Net Book Value Of Tesla Supercharger Network Is $152.4 Million

2 years ago by Mark Kane 56

Tesla Delivered ~17,400 Model S Sedans In North America In 2014

Tesla at Supercharger

Supercharger

Supercharger

When analyzing the quarterly Tesla reports we came across interesting Supercharger data.

The net book value of the Supercharger network was reported in the past three quarters and as of September 30, 2015 stood at $154.4 million.

At 536 locations, that translates to approximately $284,000 per location (or less than $50,000 per spot). Those are high power stations – the smallest have two spots sharing 120 kW, while the largest have 10+ spots and 500+ kW of combined peak power.

The average net value is pretty stable, slowly decreasing from around $300,000 at the end of Q1 ($128.5 million and 425 locations).

“As of September 30, 2015 and December 31, 2014, the net book value of our Supercharger network was $152.4 million and $107.8 million and currently includes 536 locations globally. We plan to continue investing in our Supercharger network for the foreseeable future, including in North America, Europe and Asia and expect such spending to be approximately 5% of total capital spending over the next 12 months. During 2015, this investment will grow our Supercharger network by about 50%. We allocate Supercharger related expenses to cost of automotive revenues and selling, general, and administrative expenses. These costs were immaterial for all periods presented.”

The question is how does net book value apply to the total cost of Supercharger network (before depreciation, amortization or impairment costs were deducted along the way)? A small number of oldest stations have been around for a few years, but most are no more than 2 years old.

Taking into consideration $20,000 exemplary net income from every Tesla Model S sold, Tesla would need to sell 7,700 cars to pay the $154 million for the network (we believe excluding further costs of energy and maintenance). If the current net value is lower than cost at installation, then it would be even more Model S sales needed out of 90,000 already sold.

111 Supercharger locations added during Q2 and Q3 would be about $31.5 million in net value (just 1,575 cars at $20,000 net income need to be sold to pay the bill), while 23,135 cars were sold during the same period.

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56 responses to "Net Book Value Of Tesla Supercharger Network Is $152.4 Million"

  1. MarkSTJ says:

    If I can get a model 3 for less than $30,000 (net) I would gladly pay $10 every time I needed to use the network. The network could become a large source of revenue for Tesla. GM and Nissan could really contribute if they weren’t so short sighted.

    1. SJC says:

      For the last 100 years the car makers wanted fuel revenue, but back then they made the deal with the devil and Standard Oil.

      1. Trace says:

        They were also making alcohol engines in hopes of replacking gas back in the 1900s. Then Rockefeller gave a large donation to the Temperance Movement, which led to… Prohibition!

        Convenient, huh?

  2. Ian says:

    The super charger network is a loss leader. It’s dollar value is irrelevant compared to its potential for generating revenue for Tesla.

    1. Pushmi-Pullyu says:

      Indeed.

    2. pjwood1 says:

      Careful, big difference between “book” and market value. If we were to speculate the network’s sale price, it would be a multiple of this. I mean, just imagine what an oil company, or large automotive OEM, might pay to turn it off.

  3. Boris says:

    They should so be charging people for using those superchargers. Anything that’s free gets abused sooner or later.

    1. Ziv says:

      I would bet that the III will have to pay to use the system. And in a few years the newer base model S will probably have to pay as well. It will be a premium item for the people that buy the D’s or better.
      What I find amazing is how LITTLE it has cost Tesla to put in place a nearly nationwide Supercharger system. Obviously there are still huge gaps and it is really Interstate-centric, but it is a heck of an achievement.

      1. GSP says:

        World-wide.

        GSP

        1. Ziv says:

          My error. It makes the $154Mn seem like even a better deal. I don’t pay much attention to the Europe map, but the US/Canada map is filling in nicely.
          My chances of driving an electric car in Europe are somewhere between slim and none. I can, however, see myself buying a Tesla III in a couple years and being able to use the Supercharger network would make a huge difference, fee for charge, or not.

          1. EVZ3 says:

            @Ziv
            Anyone could also say weither alien or not: “I don’t pay much attention to the US map, but the Europe map is filling in nicely.
            My chances of driving an electric car in USA are somewhere between slim and none.”

            Comments like these are sad on so many levels.

            DCFC is really helpful everywhere!

