edatoakrun
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Business model of the NOT "free...forever" Tesla DC network

Fri Apr 17, 2015 10:30 am

Edit 11/19/16, thread title changed to Business model of the NOT "free...forever" Tesla DC network.

Thought it might be time for a thread on this topic, continuing from the off-topic discussion at:

viewtopic.php?f=26&t=11219&start=130" onclick="window.open(this.href);return false;

palmermd wrote: ...The current cars are paying for the charge stations...after the network is built out, the next car sales will pay for the solar and battery pack additions to the stations. Yes, sales of the Model S will pay for the build-out of the network and in return they will get charging for life. I don't believe that Model 3 will have the same offer. I expect that they will be charging for Model 3 owners to use the superchargers. $100k car gets prepaid charging, $50k car gets to pay for the energy consumed. Tesla has not stated any of this but this is just my own view of what they are doing and I think it makes perfect sense...

Tesla is charging the one group who is willing to pay for the infrastructure, and that is people who can afford a $100k car.

Well, this is an interesting theory, variations on which I've read many times before.

Can you try plugging in the anticipated costs for the network and the kWh (purchased or generated) and show how it could actually be profitable, or even recover the costs, for TSLA?

It seems to me that the only way it could work (and quite improbably, at that) is if the future purchasers of the "$50k car" (if and when they are sold) would be willing to subsidize the charging costs for those "people who can afford a $100k car" in the present.

Anyone else have a guess on how "free...forever" DC charging could be possible?
Last edited by edatoakrun on Sat Nov 19, 2016 3:52 pm, edited 1 time in total.
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palmermd
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 11:01 am

edatoakrun wrote:It seems to me that the only way it could work (and quite improbably, at that) is if the future purchasers of the "$50k car" (if and when they are sold) would be willing to subsidize the charging costs for those "people who can afford a $100k car" in the present.


Boy you are negative. The $50k car would not even have a charger to plug into if it were not for the $100k car paying to have it installed. Why do you insist on making this about the everyman subsidizing the rich folks.
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dhanson865
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 12:25 pm

The commonly accepted number is each car pays in advance for $2000 worth of charging.

The average charge at a supercharger is about 50kWh which at $0.10 per would be $5.

The average Tesla car with supercharger port has to supercharge more than 400 times to exceed their prepaid usage. That's like supercharging once a week on average for the life of the car.

There are plenty of Model S users that don't supercharge at all. There are plenty that are selling their 2 year old car with low mileage like 16,000 miles.

Sure you'll get guys like islandbayy that supercharge several times a week and will use their allotment (well more than the average user) but I'm saying they are a minority.

Your average owner charges at home more than at a supercharger.

I don't see the problem with the model.
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 1:51 pm

I did plug in some numbers in the linked thread, but I'll add something here. There is a time value to money. That is, $2k today is worth more than $10/month for the next 200 months. Why? Because of inflation for one thing, and because you can invest that money today and get a non-zero return on it.

So what is Tesla investing the money on? Supercharging, of course! And what is their return on investment? Sales of more cars!

By a show of hands, who here would prefer a Model III over a Bolt, Leaf 2.0, etc, if the only difference was access to the Supercharger network?
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 3:00 pm

GetOffYourGas wrote:By a show of hands, who here would prefer a Model III over a Bolt, Leaf 2.0, etc, if the only difference was access to the Supercharger network?

I still think it would depend.
If I get a car with a 150 or so mile range, then I really don't need to worry about charging for the commute.
In that case, the Supercharger network would be nice, but possibly something I wouldn't use much (there isn't a Supercharger close to me anyway currently).

Yes, it would make longer distance trips more possible, but we're a 2 car family so that might be interesting, but not a major point for me...

For someone who is looking for a single car / longer commutes tho, I can see it being a big deal.

The other issue is that "if" in there..
I have a feeling there will be some other big differences. Availability date and price come to mind. ;-)

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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 3:24 pm

Since Tesla intends for the Model 3 to sell an order of magnitude above Model S, I just wonder what their build-out plans are. It's not going to be enough to string a path; they're going to need a lot more active bays.
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 4:50 pm

I think they'll market the base model 3 as a city car and omit supercharging. It's still going to be a pretty expensive car so they can easily add it on to the higher end trims. I also wouldn't be surprised if the model 3 with a PXXD version tops out at $85k +. They can also add Tesla 40 amp or 80 amp chargers at supercharger stations for dirt cheap. This will allow them to offer free charging to everyone, and people will feel that they won't get stuck, for people who aren't planning on doing road trips when they buy they will at least feel if the need comes up that they can do it. It will discourage local cheap people who don't need a charge for using it just to save a few bucks while they shop/eat.

Regardless of what happens with the 3 the S will keep growing and the X will be the real test of capacity. I think the only way they can make it work in the long run is speeding it up to 200 miles in 15 min and having a stay with your car policy during and or a fine/charge system if you leave your car longer than it needs to charge.
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dhanson865
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 6:35 pm

minispeed wrote:I think they'll market the base model 3 as a city car and omit supercharging.

You may have missed that Musk has been saying for a over a year now that Model 3 will have free supercharging.

Add to that the recent Model S lineup change such that they no longer sell cars without the supercharging and I find it likely that they'll continue on with the Model X and Model 3.

I'll add one more point to ponder. Every single Model S even the 40 kwh and 60 kwh orderd without supercharging were delivered with the supercharging built in and a simple software update can enable supercharging.

If they wanted to the could have left hardware off those cars and save money. Tesla is betting that every Model S will have that enabled once the network is built out. I'm willing to believe that enough will get turned on that a non supercharging Tesla will someday be an oddity that is hidden in a garage somewhere hardly used.
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 7:18 pm

It lets Tesla sell their cars for perhaps 50% more than they would sell them otherwise, and probably doubles Tesla's sales volumes.... sounds like a good business model to me ....
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Re: Business model of TSLA "free...forever" charge network

Fri Apr 17, 2015 7:56 pm

Tesla making the Model III a city car?! :lol:

Facts:
Elon Musk has clearly stated that 200 mile range is the practical minimum for an EV
Tesla have raised the entry level price of their Model S by releasing the 70D, opening a gap in price to $50K for Model III
You cannot buy a Tesla Model S new without supercharging enabled, all new cars have it
The supercharger build out will be practically covering the majority of their sales geography by 2016 for cars with 200 mile range

The Model III will be a 200 mile range car, end of story.
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