Tesla's global Supercharging network is the largest fast charging network
in North America and it's often cited as the EV
makers biggest competitive advantage.
Tesla Supercharger network, in part because they could design all
the parts of it,
is the gold standard in reliability and availability and in
seamlessness for EV charging.
In the fast charging market,
it's just that's what kind of leading the way by
almost 60%
market share.
But at the end of April,
Elon Musk let go of Tesla's entire Supercharging team,
laying off about 500 people,
including top executives. Now its future is in question.
This decision has rocked the foundation of what everybody believes
about EV charging.
It's baffling because they they do have such a lead
and such a head start and such a easy way
to deploy and and the satisfaction behind the user experience
to have the rug pulled out from one of this.
It is really confusing. I would describe the Supercharger network
as one of the crown jewels of Tesla.
And instead of doing victory laps and building the Supercharger
network and reaping the benefits of this this asset,
suddenly there's this pause. The layoffs were part of a
broader restructuring happening at Tesla,
as the company reckons with slumping sales and increased competition.
Tesla's stock is down 32%
for the year so far,
but cutting the Supercharging team was especially surprising to many.
The Supercharging network was critical in driving the adoption of
E VS Tesla's now former Senior Director of EV Charging,
Rebecca Tonucci spoke about the success of the network at
last year's Investor Day at Tesla charging.
We have understood since day one that a great charging
experience is the Lynch pin to electric vehicle adoption.
We've spent 10 years building charging infrastructure when basically no
one else in the industry would do it.
Those 10 years have afforded us the opportunity to get
pretty good at charging.
When we're talking about electric cars,
what we're asking the public to buy into isn't really
a new car,
it is a new fuel source.
Tesla was the gold standard in making that simple and
they still are arguably.
And so to see that their ecosystem is being somewhat
dismantled,
it begs to question what is the next step for
Tesla as a company
in the US, Tesla's market share and growth are greater
than all other networks combined,
accounting for 58% of all DC fast chargers deployed last
year.
They also just recently announced that they're opening up their
charging network to other vehicle manufacturers.
Ford owners will be granted access to thousands of Tesla
Superchargers across the United States and Canada.
General Motors E VS will have access to about 12,000
Tesla Superchargers.
Yet another automaker saying, you know what,
let's just go with Tesla.
Tesla's charging port. The North American charging standard or NACS
is now even becoming the standard in North America on
all E VS so that Ford,
GM and others can more easily integrate into the supercharging
network.
The whole intent of the industry switching to this connector
type was for the growth and opportunity of what it
would mean for standardization around their plug.
That raises a lot of questions for consumer confidence as
well as industry confidence.
Analysts believe Tesla's charging business was set to become a
major profit driver for the company.
It is estimated that global public charging revenue will rise
to
$127 billion by 20-30, with Tesla thought to own
$7.4 billion of that. Elon Musk said Tesla still plans
to grow the Supercharger network just at a slower pace.
Can't have Tesla the auto brand Without Tesla the Supercharger
network permanently stopping the growth of the Supercharger network is
suicide for the car business.
They go hand in hand in my opinion.
Tesla launched the Supercharging network on September
24th, 2012 with six sites in California.
Coinciding with the Model S entering production,
the network was free to use as an incentive for
early adopters.
You buy a car, you get out of charging,
you have a full package.
It's basically an Apple ecosystem effect.
Everything works together. It's very nicely integrated.
By mid 2013, Tesla started building Superchargers in high traffic
corridors in Europe and Asia.
At the start of 2024,
Tesla announced it had 6000 charging stations with around
55,000 Superchargers. Alongside its Superchargers,
Tesla has widely deployed around 40,000 Destination Chargers,
lower power plugs installed at hotels,
apartments and other spaces where people park for longer periods
of time.
That type of infrastructure is
not terribly expensive. The majority of Tesla's charging network infrastructure
features its V3 Superchargers,
which were introduced in 2019 and provide up to
250 kilowatts. It recently started rolling out its V4 Superchargers,
which are capable of delivering even more power in Europe
last year and has brought a handful online in the
US this year.
It designed the cars and the software that they ran
on,
but it also designed the Superchargers and the software that
ran them and those two sets of software talk very
closely to each other.
This vertical integration has allowed Tesla to create a seamless
end to end user experience when owners charge their cars.
I solely rely on Tesla Supercharging stations
and I have used multiple third party companies such as
Electrify America,
EV, GO, Chargepoint and they just do not compare to
Tesla supercharging network.
