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

Sat Oct 22, 2016 8:36 am

dgpcolorado wrote:
edatoakrun wrote:From its inception, "free...forever" has been structured as a pyramid scheme.
No, it was in part a marketing expense (some car companies actually spend gigantic amounts of money on advertising instead — I think Tesla's marketing expenditures are much more useful). The idea was to change the perception of EVs as limited range local commuter cars, which it did: the Supercharger network was a paradigm shift in EV utility.

Yes, a "marketing expense" it was, and a brilliant one at that. By making SCs "free" and encouraging long-distance driving, Tesla also controlled the message in the media - rather than having to read endless pieces comparing the price of Supercharging with gasoline, we've instead seen stories, posts, etc. that focus primarily on the utility of the SC network.

Even after the "3" ships in volume and there's a pay-per-use model for the SCs for most cars, I anticipate that Tesla may continue to subsidize its SC locations for a while, in order to keep charging costs below gasoline as Elon Musk promised. This seems most likely to be needed in places like California where real estate is expensive and electric utility demand charges are substantial, as well as in remote areas where the SCs see relatively little use yet still need to be maintained.

While putting an appropriate price on carbon would decrease this burden for Tesla (and other quick-charge network operators), the cost of the SC network should remain within reason when viewed as a marketing expense. Long term costs should also drop as Tesla installs more solar PV and battery storage at SC sites.
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Re: Business model of TSLA "free...forever" charge network

Sat Oct 22, 2016 11:23 am

dgpcolorado wrote:.
...This suggests that Tesla won't have anything close to a million cars on the free forever plan...

You now seem to be agreeing with my post below of July 2015, that ~ million Cars allowed the "free...forever" promotion is a foolish idea:

Now, you just have to get TSLA to agree with you...

edatoakrun wrote:
="dgpcolorado"
...Whether or not the network will remain free without limits when there are a million Teslas on the road remains to be seen...

As per comments by JB Straubel, Chief Technology Officer, Tesla Motors (and others at TSLA) "free...forever" will only apply to initial Tesla BEV sales, and Supercharger fees will be instituted at a later date.

As you pointed out previously Straubel (at ~13 minutes into this video) says he thinks this will need to occur after ~ one million Tesla sales:

https://www.youtube.com/watch?v=HnQs1k_0Yys

IMO, fee-per-charge at Tesla Superchargers will probably have to happen at a far lower total sales number, if superchargers are to remain reasonably reliable.

Let's see how well "free...forever" is still working, when and if Tesla sells a few hundred thousand BEVs.

The reason Tesla owners only occasionally have to wait for a charger today is because there is a ratio of nearly ~one charger installed for every twenty S's on the road.

So of course, many of the charger stalls are empty, most of the time.

Do you think Tesla will be able to maintain that high a ratio of "free...forever" chargers to vehicles, and corporate profitability, when and if it reaches ~one million BEV sales?

viewtopic.php?f=7&t=19617&start=40
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Re: Business model of TSLA "free...forever" charge network

Mon Nov 07, 2016 7:46 am

edatoakrun wrote:
dgpcolorado wrote:.
...This suggests that Tesla won't have anything close to a million cars on the free forever plan...

You now seem to be agreeing with my post below of July 2015, that ~ million Cars allowed the "free...forever" promotion is a foolish idea:

Now, you just have to get TSLA to agree with you...

viewtopic.php?f=7&t=19617&start=40

The end of the "free...forever" promotion may have been timed to stimulate weak demand for for Models S and X in this quarter.

Just be sure to order your Tesla in the next ~eight weeks, and take delivery by next April fools day.

I wonder how will this effect demand next quarter...?

Tesla officially announces end of free Supercharging, new ‘Supercharging credit program’ starts in 2017

...The company is not releasing all the details of the program, but it confirmed that starting after January 1, 2017, 400 kWh of free Supercharging credits will be given with new Tesla orders and “a small fee” will be charged for Supercharging after the credits are used...

...For Teslas ordered after January 1, 2017, 400 kWh of free Supercharging credits (roughly 1,000 miles) will be included annually so that all owners can continue to enjoy free Supercharging during travel. Beyond that, there will be a small fee to Supercharge which will be charged incrementally and cost less than the price of filling up a comparable gas car. All cars will continue to come standard with the onboard hardware required for Supercharging.

We will release the details of the program later this year, and while prices may fluctuate over time and vary regionally based on the cost of electricity, our Supercharger Network will never be a profit center.

These changes will not impact current owners or any new Teslas ordered before January 1, 2017, as long as delivery is taken before April 1, 2017....

https://electrek.co/2016/11/07/tesla-en ... gram-2017/
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Re: Business model of TSLA "free...forever" charge network

Mon Nov 07, 2016 9:41 am

edatoakrun wrote:
edatoakrun wrote:
dgpcolorado wrote:.
...This suggests that Tesla won't have anything close to a million cars on the free forever plan...

You now seem to be agreeing with my post below of July 2015, that ~ million Cars allowed the "free...forever" promotion is a foolish idea:

Now, you just have to get TSLA to agree with you...

viewtopic.php?f=7&t=19617&start=40

The end of the "free...forever" promotion may have been timed to stimulate weak demand for for Models S and X in this quarter.

Just be sure to order your Tesla in the next ~eight weeks, and take delivery by next April fools day.

I wonder how will this effect demand next quarter...?

Tesla officially announces end of free Supercharging, new ‘Supercharging credit program’ starts in 2017

...The company is not releasing all the details of the program, but it confirmed that starting after January 1, 2017, 400 kWh of free Supercharging credits will be given with new Tesla orders and “a small fee” will be charged for Supercharging after the credits are used...

