What Are The Benefits Of Increased Tesla Supercharger Rates?

APR 7 2018 BY EVANNEX 31

TO FUEL GROWTH, TESLA SUPERCHARGER RATES ARE GOING UP

For years, charging at a Supercharger was free for Tesla owners. However, the company eventually decided to implement Supercharger fees and recently increased its rates. Although Tesla owners might not love this decision, shareholders should be pleased. Why? According to Seeking Alpha’s ValueAnalyst, upon careful analysis — this could actually be considered a brilliant move for the company.

More Info: TESLA RAISES SUPERCHARGER RATES IN U.S.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Matt Pressman. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Model X at Tesla Supercharger (Instagram: modelxpdx)

It’s reported that “Tesla just raised the price per kilowatt-hour (“kWh”) that it charges customers at its Supercharger locations. According to Electrek, some states saw increases of as much as 100%, but rates in most regions increased by 20% to 40%. Rates in Oregon, for instance, doubled from $0.12 to $0.24 per kWh, while rates in California, the company’s biggest market, increased from $0.20 to $0.26 kWh.”

That said, Tesla reaffirmed its Superchargers will never be a “profit center” and continue to remain (significantly) less than the cost of gas. Yet, “higher rates will allow the company to fund the expansion of the Supercharger network through internal funds in addition to external, which may accelerate the expansion.” For some context, in the next five years or so, “with a fleet of size of two million units… $25 extra per year per vehicle would amount to $50 million in annualized positive bottom line impact.”

Above: A line of Tesla Superchargers (Instagram: bsprankles)

There’s another distinct advantage to this strategy. With the company’s growth, “congestion at Supercharger locations had sometimes been an issue for Tesla owners, and… the coming wave of Model 3s had some owners worried. Even though Tesla had already taken several steps, including an idle fee and letters to heavy users, higher rates at Supercharger locations will encourage more owners to instead charge their vehicles at home, freeing up Superchargers for their intended use: enhancing long-distance travel.”

And there’s another bonus to Tesla’s strategy, “higher rates increase the value of the company’s Free Unlimited Supercharging referral program, which allows Model S and Model X owners give five friends free, unlimited Supercharging with the purchase of a new Model S or Model X. By adjusting the dial on relative value propositions, some demand will shift from the Model 3… which has a long waiting list, to the Model S, which already is in volume production.”

Above: Tesla Model S charging (Instagram: myofficeswedan)

From a shareholder perspective, Tesla’s decision to increase Supercharger pricing could (ultimately) prove highly beneficial. ValueAnalyst concludes, “Tesla’s recent move is brilliant… [and] when analyzing the steps Tesla takes, investors should always consider the company’s mission statement, which is a long-term commitment, instead of getting lost in quarterly numbers.”

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Source: Seeking Alpha

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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31 Comments on "What Are The Benefits Of Increased Tesla Supercharger Rates?"

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For Tesla owners without a chance for home chargers and with a Supercharger available this fee means little due to necessity. Assuming 800 miles per month a Tesla M3 owner may pay $35 to $50 per month. Not bad at all.

Tesla’s website indicates a charging cost of $62 per 800 miles for a Model S. I would assume close to $50 per 800 miles for a Model 3. At $2.50 per gallon, a 32 mpg ICE car would use 25 gallons and cost $62.50.

Yeah – the EV energy cost is still lower – but it is not significantly lower. This slowly disappearing benefit of EVs (significantly lower energy cost) will not help convert the masses.

“At $2.50 per gallon,…”

According to gasbuddy.com the cheapest gas in the entire nation state of California is $2.79/Gal. In the Bay Area $3.20-3.50 is more realistic.

Refresh your browser Gasbag. Probably 1/3rd of the country is in the ‘green’ on the price map (below $2.52).
https://www.gasbuddy.com/GasPriceMap?z=4

Thanks for the link but That looks like 1/3 of US by area (if we exclude Alaska) which isn’t very relevant. Gasbuddy has the national average for the cheapest grade at at $2.67 and AAA pegs it at $2.66 currently. Both expect prices to rise.

In those low cost green areas like Texas and Oklahoma you’re looking at comparing $2.20-2.50 gas you need to compare that with 8-10 cents per kWh electricity …at least according to EIA. California electricity prices need to be compared with California gas prices.

Network charging rates should only apply to when you’re charging on them. For most drivers of long range vehicles that is a small fraction of miles.

“In the Bay Area $3.20-3.50 is more realistic.”

Oops. I just checked gasbuddy.com and they have the average price of gas in CA at $3.51. I’m sure The Bay Area is higher. The downside of not buying gas is I’m not in tune with current pricing.

“The downside of not buying gas is I’m not in tune with current pricing.” Amen to that! I hadn’t checked Gasbuddy in probably over a year – until I saw your link.

Considering most of these are in CA where gas is close to $3.50 the cost advantage is here to stay. Now wait for oil to go higher…despite what most on here think or wish for and you will see thos gap get to ridiculous levels. Recently added wti futures to my account.