No, I feel sorry for people that don't drive it
Tesla that have an electric car because Tesla does maintain
their facilities beautifully.
There's nothing else like it.
Right here in Santa Monica we've got a a restroom
and a place where we can get food.
The attractive customers with these sexy looking cars,
but the repeat buyers and the cult like following that's
a result of the Tesla experience.
And a lot of the Tesla experience has to do
with with the Supercharger network,
just the ubiquity of it and the reliability of it.
For other charging providers, emulating this experience is difficult since
they're having to design for multiple car models with varying
software and charging protocols.
With Electrify America and with all the other networks to
a greater or lesser extent,
there is a certain amount of discontent among EV drivers
about reliability.
So there's a lot more software now that's being added
into diagnose problems to let them know what's going on.
With Tesla, it'll tell you how many stalls there are,
how many are in use,
whereas I've used Electrify America.
I'll open up the app and it says that it
is available and I'll pull up and someone's in there.
This stall may actually be out of service,
not even functional. Tesla also built in other benefits to
its system,
such as battery preconditioning and congestion awareness.
Other electric vehicle manufacturers will.
Some of them have vehicle side data,
other infrastructure providers have site data,
but at Tesla we have both and perhaps most important
scale,
other charging networks. They would have a maximum of four
charging ports at a site.
Tesla, it's between 8 to 10 ports per site on
an average.
Musk said that expansion of existing locations will remain a
priority.
Tesla installed around 12,000 chargers a year for the last
few years globally.
So when it comes to figuring out where to put
the infrastructure,
Tesla does it better than anybody else.
They know everything about their customers.
They know everything about their chargers that gives them laser
like focus
on figuring out where does it make sense for them
to put their infrastructure.
So why did Tesla got the Supercharger team then?
Perhaps it just didn't make sense financially for the company.
In the early days, Tesla's supercharging network was predicted to
lose money.
The construction and maintenance of EV charging stations can be
expensive with prices varying widely depending on the type of
charging and power infrastructure being built.
Installing EV charging is really expensive today.
We're not at mass market yet in terms of costs,
we're still seeing around 250K being the benchmark.
Well, high power recharging actually is.
The main cost, believe it or not,
is not the charger itself.
The main cost is what you need to bring from
the grid.
You have to do site prep,
you have to trench power lines,
and more importantly, the electric utility
either has to have high voltage power near the site
or they have to bring it in.
However, Tesla did say that it has managed to cut
its costs considerably.
We have the industry's lowest deployment cost.
Our costs are often 20%,
if not 70% lower than alternatives.
While it hasn't publicly disclosed Supercharger construction costs,
government funding through the National Electric Vehicle Infrastructure Formula Program
has provided a window onto Tesla's costs compared to its
competitors.
That was really bidding 50%
lower than any other network out there for Navy funding,
which is why they've got the most amount of funding
to date for Supercharging.
Tesla uses dynamic pricing that factors in the electricity costs,
charging, power output and peak or off peak hours.
Musk has indicated Tesla aims for about 30%
gross margin or around 10%
profitability on its Superchargers. Tesla doesn't break out revenue from
its charging business,
bundling it in its services and other business.
But it has called it out in recent earnings statements,
saying pay per use supercharging remains profitable and that it
was part of
2023's biggest profit generators, helping contribute to the nearly $500
million in gross profit for the segment.
In the US, charging infrastructure is getting a boost from
federal funding,
which Tesla has been aggressively pursuing.
They've got around $12 million
in Navy funding so far for around 30 sites incompatible
of the others,
so they've got the most on Navy funding.
The Biden administration's Charging and Fueling Infrastructure and the National
Electric Vehicle Infrastructure Formula programs are part of President Biden's
goal of growing the national charging network to
500,000 stations by 2030. So far,
states have allocated $1.5 billion in funding for
2022 and 2023 to support the construction of chargers,
with an additional $885 million for
2024. Government funding in the infrastructure bill has spurred a
lot of work around creating electric vehicle charging infrastructure,
but given how long ago it was announced,
it has taken a while simply due to process.
In addition to supporting the development of charging infrastructure,
the programs also hope to address some of the pain
points common today.
We're seeing standardization for uptime requirements
requiring 97% uptime on all federally funded chargers.
Also requiring payment systems to be installed on the charges
directly,
Trying to push towards having a more seamless starting experience
for all EB drivers in the US today.
