Model 3 Supercharging Capable Discussion

[Red Sage]

It depends on the circumstances. If the assumption is that the upfront funds is not enough to pay for the average usage customers (as I believe the argument is), then it really is like a ponzi scheme, since all that is funding the current network is continual growth. As soon as growth stabilizes, the network would not be able to be maintained with given amount.

My problem with so many considering everything related to Tesla Motors as a Ponzi Scheme is that that their actual assumption, first and foremost, is that Tesla Motors is a scam that was set up to rob Consumers and defraud government agencies and is destined for failure as a result. It's a long way to 100,000,000 fully electric vehicles per year, and an even longer road to replacing 2,500,000,000 ICE passenger vehicles worldwide. Considering Tesla Motors' current strategies, growth should be fine through 10,000,000 vehicles per year, and that isn't even to the tipping point of 50,000,000 per year from which point no matter how much you added each year it would be less than the year before. The real scandal is why everyone thinks Rolls-Royce has a solid business plan of building gas guzzlers at less than 5,000 units per year at continually escalating price points. Geez.

 

[Red Sage]

Red, as the numbers of non-Tesla EVs begin to rise from all the other car manufacturers, eventually totaling tens of millions of non-Tesla EVs/year, how do you foresee all the other car companies handling the long-distance charging problem?

1. Each build their own network
2. Lease Tesla's network
3. Let 3rd parties handle it

If #3, how would that impact Tesla's network and pay once use-model?

I foresee that eventually, one day, at least one of the traditional automobile manufacturers will find themselves against the ropes, with nowhere near enough people buying their cars. So, just ahead of filing for bankruptcy (or perhaps immediately after, during reorganization) they'll announce that they'll start selling long range electric cars that use the Supercharger network. Almost simultaneously, they'll also cancel all their prior contracts with 'independent franchised dealerships', dump every union they are affiliated with, and emerge from bankruptcy as a new firm that sells direct. They'll spin off another, smaller entity to deal with their legacy obligations to ICE vehicles. The rest of the traditional automobile industry will cry foul, just before doing something very similar themselves (especially if they see it works).

But what they'll actually want to do is #3. Hope that some fool decides to make an attempt at becoming 'The Next EXXON!' by 'selling' electricity. It probably won't work... Though some people wouldn't mind filling up with quality, premium energy from SHELL/EXXON/MOBIL/BP branded 'pumps' that charge their EVs at breathtakingly slow rates. None of this will have any effect on Tesla Motors whatsoever, though privately, their Executives my snicker, laugh, guffaw, and point.

 

[stopcrazypp]

My problem with so many considering everything related to Tesla Motors as a Ponzi Scheme is that that their actual assumption, first and foremost, is that Tesla Motors is a scam that was set up to rob Consumers and defraud government agencies and is destined for failure as a result. It's a long way to 100,000,000 fully electric vehicles per year, and an even longer road to replacing 2,500,000,000 ICE passenger vehicles worldwide. Considering Tesla Motors' current strategies, growth should be fine through 10,000,000 vehicles per year, and that isn't even to the tipping point of 50,000,000 per year from which point no matter how much you added each year it would be less than the year before. The real scandal is why everyone thinks Rolls-Royce has a solid business plan of building gas guzzlers at less than 5,000 units per year at continually escalating price points. Geez.

Part of the skepticism of Tesla is because so far they had only one non-GAAP profitable quarter (way back in Q2 2013). Elon initially said early this year that in Q4 2016 there would be a profit, but I think that plan is out the window given the accelerated schedule for the Model 3.

But that's besides the point of the post. The point of the post is that for a non-ponzi type scheme, Tesla needs to set out a supercharger price that matches what an average customer would demand of the superchargers. They can choose not to do that and the system can still be fueled by growth (just like a ponzi scheme does), but eventually it won't work. That is not to say that Tesla as a company is necessarily operated like a ponzi scheme.

From Tesla's response to the SEC inquiry about how superchargers are paid for, Tesla definitely has a scheme for this behind the scenes and continually makes adjustments. The Model 3 payment model would be one major adjustment in their strategy.

 

[Red Sage]

Part of the skepticism of Tesla is because so far they had only one non-GAAP profitable quarter (way back in Q2 2013). Elon initially said early this year that in Q4 2016 there would be a profit, but I think that plan is out the window given the accelerated schedule for the Model 3.