Ironically, the EV revolution will start out forcing fuel prices lower. Once a noticeable fraction of cars are full electric, the reduced demand will force fuel suppliers to drop prices, and the trend will continue through several rounds of refinery closures. Towards the end, the few remaining refineries will be forced to distribute their fixed costs over the very small supply required, and prices will skyrocket.

There will always be a few refineries though — optimized to produce plastics, coatings, and pharmaceutical feedstocks.

This type of talk is typical for people with no knowledge of how markets work. What you are talking about is at least 30 years away. Higher oil prices are pretty much inevitable here as production keeps grinding lower and lower…not to mention if a war involving Iran would start. We are not ready for a switch and oil is used in much more than just propulsion fuels. The coming oil price increases will however do a big favor to evs and make the gasoline electricity spread even more attractive to car buyers.

Good luck on your investment.
“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.” – Rashid bin Saeed Al Maktoum, first Prime Minister of United Arab Emirates

No idea how often Teslas website updates this link: https://www.tesla.com/models/design#general_disclaimer

It states that PREMIUM gas is “$2.70/gal”…

Not bad at all? To get 800 miles travel, I can refill my 60mpg hybrid for $30 gas based on a $2.20 per gallon now. Nothing is free I guess, It never pays to charge outside of home.

You don’t have a 60 mpg hybrid or 2.20 gas. Even if you did, a pv ev combo would beat that so crawl back under your rock.

60% markup in CA. Imagine the outrage if Exxon-Mobil marked up gas at this rate.

Dinosaur,

With Pompeo and Bolton coming aboard in their new roles, I can see a disastrous Middle East war looming on the horizon. A 60% increase might be too modest if Iran has any say in how the next war plays out.

“60% markup in CA. Imagine the outrage if Exxon-Mobil marked up gas at this rate.”

The difference is with gas+ICE you’re talking about 60% price increase on 100% of miles or 60%. With a typical American drive cycle and a 200++ mile range of a Tesla we’re talking about 60% of 1-4% of miles driven or for most an increase below 2%. You don’t have to imagine what would happen if gas prices went up 1-2% because it happens frequently.

Gasbag,
I don’t understand your post. You seem to be implying that 1-4% of miles driven by a Tesla burn gasoline. What am I missing?

The piece I think you are missing is ‘home charging’; I think his point is that Supercharger usage only accounts for a small percentage of miles driven — the rest are done on home charging.

Got it. Thanks. I was stuck on 60% increase in gasoline only.

Laughing out loud, If it’s free tesla is special, does business differently from everybody else, if it’s not free tesla is super special, others cannot begin to compare, if rates going up tesla is WOW, the best. Is this evanex pathetic or what?

So don’t read it…what’s holding you back?

The extreme cheerleader spin in Evannex’s article does kinda remind me of the “Everything is Awesome” meme from “The Lego Movie”. 🙂

But hey, if it bothers you that much… nobody is putting a gun to your head and forcing you to read articles from Evannex here!

What is (not) holding him back in coming here is the orders from his Big Oil bosses to spread anti-Ev fUD!

Oh and the other thing about “Dinosaur” big oil here is he can’t do math or he is blatantly lying and hoping no one checks his math.

Tesla raised their paid SC rates in California 30%, exactly.

This isn’t about making money. It’s to avoid the flood of Model 3’s from choking up the Superchargers and pissing off Model S and X owners.

Any Model S/X buyer can grab a free referral code off the Internet. So the income from Supercharging will come from Model 3 owners.

It’s a good move If you’re selling premium vehicles.

While Tesla has said it intends for the SuperCharger network to be revenue neutral; in other words, not making a profit… At the same time, Tesla’s costs for that network have to be going up rather sharply, because they have to pay for all those extra SuperCharger stations to handle the flood of Model 3’s now coming out.

So I doubt that Tesla’s only motive for raising prices was to discourage congestion at existing SuperCharger stations. There is no evidence at all that Tesla had only one motive for raising the price, and it may well be that Tesla had more than one reason.

You’re not making profit at $0.26/kWh. Even $0.50/kWh is not really making money when you factor in everything, especially since they won’t be used for daily driving by everyone like gasoline cars need gas stations.

I like what Tesla is doing, making it bit more than home charging while having it similar to gasoline. That will keep cheapskates away from superchargers. I only wish they’d bill by time so that people don’t try to charge to 100% after tapered to hell.

Free and cheaper than home charging SUCKS!!!

Elon share his spreadsheet with you? Break down the numbers for all of us please.

You don’t need Elon’s spreadsheet to realize making pennies on $50K (more with install) will not make any profit. With Tesla’s bond rate way over 5%, you can do the math yourself to see when it becomes profitable.

In general, 5% return is the threshold for “breaking even”, because that’s easy dividend/bond rate. Why waste your time/money of doing difficult stuff for less percent when you can “park your money” and get the same? If inflation goes up, that number will also go up.

The problem with their pricing structure is that states like WA and OR get screwed. These two states have cheap, renewable power but expensive gasoline. But, since the new Supercharger prices seem to be based on the price of gasoline, they go way up, 127% in the case of WA. WA and OR are now effectively subsidizing the rest of the country.