Tesla: cost of providing Supercharging “immaterial”

Tesla supercharger

Stock-market pundits are all over the map when it comes to Tesla. One recently predicted that the EV-builder’s stock price is poised to double, thanks mostly to a new Uber-like business that, so far, exists only in said pundit’s writings. Another insists TSLA is heading for a crash, claiming that the company loses money on each car sold (Tesla does burn through cash, as startups do, but that’s due to capital expenditures; the company asserts that its gross margin on auto sales is 22.3%).

Stock analysts spend a lot of time thinking about long-term costs that companies will face, so it’s no surprise that many are wondering about Tesla’s promise of free Supercharging for life. This is an unprecedented offer in a brand-new industry, so it’s hard to calculate what the long-term costs will be, but obviously the electricity and the maintenance of the Superchargers are not free.

Populist stock-picking site The Motley Fool, noting that Tesla’s Supercharger network has grown to over 2,800 chargers at 499 500 locations, recently posed the question, “What does offering this sort of convenience cost Tesla?” The answer: “Not as much as you would think.”

Many in the mainstream media don’t understand that a public charging station is not comparable to a gas station. EV owners plug in overnight, and start every day with a full charge, so Superchargers are only needed for long-distance travel (at least, that’s how it’s supposed to work – Tesla has been coming down on drivers who use Superchargers for daily charging).

The Fool found some insights about Supercharging costs in Tesla’s most recent 10-Q filing. The company says that it plans to expand the Supercharger network by about 50% over the next year, which will cost about 5% of its planned $1.5 billion in total capital spending. Small beer compared to the massive sums it’s investing in Model X and the Gigafactory.

What about the cost of maintaining the network? According to Tesla’s 10-Q filing, “these costs were immaterial for all periods presented.”

 

Source: The Motley Fool

  • Wade

    The cost of the power itself isn’t much. The supercharger network is such a smart idea on several levels. On the one hand, it’s analogous to Apple being the hardware and software provider for its products. That integration in and of itself yields a better product. Tesla owning charging infrastructure to minimize range anxiety (a barrier to adoption) eliminates some of the network costs inherent to alternative charging infrastructures. On the other hand, I’m sure their deals with locations for these stations minimize costs as well. They are laying groundwork for the future. Smart.
    The only other potential owner for charging infrastructure who can compete reasonably in my mind is the electricity provider themselves. I think PG&E knows this, loll. It’s because they are buying this power at resource costs.
    Individual evse makes sense for retail to attract some business. When I think of infrastructure I’m thinking of a charging network. Maybe a retailer like Walmart will jump in some future day.

  • Zephyr

    …and this is why I offer free charging to EV drivers passing through my EVSE-poor area. Even a full charge on an 85 would be about $8 at my retail rate. The operating cost is so low compared to the hardware that it’s barely worth even worrying about.