Should Tesla move into the real estate market?

[TD1]

Tesla continues to grow exponentially. With the massiv sales of new Model3 Tesla will have to build many new superchargers and/or expand the existing ones.

Why does Tesla not follow the McDonalds model? McDonalds used to buy empty cheap plots of land and build a foodcourt there. As McDonalds itself attracts many people other fastfood chains had it easy to open shop on this plot of land and the value of this land continued to increase. Now McDonalds own 35billion in realestate.
McDonald’s isn’t just a fast-food chain—it’s a brilliant $30 billion real-estate company

I think Tesla could achieve the same effect, considering the massiv growth of superchargers and the time it takes to charge.
So.
1. Buy cheap plot of land next to a Highway
2. Build Supercharger on it
3. Rent some plot space to shops and restaurants.
4. More EVs = More customers for the shops = Higher Plot value and rental income.

This strategy became a solid leg of the McDonalds business model.

I think Tesla has the potential to do this strategy too, as they are the first mover with a fastcharging network.
Also those plots of lands don't need to be in sight from the highways like gasstation are, this trend to build them right next to the road stems from the times before gps/mobile internet.

Now people navigate to the superchargers through GPS. This gives much more options of plot land that can be chosen to create these new Supercharger complex.

Any opinions on that?

 

[SwTslaGrl]

Tesla has been thinking in those lines:
Tesla’s new drive-in restaurant with Supercharger station gets a possible location as company applies for permits

IMHO, it competes with other investments and return of capital. Perhaps there are better use for available funds?

 

[heltok]

When Tesla said they were gonna do an Uber/Airbnb like system I was like "what, they are gonna rent out RVs?!?!". Imo it would be pretty epic if Tesla did a home/ride-sharing network that drives RV to people and lets them sleep in the RV while the RV drives from A to B or is just stationary. That would solve the GF1 housing crisis!

 

[cpa]

I dunno at this juncture. Tesla does have a pile of cash, but will need that cash for the foreseeable future to develop new product lines and expand functions like service and manufacturing plants. It has debt to service too. It may be some time before Tesla has enough free cash flow to consider investing in real estate.

It is true that Tesla has dipped its foot into the water with the purchase of the Kettleman City and Baker 40-stall Supercharger sites.

I do not know how much "cheap" land is available at interstate exits. What might be available could easily be in the middle of nowhere (at least here in the West.) Moreover, there is no guarantee that "if you build it, they will rent" just because there are Superchargers proximate to the retail establishments. Tesla will have to hire people to work in the real estate department, which will reduce any potential profits and cash flows from these putative rental properties.

I know just enough to be dangerous about commercial real estate from my clients who have been in the business for decades. It is not an easy row to hoe. Tesla would have costs (like above) to pay that now are done by the family members for their shares of the annual profits.

Tesla's Supercharging is so popular that I believe that nowadays, many landlords do not charge Tesla rent for installing Superchargers on their properties, or charge a de minimus amount to cover overhead.

 

[Kichwas]

Something I noted from the Q3 webcast. Tesla is open to letting other EVs charge at superchargers.

But...

How many other brands actually allow their cars to do this? How many supply adapters?

Musk also noted that “all they have to do is supply adapters” which made me suspect most acoided this offer.

This makes me wonder if, at some point, superchargers will fade away and we’ll only have whatever options the whole industry embraces... like ChargePoint.

If Tesla bought up mall space to put down superchargers... is that wise if only Tesla owners are viable customers?

 

[neroden]

At this point Tesla is on track to have more electric cars on the road than every other manufacturer put together. Would it have worked in 1920 to have gas stations which only served Fords? Given the dominance of the Model T, it would have worked.

 

[Uncle Paul]

Tesla is well aware of this strategy. When they pitched their need for land for their proposed Gigafactory, they promoted the fact that they will be a fantastic anchor tennant, and it has worked out that way.
The Sparks, Nevada location was an empty and desolate spot in the desert. Now not only Tesla is building there, but it has turned into quite a commercial success with other companies that support Tesla operations, as well as other high tech companies all developing into a huge commercial success for the property owner and developer.

 

[jaguar36]

Tesla should be using their cash to develop new products and build out more production. Buying real estate would be a very poor return on investment at this point compared to those. In addition it is not at all in their mission statement.

 

[ItsNotAboutTheMoney]

No. Tesla is able to take advantage of the desire of other companies competing to bring in customers and current excessive lot space, and can follow the customers by moving as required.

And reading that article, the problem I see with McDonald's real estate is that a bunch will be for a drive-thru restaurant. Great for drive-thru restaurants but not so great for other uses.

 

[Darmie]

The founder was a great movie. I would think they look at the liability of owning vs leasing and partnerships. One thing that I look at is the partnership Tesla has with other realtors. Here in Houston, they have placed two S/C at the Rudy's BBQ. Not saying we don't like our BBQ here in Texas, but what happens if that business goes away and new owner is not so electric friendly? So, maybe they can look at prime location now, purchase location, build building. Then lease out to company willing to profit from supercharger users. Fuel stations claim they make no money on gas, so here is a win win for the company leasing from Tesla.

 

[electracity]

I hope in the next ten years that Tesla can stop building superchargers.

Ultimately charging is a business that can't be differentiated.