But that's besides the point of the post. The point of the post is that for a non-ponzi type scheme, Tesla needs to set out a supercharger price that matches what an average customer would demand of the superchargers. They can choose not to do that and the system can still be fueled by growth (just like a ponzi scheme does), but eventually it won't work. That is not to say that Tesla as a company is necessarily operated like a ponzi scheme.

From Tesla's response to the SEC inquiry about how superchargers are paid for, Tesla definitely has a scheme for this behind the scenes and continually makes adjustments. The Model 3 payment model would be one major adjustment in their strategy.

Once all the points of profitability are in place, which I feel will begin around 1,000,000 units per year, and stabilize at around 3,000,000 to 4,000,000 units per year, everything will roll along just fine. When it only takes 25% of available revenue to take care of capital expenditures, instead of 90% or so, then regular operating expenses for the Supercharger network will be the mist raised from a drop in the ocean. Don't worry about it.

 

[Alketi]

But what they'll actually want to do is #3. Hope that some fool decides to make an attempt at becoming 'The Next EXXON!' by 'selling' electricity. It probably won't work... Though some people wouldn't mind filling up with quality, premium energy from SHELL/EXXON/MOBIL/BP branded 'pumps' that charge their EVs at breathtakingly slow rates. None of this will have any effect on Tesla Motors whatsoever, though privately, their Executives my snicker, laugh, guffaw, and point.

We agree on the first part. The transition to EVs is inevitable and conventional auto will be dragged to the EV table, as it'll be unavoidable due to cost/performance/maintenance. Some will even go out of business in the process.

However, once we get there, clearly a percentage of people will still want to drive long distances and not everyone will own a Tesla.

Thus, it follows that the free market will create a 3rd party infrastructure and that the free market will also set the price for 3rd party charging.

This affects Tesla as follows --

Tesla owners will ask themselves: is it cheaper to buy the Tesla charging package, or just use 3rd party chargers?

The cost calculation simply reduces to the number of times you think you'll use the Tesla Supercharger network vs. the number of times you can just pay-as-you-go on the 3rd party network for the occasional long trip.

Spitballing numbers: if Tesla charges a $2000 one-time fee vs a $20/per-use 3rd party fillup, then (all other things being equal) you need 100 3rd party fillups before you break-even. If you rarely take long trips, there will be no financial point to paying Tesla $2000 up front.

It seems fairly straight-forward to me. Tell me how that logic doesn't make sense.

 

[stopcrazypp]

Once all the points of profitability are in place, which I feel will begin around 1,000,000 units per year, and stabilize at around 3,000,000 to 4,000,000 units per year, everything will roll along just fine. When it only takes 25% of available revenue to take care of capital expenditures, instead of 90% or so, then regular operating expenses for the Supercharger network will be the mist raised from a drop in the ocean. Don't worry about it.

This is exactly the handwaving that people don't accept. Tesla is worrying about it behind the scenes, so in order to predict what they will do, it requires looking at the same factors, not just handwaving it away and saying it would work out in the end. From Elon's comments, it is very clear that they have done the math on the costs of the network and will make the Model 3's payment model accordingly. I believe before Elon's recent comments, you suggested there would not be a separate supercharging activation fee because of the same logic of it being a drop in the ocean, but Elon/Tesla obviously did not look at it the same way.

 

[ChadFeldheimer]

The peak capacity issues have been largely worked out at Superchargers by having solar panels and battery backup on site. JB Straubel spoke of this a couple of times, I believe.

Some superchargers are equipped with peak shaving batteries. In those cases, you need to account for amortized cost of the battery in the cost of electricity supply - because the alternative is even more expensive.

It'll be tough to do much better than $0.25/kWh.

 

[RobertF]

The many problems discussed with free or even yearly/annual programs could be mitigated by building in a financial incentive to use SC less. A copay or max uses per year or other method which costs less if you don't use it. Cross country trips are a problem. This could be lessened by excluding or reducing charges at SC more than 100 or X miles from home. Not saying I have the solution but there are a lot of bright members that probably could design a workable method that financially rewards using less. Pay per use is the only simple method I came up with.

 

[melindav]

Without going into specifics they're probably paying .25+ per KWH.

I know totally late to reply, but that job gets in the way during the day...

I looked at my local utility co. and the highest commercial rate plan is $25/month + 7.7 cents per kWh. Compared to residential $12+ 8.16 cents.

 

[dhanson865]

The peak capacity issues have been largely worked out at Superchargers by having solar panels and battery backup on site. JB Straubel spoke of this a couple of times, I believe.