            1. Ziv says:

              I take your point EV, but I work in the world that impacts me directly. I wish European drivers all the best, but the chances of I-10 or I-90 getting an extra pair of chargers makes a much bigger difference to me than whether Europe gets 50 more chargers.
              I would imagine most Europeans care a great deal more about the Euro map rather than the North American map. If I stack idealistic up against pragmatic, pragmatic wins every time. I think that probably indicates why I drive a Volt and not a Leaf.
              And I am guessing that you are a dedicated BEV guy judging from your tag line. 😉

        2. heisenberght says:

          You mean 1st-World-Wide ? 😉 None yet in africa? What about south america? Mexico? India?

          I see that it does not make sense for Tesla to put a lot of money there, but it would at least be nice to see at least some, just as a marketing gag or something. Prepare the market, just 1 per country. More seriously: We tend to forget some markets in all our discussion, that’s kind of sad for two reasons:

          1st: lot’s of people live there, we just were lucky

          2nd: our old used dirty cars end up there quite often, if we want to reduce pollution on a global scale those markets have to be adressed.

          I see that Tesla is maybe not well suited to cover such markets. However I hope for expansion. At least in Mexico there are some rich people who would afford a Tesla – don’t ask where that money comes from 😉

          Regarding Europe: There is still a quite huge blind spot in spain, which is astonishing. While spain does not have that much money, OK, potential customers from germany wonder how they can go on vaccation?

          1. JP White says:

            Mexico will probably be next. In a shareholder conference in June this year….

            “Musk also said he would begin selling Tesla cars in Mexico before the end of the year, putting the company’s marketing and sales flag in all three North American countries. ”

            http://www.ibtimes.com/tesla-motors-tsla-annual-shareholder-meeting-five-takeaways-ceo-elon-musks-1959333

    2. kdawg says:

      Well, they did pay $2000 for the Superchargers access, so not really free.

      1. Josh says:

        $2000 option was only on the 60 version. All 85s had in included for free, same deal with all versions now (change started with the 70).

        But using the $2000 number is more appropriate than the $20k number used in the article, since that is what Tesla valued it at.

        Any way you slice it, it makes great business sense for Tesla to develop the network. Other OEMs that are near break even on EV gross margins won’t be able to make the math work.

        1. ggpa says:

          +1

          Assuming $2000 per car was collected for the Superchargers, then it cost the company hardly anything to build the Superchargers. It was a wise decision from Tesla to build them.

        2. kdawg says:

          Just because it’s baked into the price doesn’t mean it’s free. Tesla let the cat out of the bag when they optioned it out on the 60kWh. Model S 70/85/90 owners are still paying for the Supercharger access whether they know it or not.

          Saying it’s free is sort of like saying, you get 4 free tires when you buy a Model S.

          1. Boris says:

            Not sure I agree. Yes it’s prepaid, but it’s as if someone prepaid me all you can eat buffet at a restaurant thinking I’ll go in once a week. You know people would start going in more than once a week, then they would start taking food home etc. Tesla has already warned some people of overusing the local superchargers. Free supercharging on Model 3 would so get abused, but then for Tesla to break even, they would have to charge people not $2K but $4K and all of a sudden that’s not competitive. Adding $1K to every car and charging $10 for each recharge seems much more fair to everyone.

            1. kdawg says:

              I don’t think there is much abuse w/the Superchargers. Just a few people. In fact most charging of the Model S is done at home. I forget the percentages right now.

              At $2000/car for Supercharger access, Tesla is making money on the deal. I don’t see a need to increase the price.

            2. Trace says:

              They could always go to a monthly fee program for the heavy users, and to cut down on the abusers.

              It’d be much more expensive to retrofit all these chargers with credit card slots.

              1. s says:

                I hope they do something like that. You get 10 (20, whatever number makes sense for most people) free charges per year. If you go over, you get a warning and you ‘borrow’ from the future. But eventually if you keep going over they lock you out and if you want unlimited access, you pay a monthly subscription.

        3. Pushmi-Pullyu says:

          Josh said:

          “$2000 option was only on the 60 version. All 85s had in included for free, same deal with all versions now (change started with the 70).”

          Well, Tesla describes the $2000 fee as being included in the cost of new Model S’s… as though it’s standard equipment.

          Whether or not it makes sense to describe the cost of a loss leader as a “fee”, when you don’t have the option of not paying for it, is a matter of perspective, not a matter of right or wrong. And of course, the Supercharger system is a loss leader. From Tesla’s perspective, its primary purpose is to promote car sales and to generate free publicity from media coverage of Superchargers.

          “But using the $2000 number is more appropriate than the $20k number used in the article, since that is what Tesla valued it at.”