...For Teslas ordered after January 1, 2017, 400 kWh of free Supercharging credits (roughly 1,000 miles) will be included annually so that all owners can continue to enjoy free Supercharging during travel. Beyond that, there will be a small fee to Supercharge which will be charged incrementally and cost less than the price of filling up a comparable gas car. All cars will continue to come standard with the onboard hardware required for Supercharging.

We will release the details of the program later this year, and while prices may fluctuate over time and vary regionally based on the cost of electricity, our Supercharger Network will never be a profit center.

These changes will not impact current owners or any new Teslas ordered before January 1, 2017, as long as delivery is taken before April 1, 2017....

https://electrek.co/2016/11/07/tesla-en ... gram-2017/


Wait. So you've maintained all along that they model is not sustainable once Model 3 arrives, and they will have to charge something or people will just start using it to do daily charging. Then when they come up with a new system that addresses this issues and launch it at the start of the year Model 3 will arrive, you change you position on why they are doing it to just simply that they are trying to increase demand for Model S. Perhaps you are right that they are doing this to stimulate demand for Model S, but the main reason is still your original premise that it wont be sustainable as the network builds out and the Model 3 gets released in mass.

I see this as a positive for the company in many ways. Original owners still get unlimited long distance, and It gives new Tesla owners free long distance travel for 1000 miles per year. Tesla has much more control over the cost of the supercharger network. Adding a billing system to the network makes it easier to allow other car manufacturers onto the network (which may be a big reason behind this that is not announced yet). I'm long TSLA and this is a positive for the stock in my view.
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Re: Business model of TSLA "free...forever" charge network

Mon Nov 07, 2016 10:16 am

palmermd wrote:...you've maintained all along that they model is not sustainable once Model 3 arrives, and they will have to charge something...

"Free... forever" has in fact been abandoned long before the model 3 begins production, and with a small fraction of the ~"million" S and X sales that TSLA projected, without even selling the "few hundred thousand" cars that I thought might be possible.

When do you think will TSLA will install all those "solar and battery pack additions to the stations" you expect?

Post 1, Page 1:

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

Mon Nov 07, 2016 10:35 am

edatoakrun wrote:When do you think will TSLA will install all those "solar and battery pack additions to the stations" you expect?


Battery supply is still waiting on completion of the Gigafactory in Sparks. Solar won't likely go in without the battery. I think all of these plans were put on the shelf to put focus on Model 3, and rightly so. I could see them building roofs with the solar shingles on top for marketing displays for the solar roof product.

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

Tue Nov 08, 2016 9:05 am

Tesla officially announces end of free Supercharging, new ‘Supercharging credit program’ starts in 2017

When I got this announcement, my immediate reaction was why they were trying to push people to the Bolt, since IMHO, Supercharger access is the leading feature the Model 3 has that the Bolt lacks. They should have waited longer before pulling this.
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Re: Business model of TSLA "free...forever" charge network

Tue Nov 08, 2016 9:16 am

jlv wrote:
Tesla officially announces end of free Supercharging, new ‘Supercharging credit program’ starts in 2017

When I got this announcement, my immediate reaction was why they were trying to push people to the Bolt, since IMHO, Supercharger access is the leading feature the Model 3 has that the Bolt lacks. They should have waited longer before pulling this.


They didn't change supercharger access at all. The existence of the network is still a huge selling point over the Bolt. One of many advantages for the Tesla.
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Re: Business model of TSLA "free...forever" charge network

Tue Nov 08, 2016 12:56 pm

palmermd wrote:
edatoakrun wrote:When do you think will TSLA will install all those "solar and battery pack additions to the stations" you expect?


Battery supply is still waiting on completion of the Gigafactory in Sparks. Solar won't likely go in without the battery. I think all of these plans were put on the shelf to put focus on Model 3, and rightly so. I could see them building roofs with the solar shingles on top for marketing displays for the solar roof product...

I suppose self-delusion may be a common response from those Tesla owners who have been lied to by TSLA for so many years now:

OFFICIAL Sep 24th 2012 at 11:20PM
Tesla Supercharger network offers free, solar energy for Model S drivers

PRESS RELEASE

Tesla Motors Launches Revolutionary Supercharger Enabling Convenient Long Distance Driving
Drive the Model S electric car anywhere in the country on pure sunlight for free

HAWTHORNE, Calif. – Sept. 24, 2012 –Tesla Motors today unveiled its highly anticipated Supercharger network. Constructed in secret, Tesla revealed the locations of the first six Supercharger stations, which will allow the Model S to travel long distances with ultra fast charging throughout California, parts of Nevada and Arizona.

The technology at the heart of the Supercharger was developed internally and leverages the economies of scale of existing charging technology already used by the Model S, enabling Tesla to create the Supercharger device at minimal cost. The electricity used by the Supercharger comes from a solar carport system provided by SolarCity, which results in almost zero marginal energy cost after installation. Combining these two factors, Tesla is able to provide Model S owners1 free long distance travel indefinitely.

Each solar power system is designed to generate more energy from the sun over the course of a year than is consumed by Tesla vehicles using the Supercharger. This results in a slight net positive transfer of sunlight generated power back to the electricity grid.
...

http://www.autoblog.com/2012/09/24/tesl ... r-model-s/
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Re: Business model of TSLA "free...forever" charge network

Tue Nov 08, 2016 4:20 pm

I think that this thread is now moot. That being said, Free SC access was a terrific marketing tool, far more valuable than spending the same money on advertising, and imposing the cutoff will undoubtedly boost sales/deliveries for the next two quarters, while also raising the value of the existing cars on the used market. I particularly like Tesla's decision to give an allowance in kWh, as it will encourage people to move from the SCs once they've got enough charge to get to the next one plus any reserve they want, instead of staying longer because they can. Now we just need to see if/how they tier and price SC charging packages, in addition to the a la carte price.
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