The concept has, the execution is still in the future. 99% of the current superchargers have no solar panels or battery backup. Just peruse the supercharger construction threads and see more coming on line every week with no canopies and an empty hole where the battery backup would go.

I'm sure they'll add those as the gigafactory comes on line but you make it sound like they did it in the past not they still need to do it in the future.

 

[googlepeakoil]

Uhm, respectfully No.
Your hypothetical "within 75 miles of your home address" is not realistic for Texas and many other vicinities.
At least as the Supercharger network stands right now.

There are several areas (e.g.: East Texas) I visit and that I can get to and return ONLY if I Supercharge 50 miles away from my home.
Because just past that, it is a very real "Supercharger Desert", and I prefer NOT to rely RV Parks and the occasional 120V outlet to renew my charge.

IF I had the luxury of Superchargers being available "ala California", then perhaps the fee would be warranted.

wouldn't people just lie about the address they live at / say they moved to a remote spot of the World to save on this. It'd be far too big an admin headache for Tesla.

 

[Booga]

The Supercharger network, with 270 sites in the US today, and due to be doubled by the end of 2017, is already beyond the approximately 200 locations that Tesla Motors originally forecast as being necessary to enable long distance travel on our highways. It would be unwise to presume that having perhaps 150% saturation beyond that 200 locations by the end of 2017 is intended to be solely for use by Model S and Model X. No. That expansion is specifically to allow use by Model ☰ buyers. So, yes, by buying today, you are paying for the infrastructure that will be used by future buyers. That also includes Tesla Stores/Galleries, and Service Centers. It also includes, I hope, what would be Tesla Waypoint or Tesla Depot locations that catered to long distance travel by way of electric vehicles, some day.

When I buy an ICE, there is an NPV associated with my energy consumption. Business of all sorts make decisions not only on what customers will pay up front, but the demand that will exist in the future. Would you also be saying that I'm creating economic value in infrastructure for gasoline stations when I buy an ICE based vehicle?

If so, then OK - you're right. Not only do I benefit, but so do others. This analogy could be extended by my need for groceries... Wal*Mart does planning based on demand, so maybe my purchase of apples is supporting apple growing/distribution infrastructure, which future buyers of apples will benefit from, and ultimately flows into the creation of Wal*Mart stores.

Tesla, assuming they have access to the capital markets (which they do), can choose to either finance the infrastructure's initial build out by asking for money up front or just know that the demand will be there (and they get revenue by charging ongoing fees irregardless of how - pay per use, per year, whatever) and utilize the capital markets to fund the initial build out and ongoing use of capital. At the end of the day, it's a wash if you believe that the markets are efficient allocators of capital and that it's probably more efficient do it by the billions rather than by $2,500 at a time.

Given that they have easier access to the capital markets (look at the last equity rise) than in the past, I think Tesla is likely to charge on an ongoing basis rather than build in an infrastructure development cost into the price. At least, it'll be an option. They are probably going to take their expected per kwh cost, add in the expected economic depreciation of the equipment on a per charge (including non-used time for weather impacts, etc.), and ultimately charge that to the customer. Any variation will be based on expected usage calculations (how many charges will the average user consume, etc.) or even being sold below cost to encourage the SC network use.

I know I've shifted topics, but I think the financial aspect from understanding the financial statements and their access to the capital markets is critical. Things are very different than they were when they were just starting to build out the SC network, and so maybe they did the calculations posted earlier in this thread at one point, and today they'll still be similar, but applied in a different manner.

Today, they shouldn't be viewed as splitting up the payment into infrastructure and electricity - it should be viewed as just as "all-in" cost on a per charge basis, which they will likely display and sell on either an actual underlying usage basis or time based subscription, or some kind of similar variant. If they do a 1-time up front fee, it's going to be purely based on this "all in" cost and an estimate of the number of charges - not specifically targeting a certain amount of cash flow for infrastructure build, because they have easier access to the capital from the markets today.

 

[googlepeakoil]

The concept has, the execution is still in the future. 99% of the current superchargers have no solar panels or battery backup. Just peruse the supercharger construction threads and see more coming on line every week with no canopies and an empty hole where the battery backup would go.

I'm sure they'll add those as the gigafactory comes on line but you make it sound like they did it in the past not they still need to do it in the future.