Tesla has said it's always been our ambition to open
the Supercharger network to all EVs and by doing so
encourage more drivers to rapidly transition to an emission free
future. It started with making moves on that promise in
2021 with a pilot program in the Netherlands that allowed
non Tesla EV owners to charge at 10 Supercharger sites.
After a successful run, it began expanding access throughout Europe.
In 2022, in the States,
as President Biden announced new standards for EV charging funded
by the bipartisan infrastructure law,
it was revealed that Tesla would be opening part of
its network.
The move would grant Tesla access to federal funds as
part of the effort to build out a nationwide charging
network.
That's what If they had to go off on any
funding,
they would have to allow more vehicles charge at these
chargers.
And that's the biggest reason why I think Tesla would
open up the network for their automakers.
In 2023, Ford announced a deal with Tesla to leverage
its Superchargers for Ford EV customers.
Owners would need a Tesla developed adapter to give its
CCS ports compatibility with Tesla chargers.
Ford and Tesla stunned the industry by saying we have
arranged for Fords to have access to Tesla Supercharger network
nationwide overtime.
It's been a pretty bulletproof rollout.
Ford owners seem to be uniformly happy.
Shortly after its announcement, GM also said it would work
with Tesla.
CEO Mary Barra said it will save the company $400
million
of a planned investment in building out EV charging in
the US and Canada.
Every other maker has pretty much said yes,
we will give our folks access to the Tesla network.
As other EV owners have started using the Supercharger network,
it has presented some challenges.
Regrettably, they have to park crosswise in two spaces because
Tesla designed all of the Superchargers that are out there
now with cables that are just long enough to reach
the left rear corner of a Tesla.
The new Tesla Superchargers that are rolling out will have
longer cables.
There have been complaints about lines at Tesla stations with
access being granted to more E VS Congestion at charging
sites is a growing concern.
It's going to be interesting to see how Tesla owners
handle a fairly large influx,
and Tesla is managing it.
They're rolling out each car company at a time.
In the US, every automaker besides Tesla has been using
the CCS connector,
meaning anyone using Teslas network will need an adapter.
But that is quickly changing.
SAE International, an association that sets technical standards for aircraft
and vehicles,
worked with Tesla to standardize NACS,
now named the J 3400 standard.
Ford was the first to adopt Teslas connector with GM
signing on in June
2023. We plan to adopt the North American charging standard
and we're working really hard that our first vehicle will
come in
2025. Almost every other automaker has agreed to adopt NACS
in its vehicles either this year or in
2025. The convergence of everybody on the single standard in
US is a hugely positive things that it will accelerate
adoption of electric vehicles when you combine the
the the next plug with opening up their chargers to
everybody else.
I think that's just a it's a massive win for
Tesla for sure,
but I think for the consumer and for the marketplace
I think it's a massive win for everybody else as
well.
In October 2023, BP announced it had ordered $100 million
of Tesla's ultra fast chargers.
It's the first time Tesla's chargers will be deployed by
an independent EV charging network and will be installed at
Key BP,
Amoco, AMPM, Thornton's, Travel Centers of America and other charging
locations.
Between widespread support across the US automotive industry and a
surge in government funds to build new sites,
it seemed Tesla's charging business was on the verge of
going stratospheric.
But then everything came crashing down.
Elon Musk has surprised markets and the auto industry by
scrapping the unit responsible for Tesla's charging network.
In an e-mail announcing the layoffs,
Elon Musk said we will continue to build out some
new Supercharger locations where critical and finish those currently under
construction.
I wonder how that's going to impact my decision for
having purchased a Tesla because that's one of the the
selling points,
right, is that you know you have this really cool
extensive network where you can charge and and it's seamless.
It's the supercharging network is like the lifeline for the
the Tesla cars. You got to keep that
team. The ideal is that there will be more charging
stations.
I've been on the fence about whether or not I'll
get another Tesla,
but that honestly pushes me over the edge.
This is taking the place of gas stations and you
need a whole lot more.
You can make so many billions of dollars.
This is not the time to lay them off,
Stop playing around. I think it's time to align the
Take a break
for employees and contractors working with Tesla.
The news was sudden and unexpected.
My business partner, he was driving to a
Tesla Supercharger site that we're doing right now
and he got a call from our construction lead at
Tesla telling him to turn around and his entire division
had been laid off and Mark should go home and
and go pencil down on the project until we find
out what's going on.