          Hmmm, well the article doesn’t value Supercharger access at $20,000; that’s what the article claims Tesla makes on each car. But I agree that it makes sense to value Supercharger access at $2000 since that’s the price Tesla charged.

          “The value of a thing is the price someone is willing to pay.”

        4. Josh says:

          Thanks all for the correction.

          “Free” is absolutely the wrong term to use there. “Included” is what I was thinking/meaning.

          There is sloppy math related to Tesla battery costs and included options, so I wanted to point out that the vast majority did not fork over specific cash for the SuperCharging option.

          $2k is the best guess at the “cost per vehicle” of the supercharging network, although I bet the cost is lower since that number is 3 years old now.

  4. Big Solar says:

    154 million, at least they are putting their money where their mouth is.

    1. Josh says:

      The dollar amount is actually kindof small in Tesla terms. They burned ~$500 million in cash in just Q3 of this year. So all of that money could of theoretically tripled the size of the network, but was spent on Model X and Gigafactory (and presumably a little on Model 3).

      1. Well Josh, it’s a good thing EV’s are relatively cheap to build – “The dollar amount is actually kind of small in Tesla terms. They burned ~$500 million in cash in just Q3 of this year.” – since my employer, Bombardier, blew threw an excess (Read: more than they earned!) of a bit larger number: $4,900,000,000! Yup, the C-Series Airliner development cost them 4.9 Billion over their earnings, in just the 3rd Quarter!!

        So Tesla has a much better financial condition in comparison!

        1. sven says:

          I commute to and from work on a Bombardier subway train everyday in NYC. Keep up the good work! 😀

        2. Josh says:

          Well financial condition has many more factors. I don’t know enough about your employer to make a good comparison.

          I work in another field with massive capital R&D projects (wind energy), so I can relate a bit. I hope the investment in the new product pays off for you guys.

      2. Big Solar says:

        its still money and its where their mouth is.

  5. Just_Chris says:

    I think the hardware cost for a 50kW fast charger is about $30k so the $50k number doesn’t seem unreasonable per space including installation and land.

    If I was an investor I am not all that sure if I would worry too much about the cost of the supercharger network at the moment. It is quite clearly a market differentiation between Tesla and competitors. Audi or Nissan may bring out a 200+ mile BEV by 20XX but they will not have a supercharger network. Time will tell if this is important (I think in the US it is but in the EU I am not so sure). If it makes little difference to customers then it starts to look like a big cost for little gain but if it is essential and all the other car makers have to build a network or pay Tesla to use theirs then it looks like a pretty good investment.

    1. Cosmacelf says:

      Yes, the Supercharger network is a giant competitive advantage that they have a monopoly on. Every time I hear the press crow about a Tesla competitor, I dismiss it since they don’t have a high speed charging network.

  6. Three Electrics says:

    The Supercharger network is cheap and easily replicable. BMW spent 1/15 the cost of the network on a single Super Bowl ad for the i3. The question is whether it makes sense to build out a proprietary network, or jointly build out something for all to share.

    1. ggpa says:

      Well, if we assume BMW wants to catch up, it will cost them a lot more than it cost Tesla.

      Because Tesla was first, they could slowly develop their own chargers, and build out the network very cheaply.

      1. Just_Chris says:

        I really don’t think that would be the case. If BMW was to replicate what Tesla has done it would be far easier and probably a lot cheaper because it has been done before. A lot of the things Tesla had to find out first time are now open for everyone to see. Tesla has a head start but they have not won the race.

  7. Speculawyer says:

    But that network is probably one of their most valuable assets. No one else that tries to build long range EVs has a network that allows you to go coast to coast in the USA and all over Europe.

    1. ggpa says:

      +1 The network adds a lot of value to every Tesla vehicle. Much more than the $2000 per vehicle that it cost to build.

      1. Pushmi-Pullyu says:

        You’re confusing cost with price. $2000 is the price Tesla charged for access to the Supercharger network. But the network is a loss leader, which means it costs Tesla more than that per car to build, maintain, and power it.

        Assuming the figures in the article are accurate, $152.4 million and 90,000 Model S’s sold, that comes to $1693 per car just to build the network, plus an unknown amount of money to maintain and power it for the lifetime of the car.

        1. ModernMarvelFan says:

          “$152.4 million and 90,000 Model S’s sold, that comes to $1693 per car just to build the network, plus an unknown amount of money to maintain and power it for the lifetime of the car.”