This comment by JB is what I would call "green washing". People get impression the company is greener than it really is by showing pictures of solar-panel covered SC's when 95% aren't covered by solarpanels (powered by the local grid provider) and batteries are only present at a few sites.

 

[googlepeakoil]

This may be one option, but not the only option. That old model totally excluded an owner from using the SC network at all, unless they ponied up $2k up front. Tesla is now trying to bring EVs to the masses, and many of those just simply can't/won't pay that much for the privilege. BUT, add in some sort of pay-per-use plan, and there you go. Put me in that camp, I'll never use $2k worth of juice from the SCs.

Pay-per-use stops 2 things Tesla is concerned about:
- people using it as their alternative to home charging
- over-crowding
If they all pay up-front then there's still going to be the over-crowding and people will feel like it's their right to SC as much as they want - they'll say "i paid my $2k"
Pay-per-use stops both of the issues and will make people responsible. Otherwise it's going to be filled up with taxi companies who think $2k for gas for life - sign me up!!! There's some airport in Holland I read about - had a fleet of 100 Tesla's and the local SC is a parkinglot of those taxis!!!

 

[Gilzo]

I got it...found the solution. Everyone can do this and call it good.

A Wyse decision: Charge it!

 

[FlatSix911]

I got it...found the solution. Everyone can do this and call it good.

A Wyse decision: Charge it!

Well done!

Public charging at our home
Elizabeth: Of course, we weren’t planning on enjoying our EV experience alone. We recently installed a public charging station outside our Ozark residence for use by Tesla and other EV owners who might need to recharge their EVs while traveling through the area.

Our local paper picked up our story which created an online presence which netted us some new friends. People we didn’t know left messages on our answering machine - they were happy for us, wanted to see it, and wanted to be part of the joy.

 

[Red Sage]

Tell me how that logic doesn't make sense.

Just as movie theatres make their money from selling overpriced concessions, like 20 cents worth of popcorn for $12.00... Gas stations make their money from sales of alcohol, tobacco, irradiated corn dogs, and incredibly expensive convenience items, that people buy because they are in a hurry and don't want to go somewhere else to get them. Standalone chargers that are unattended, meant to be operated as vending machines for EV juice, must be ridiculously expensive in comparison to be anywhere near as profitable.

$20.00 worth of gasoline (at $3.00 per gallon) might take you a bit beyond 265 miles in a 40 MPG hybrid. $20.00 worth of electricity, purchased at around 13.5 cents per kWh would allow you to travel nearly 500 miles at 300 Wh per mile. But at $20.00 per session, someone with a 90 kWh battery pack who stops to recharge from 20% (18 kWh) to 90% (81 kWh) would be paying around 31.7 cents per kWh -- and might only travel 210 miles at 300 Wh per mile.

This is where the 'logic' of flat rates per session breaks down. You give up every financial advantage of driving EV. And it gets even worse with smaller capacity battery packs. You pay more per mile of driving than you would when buying gasoline. With those kinds of numbers, people will simply keep driving ICE.

 

[ohmman]

$20.00 worth of gasoline (at $3.00 per gallon) might take you a bit beyond 265 miles in a 40 MPG hybrid. $20.00 worth of electricity, purchased at around 13.5 cents per kWh would allow you to travel nearly 500 miles at 300 Wh per mile. But at $20.00 per session, someone with a 90 kWh battery pack who stops to recharge from 20% (18 kWh) to 90% (81 kWh) would be paying around 31.7 cents per kWh -- and might only travel 210 miles at 300 Wh per mile. This is where the 'logic' of flat rates per session breaks down. You give up every financial advantage of driving EV. And it gets even worse with smaller capacity battery packs. You pay more per mile of driving than you would when buying gasoline. With those kinds of numbers, people will simply keep driving ICE.

You're making the assumption that this is the only charging method for all mileage on an EV. It's not, and for the vast majority of miles driven, it won't be. The EV cost per mile will still be tremendously better, because most people will be charging at home or work where energy is significantly cheaper. Paying slightly more on road trips won't affect the averages, except for people who are constantly on trips. Also, theoretically the EV should require less maintenance costs over the long run.

The other assumption that stands out to me is that you're not accounting for energy loss during charging. So paying your theoretical 13.5c/kWh would be more costly than it appears, because you'd consume more energy to store the same amount you list. However, the $20 flat rate is just that - a flat rate - so the losses aren't a penalty in the rate.