Andre Spinter owns a residential and commercial charging installation business
and has worked with Tesla on several installation projects in
Texas.
We contacted everybody that we know at Tesla.
Every single one of those emails bounced.
We have a number of open purchase orders of jobs
we're working on for Tesla.
I think they'll complete those jobs and quite frankly,
it's a liability for the company to have
open permits, open construction sites.
It's just it's sloppy. They're not going to do that
without an internal team.
Some predict Tesla will outsource development of new sites.
We would love to take on the responsibility of building
that Supercharger network for Tesla.
I think there's a lot of contractors that are probably
have the ambition and ability to do it.
Tesla reportedly left its Supercharger maintenance team intact and says
it will support existing sites.
Maintaining the Supercharger network looks easy,
but there's a a lot of people involved in a
lot of resources.
Tesla's got it down to a science.
I think that the suppliers they work with on the
maintenance and particularly the software that they employ
is, is key to maximizing the up time.
If Tesla's going to maintain the existing Supercharger network with
a team of whatever size that might be,
then that will give drivers,
I think, confidence. But we're going to be selling millions
of more E VS down the road.
So that then asks how well will this existing network
stand up to that additional use by more brands from
other automakers.
I do a lot of driving,
so I haven't been through a lot of Supercharger stations.
There's a lot of charges that don't work,
so they got to get their customer service down.
The response is terrible. It's just like a run around
in circles.
I just stopped trying to contact them.
It's just a waste of time.
Now we're possibly potentially adding charging being a problem and
congestion and people having to wait.
I don't know man, like me personally,
I just go get a Mercedes.
It's already strained in certain urban areas such as New
York,
Los Angeles, San Francisco to now know that that expansion
is going to be really halted.
It then leans on 3rd party charging networks.
It's too early to tell what the full impact of
Tesla's decision will be,
but some believe it will place more responsibility on an
industry not ready to take on the mantle of the
Supercharger network.
Without having the brain trust at Tesla that's been rolling
that out and making it possible we are going to
then rely on industry to pick up the slack.
One of the biggest hurdles the industry faces is infrastructure
policy.
Tesla's policy team worked hand in hand with its charging
team in the deployment of the Supercharging network.
The policy team was able to navigate a lot of
what are typical red tape problems as it relates to
infrastructure rollout that third party networks still battle on a
regular basis. Tesla's team had become very,
very savvy and how to navigate that on a federal
and state level,
but to blow up their own closed ecosystem that was
working so elegantly is baffling.
Tesla does have growing competition in the charging space.
While it enjoyed dominance in its home market,
it is a smaller player in Europe and China,
and there are companies with the ambition to catch up
and exceed the the Tesla Supercharger network.
There's Iona, the joint venture between GM,
Hyundai and a number of other auto OEMs.
Mercedes is a deep pocketed competitor that's building their own
Supercharger network.
Rivian's building their own Supercharger network.
Last summer, several legacy automakers joined together to form a
new joint venture to create a network of 30,000 plus
chargers in North America,
with the first stations expected to open this summer.
In 2019 Shell acquired LA based charging company Green Lots
and has started installing chargers at its gas stations as
part of the Shell recharge network in the UK it
is converting a gas station to a full EV charging
one.
So oil and gas and retail is the next biggest
growth sector that we're seeing today with Shell BP,
Circle K 711 all trying to enter the space not
just to make money off EV charging,
but really trying to make the money off the dwell
times.
An EV driver is likely going to dwell there for
longer than they will on a gas station.
The Smart. Charging providers will see that there is going
to be a way to
squeeze a lot more money out of the wallet of
their travelers.
With more infrastructure being built out across the board,
experts predict it will improve the charging experience for everyone.
The software is going to be standardized.
The communications is going to be standardized.
The payment processing is going to be standardized.
The plugs are becoming standardized.
There definitely needs to be some sort of consolidation,
and only time will tell whether Musk's radical change in
supercharging strategy is the right one for Tesla.
In my opinion, Mr. Musk is playing three-dimensional chess and
he he just made a move that none of us
comprehend yet.
Some will interpret it as a brilliant move,
some will interpret it as a bonehead move,
and only time will tell.
We have really relied on Tesla's leadership here in North
America and I think to all of a sudden have
that seemingly halted that brings into question where do we
go from here and who will step up the way
the Tesla has.