          That is true.

          But with 90K car sold, you already got $307x 90K = $27 million in spare cash for upkeep of the network. As more units are sold, more cash will flow in, do you think it takes more than $27 million in upkeep of the current network going forward?

          1. Pushmi-Pullyu says:

            What I think is that it’s pretty silly to talk about Tesla’s finances as though all the gross profit they’re making could be used to build more Superchargers.

            It would also be a very dangerous thing to depend on future sales to support the cost for powering and maintaining the Supercharger network. That’s a Ponzi scheme. If Tesla is financially responsible, it will always figure the cost of the Supercharger network on the basis of current income, not future income. Depending on continual future growth means it would inevitably collapse, because no company, not even Tesla, can continue growing in size forever.

            There will come a year, hopefully some decades in the future, when Tesla’s growth will taper off, and the company won’t want to be caught in a cash-flow crunch because they were building out the Supercharger network based on the unrealistic idea of eternal growth.

            1. ModernMarvelFan says:

              “What I think is that it’s pretty silly to talk about Tesla’s finances as though all the gross profit they’re making could be used to build more Superchargers.”

              Not gross profit, only those “profit” left over from the $2000 SC access fee.

        2. ggpa says:

          PP – I am not confusing anything. It seems that the $2000 per vehicle is roughly what it cost Tesla to build the network. But that is secondary …

          My main point is that the value that it provides is much more than $2000. It is hard to quantify why it is worth more, but perhaps one datapoint is that many BMW i3 buyers are willing to pay $4000 for the Rex option.

        3. Three Electrics says:

          To put that in perspective, BMW spends more than the cost of a supercharger network each year on TV ads alone.

          1. Rick Danger says:

            Maybe, but they’re *not* putting it into a Supercharger network, nor are any of the other “major players.”

            If it’s so easy, let’s see some action, not a lot of empty words.

  8. ModernMarvelFan says:

    $154million @ $2k per car is only 77,000 cars.

    I think Tesla got that more than covered.

    1. +1

      Although net book value almost certainly reflects depreciation, so their cost would presumably be higher.

      That $152 million does not include operating costs, i.e. electricity and maintenance.

      Despite all that, as you point out, they’re probably doing very will with the SC network “product”

      I certainly appreciate it. Huge value add for Tesla.

      1. ModernMarvelFan says:

        I think Tesla has it more than covered with the cars sold.

        Now, with more cars coming online, the demand will increase and so are upkeeps, but tesla can adjust the “cost” to the car with the upkeep cost on per car basis.

  9. John Hollenberg says:

    And to think they could have built 75 Fool Cell stations for about the same amount of money… yes, I can see that Fool Cell is the future.

    1. Pushmi-Pullyu says:

      And unfortunately, if future H2 fueling stations are like current ones, those 75 stations would only be able to supply about 2250 “fool cell” cars… and even that number is being optimistic.

  10. Nelson says:

    How do you can you set a value to something that helps you sell something else. How many Model S owners you think bought the car because of the growing Nationwide Supercharging network?

    NPNS! SBF!
    Volt#671

  11. Bigbearballs says:

    Could the superchargers charge users 5 cents a mile? 100 miles would cost $5, about the equivalent of what a 40mpg car takes to drive that far using 2.5 gallons at $2/gallon.

    1. Big Solar says:

      I think it would be easier to charge per KWh.

  12. LOU says:

    Funny to read the direction and tone of some of the comments. For me, the value in a SC network is the ability to drive your BEV beyond its stated range. Most of us non Tesla drivers would gladly pay a reasonable fee for those occasional times when we’d need to charge at a SC location. When the fabled 200 mile BEVs become a reality, it is the ability to travel beyond 100 miles one way that will prove the value of a solid QC/SC network. That means you can sell the “average Joe” on the concept of electrification and he has little valid argument that his car is limited in what it can do.

    Most of us are not concerned with ROI, or “value” to tesla stock, etc in regards to the SC’s. We just want to be able to drive our cars and on that trip beyond 100 miles we know we can plug in somewhere and get refilled in a reasonable time. Whether it is Tesla, or Nissan or CCS, none of that matters to us as long as we can access it.

    Lou

  13. jim stack says:

    Instead of Millions in advertising Tesla puts it in Super Chargers that help sell a lot more than some silly ad. It is also an asset that Tesla owns.
    No other car maker or charging company is even close. I think they made a great choice.

    1. Rick Danger says:

      +1.