 

[Red Sage]

This is exactly the handwaving that people don't accept. Tesla is worrying about it behind the scenes, so in order to predict what they will do, it requires looking at the same factors, not just handwaving it away and saying it would work out in the end. From Elon's comments, it is very clear that they have done the math on the costs of the network and will make the Model 3's payment model accordingly.

You misunderstand. My point is that Consumers need not worry about it, because Tesla Motors will have formed a solution of their own well ahead of the Supercharger Apocalypse that so many are predicting. It is Tesla Motors' job to seek out current or potential problems and discover a means to avoid or eliminate them. I trust that they will do so in the most logical manner possible. I protest the proposed 'solutions' that Tesla Enthusiasts put forth to fight 'problems' that I consider unlikely given Tesla Motors' actions thus far. Because even the anecdotal issues they point to have already been solved by other means.

I believe before Elon's recent comments, you suggested there would not be a separate supercharging activation fee because of the same logic of it being a drop in the ocean, but Elon/Tesla obviously did not look at it the same way.

What I suggested was that at a certain level of initial profitability on the base version of Model ☰, there would be no need for an activation fee. I set that at 12% -- so, if it only costs Tesla Motors $30,800 or less to build the $35,000 base configuration of Model ☰, then the profit margin would be enough to include Supercharger access as 'FREE for LIFE!'. Which is an amount I estimate would be around $500, or roughly 11.4% of the presumed 12% profit margin. Naturally, if the car will have a much narrower profit margin in base trim, 6% or less instead, that would mean the car must have Supercharger access as an optional upgrade.

That said, based upon what Elon has said, I believe that the Model ☰ will have Supercharger access from the start. Every single one of them. But, the unlimited '...for LIFE!' version of Supercharger access will be an optional upgrade from the level of Supercharging that is 'included' with the car. It will still be 'FREE...' of additional fees, though only for a limited time or limited number of uses or both. So, no pay-per-use, credit cards on file, taps, swipes, periodic billing, or subscription plans. Supercharging will be 'ON' until it is 'OFF'.

Just as 'FREE for LIFE!' Supercharger access was eventually included in ever single iteration of newly purchased Model S and Model X, I believe that will some day be the case with every Model ☰.[/QUOTE]

 

[Red Sage]

You're making the assumption that this is the only charging method for all mileage on an EV. It's not, and for the vast majority of miles driven, it won't be. The EV cost per mile will still be tremendously better, because most people will be charging at home or work where energy is significantly cheaper. Paying slightly more on road trips won't affect the averages, except for people who are constantly on trips. Also, theoretically the EV should require less maintenance costs over the long run.

Please pardon me. I really am making an effort to keep my posts shorter. Unfortunately, when I do, people tend to think I was overlooking something, even when I have not. It is my hope that someone who has read my prior posts is aware of my positions on various related subjects as I converse.

If you look through my posts in this and other threads, I have repeatedly noted my strong believe that the grand majority of owners will be charging their cars at home or at work for at least the next five years. Quite a few of those who post opposing viewpoints to mine repeatedly claim that there must be significantly more Superchargers for multiple reasons. I disagree with them. These are my primary positions on the subject:

• Superchargers will not need to be 'on every corner' or 'at every exit' -- because most people will charge at home or at work.
• Superchargers will not be overwhelmed with the arrival of Model ☰, because Tesla Motors is NOT going to stop building them between now and late 2017.
• And Tesla Motors will not have to add a pay-per-use option for Superchargers with the Model ☰, because paying for limited use, or unlimited access with the purchase of the car will be sufficient.

I hope that clarifies things for you somewhat. I feel I've been rather consistent on these points. I don't want to spam the forum by posting them every time I give my opinion.

The other assumption that stands out to me is that you're not accounting for energy loss during charging. So paying your theoretical 13.5c/kWh would be more costly than it appears, because you'd consume more energy to store the same amount you list. However, the $20 flat rate is just that - a flat rate - so the losses aren't a penalty in the rate.

I have noted previously that I believe it is unfair that EPA ratings for Wh per mile include induction losses during charging. I think that effectively means they are saying you are spilling electrons on the floor while charging. Even with that caveat, I still include those estimates from time-to-time, as a 15% penalty. I don't like doing that, but I will do so on occasion. Most of the time, I will not. No one presumes that gasoline or diesel is being wasted on the floor while filling an ICE. Instead, they judge the range and efficiency of the vehicles based upon the fuel that is in the tank. Many of the calculations and comparative results on a Monroney sticker are financial in nature. I care more about actual results of use.