Tesla announced that its network of supercharging stations won’t cater new customers for free anymore. Supercharging stations were one-of-a-kind charging stations across US and some other countries that allowed Tesla customers to fast charge their vehicles for free. This was one of the biggest perks of owning a Tesla. While current Tesla owners have enjoyed the privilege of travelling across the US and some other countries for free and with fast charging, new ones will not get the same luxury. The move from Tesla comes at the right time with its vehicle sales increasing fast around the globe and the expected launch of the lower cost Model 3 fast approaching, the company needs to meet market demands in terms of unit production as well as maintain customer satisfaction. Major investments from the company are going towards its lithium-ion battery Gigafactory and to increase production in its manufacturing plants to meet strong customer demand for its existing and new models. The revenue Tesla will raise from the use of Superchargers will solely be used for the expansion and maintenance of the charging network, allowing its customers to fast charge their vehicles when travelling long distance. Tesla is not making the Supercharging network a profit centre.

What it means for the customer:

• The new tariff structure that will be announced later this year won’t affect the ability of current Tesla owners to recharge for free at the company’s Supercharger network.
• In addition customers ordering their Tesla before January 1^st and getting a delivery before 1^st of April will also be exempted from this fee.
• New Tesla customers getting their delivery after 1^st April will get a 400mKW energy credit annually which translates to roughly 1000 miles of free supercharging. Post the 400mKW there will be a fee which will be levied for using the facility.
• The two places the car is mainly charged are home and office, where cars typically spend most time. In both the places the user (or their employer) pays for the electricity. The change won’t therefore add much to the current cost Tesla owners have to bear in normal usage.
• Travelling cross country with Tesla vehicles might get costlier as drivers will have to pay for the use of Superchargers along the way, or the user can plan to stay at places where electricity is cheap so they can charge the cars at lower cost or even for free in some cases.

Tesla stands to make no profit from the fees levied on the use of Superchargers, in-fact the company has mentioned that the revenue collected will be used to expand the network to cater a wider geography and customer base. The launch of Tesla Model 3 will see a spike in company’s sales, the step to monetize Superchargers in order to expand its fast charging network is the right step towards maintaining customer satisfaction and availability of charging stations.
*Source Company Filings

What it means for Tesla:

• The company will likely see an increase in orders for its Model S and Model X vehicles until January 1^st as consumer rush to place orders to lock-in free Supercharger use. Tesla will then be under pressure to deliver vehicles before the April 1^st
• The revenue collected from levying fees for using the Superchargers will be useful for the company to expand the Supercharger network to support its increasing customer base; the launch of Model 3 will dramatically increase Tesla’s installed base.
• Some of the prospective Tesla Model 3 customers who were attracted by the fact of free charging may shift to buy other EVs in the market at a lower price as compared to Model 3.

At current rates of demand Tesla is able to deliver its vehicles with in an estimated one-month timeframe from the date of ordering. The extended three-month till April 1^st to get delivery, given by the company will allow users ordering their vehicles before January 1^st to get delivery on time and enjoy the free driving perk. And for longer term the company is constantly pushing its manufacturing goals to meet high demand. The company is set to tackle problem by increasing its manufacturing capabilities with the acquisition of Grohmann Engineering. Tesla claims the expertise of Grohmann Engineering will allow it to make manufacturing plants more efficient and increase output by utilizing highly automated manufacturing methods.

The network of Superchargers is something Tesla has uniquely for itself. In order to generate incremental revenue Tesla can license the fast charging technology to other OEMs and open the Supercharger network for use by them at higher rates, keeping the facility free or low cost for its own customers. If it were to make this move it would be a boost for the overall EV market as long-range travel with EVs will become more feasible and Tesla will be able to obtain higher revenues from its Supercharger network, creating a win-win situation for all.