enjoy it, because I am part of something big that very few people understand.

In your case? What do YOU get when you buy his car? You get the best car that has ever been made and the assurance that there is a guy behind the scene who is not out there to rip you off, but is working on making it as convenient for you as possible. I am saying, trust his vision and his ability to make things happen.

BTW, I am not getting paid for this and I am not related to either Musk or his companies :)

To the point: actually, I think charging stations are the way to go. Battery swap is the emergency solution.

Imagine a network of electricity all over the world.
The energy comes solely from the sun and it is free.
The cars are all getting charged up when necessary and everything is running smoothly, without poisonous exhaust gas.

If you are not into the future, imagine how nice it is to drive the beautiful and silent Tesla that got charged up for free or for a fraction of what other people pay at the pump. Imagine the world being independent of oil producing countries.

carlgo | 7 July 2013

@teslajolt: This might actually be Musk's plan, that Superchargers are just the first step to get it going.

@tes-s: Wasn't there mention of having 50 or so batteries in stock per facility? Hopefully there will be a lot of stations so customers won't all be descending on a couple of places. It might be that charging the drop-offs will be more difficult than the swap part, and there will be the occasional dud to mess up the robots.

@brianH: It would make sense that Tesla and SolarCity would work together synergistically. But, if I buy a SolarCity solar array for my house am I also paying for you to Supercharge for free while you slurp pea soup in Buellton? This hampers the profitability/development of SolarCity, a key cog in his plan to eliminate fossil fuels.

@cloroxbb: Hopefully there would be stations everywhere, with and without bathrooms, mini-marts, etc. Some close to attractions, some not. The idea of swap stations is that you would not HAVE to leave your car for an hour hooked up to electrical dialysis. You still could of course, but there would now be a choice. Musk mentioned the choice factor.

evap: I'll disagree. Musk has concluded that the best way to succeed with his vision is to make money on products and services that themselves are part of the vision. Pretty smart, huh? That is why he talks about profit margins, stockholder value and all that. That is the key to it all, otherwise he would have to be subservient to governments, wealthy benefactors, etc.

oildeathspiral | 7 July 2013

carlgo I agree with many of your points. A lower priced, shorter range Tesla would sell very well if there were well-placed battery swap stations in the area and the cost was equivalent (or hopefully slightly less) than gas. It would be like the battery swap equivalent of the Volt-electric, battery swap instead of gas range extender when you need it. With a decent network of Supercharging and swap stations built out as well as lower price, this Volt owner would have gone with a Tesla instead.

Brian H | 7 July 2013

No, go back to the SC 'reveal'. The network, on an annualized and total-in total-out basis, is self-sustaining. Nothing to do with the SCTY home panel/leasing business, other than the strength of the company as a whole, and its ability to absorb swings and development periods.

Elon has noted that all stations will eventually have canopies, except perhaps in high latitudes where other "sustainable" power sources will substitute. Those might indeed be paid with general TM revenues, but that should not have a major ('material' in accounting-speak) impact.

carlgo | 7 July 2013

@brianH: If nothing else, SolarCity should be able to supply recharging power at a lower rate to Tesla, even at a profit, than other competing companies would have to pay for their charging.

The canopies are too small to do much, mostly symbolic.

Stations along the rural sunny routes might be able to get an acre of land here and there cheap enough to house large arrays that directly feed those Superchargers.

No law that says SolarCity can't invest in any energy source. Maybe geothermal will be available in some areas of The Great White North.

For fun, check out Apple's new solar array to power their Reno data center. Evidently 137 acres of the best available collectors to run that one power hungry place. It takes one hell of a lot of collectors to power things like cities, or even a couple of hundred Teslas a day.

carlgo | 7 July 2013

@oildeathspiral: It seems Tesla knows this and has committed to reducing the fear of long distance travel. My thinking is that even this is not enough. Quick charging, real quick charging, must be available everywhere, in every small town, suburb, shopping districts, along rural routes, near your camping spot, everywhere, just as gas stations are now. Anything less and too many people will freak out and opt for the "safe" choice of an ICE car. I do not think the average person is all that brave and adventurous. They are pretty sure that if they run out of gas or power that they will be killed. That is the state of our quite fearful nation.

negarholger | 7 July 2013

@carlgo - you are thinking in one dimension. Why does it have to be above the SC spots. Think Gilroy - tons of regular parking space... upgrade with solar covers and both win - customers have shaded spaces and at the same time tons of electricity for charging. Don't find why it can't work, find how to make it work... that is Elon's way and why he gets things done.

Brian H | 7 July 2013

The stations are sized for peak use, like weekends, but the solar power feeds the grid (or batteries) all sunlit hours. Elon claims they balance, or better.

Seems you want to insist on inserting Tesla into the loop. Solar City handles all the finances once the station is complete, with no "selling to Tesla". They deal with the utilities directly, and TM can avoid all the overhead required. Hands-off, except for the (minor) capital and maintenance costs (which are in effect (minor) marketing costs).

Jolinar | 8 July 2013

@Brian H
can you post link to video where Musk or anybody from Tesla says that Solar City handles all the finances once the station is complete? I don't believe you.
Yes, they can account SC expenses as marketing costs, but that does not make SC free. Customers have to pay for marketing of any company, Tesla or not.

I actually think they could disclose SuperCharging technology and licence it to anybody who is interested so we could see "free" SuperChargers from Tesla and commercial SCs from other parties. That would help every side... customer would get more coverage, Tesla would get some more free money from licensing and maybe (but probably not) save on marketing expenses. And finally commercial SC operator would have own new business with competitive environment. And the same could be made with battery swaps - that how I see ideal future. If Tesla wants to accelerate EV adoption they need to satisfy all parties, customers and manufacturers alike.

tes-s | 8 July 2013

I'm not sure I understand the idea of licensing SC technology for commercial SCs. How would commercial SCs compete with Tesla SCs that are free?

carlgo | 8 July 2013


For-profit stations would compete because they would exist. Some dots on a map with range circles around them does not do it.

Brian H | 8 July 2013

Listen to the reveal video again.

bent | 9 July 2013

Nobody knows where the future of charging will lie. Maybe the future is huge battery packs that only ever need to be charged while at home. Maybe the future is moderate sized packs with super charging en route for long trips. Maybe the future is battery swap. Maybe it is inductive charging along the main highways. Perhaps there will be an unexpected technological breakthrough and we'll all be getting our electricity from fuel cells in ten years. Or in fifty years, Mr. Fusion.

What Tesla is doing is show the world that wherever the future of mobile energy supply lies, Tesla is already there or can get there fast enough: It would be a mistake for them to marry themselves to any single approach so early in the game. So they already have big packs, super chargers, and fast swap. I'll expect them to stay in the game on inductive charging, and to be keeping an eye on fuel cell development. It's all just electricity in the end.