There may be an unannounced technology.
Because shaving pennies for decades in residuals is very worthwhile. Plus the company has longer-term control over the market.
Who needs brakes when you have FSD?
Andy
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I bought a Tesla yesterday for three dollars US. No brakes, the body needs work.
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Iâm sure youâre right, itâs a low margin business. But at least itâs a business, or there wouldnât be a half-dozen other well funded companies trying to put chargers all up and down the interstates. So it appears that heâs pretty much washed his hands of that business without even selling it to someone who might want to roll it up into an already established network. If the long, low margin business isnât for him, well OK. How about a quick sale or something?
Meanwhile heâs laid of 10% of the workforce. Now he axes 500 people setting up charging stations, and just today theyâre rescinding offers to summer interns (?) This sounds more like desperation and chaos than some grand master plan.
New Tesla registrations in California are off, according to one report, and China is looking pretty ugly as well. I wonder if the âsupply chain disruptionâ excuse is going to work for next quarter?
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Continuing my contrarian take on this - sell it to who? Sure, thereâs half a dozen companies trying to put up chargersâŚbut I donât think âwell-fundedâ describes them any more. Look at Chargepoint - the largest. It once had a market cap of close to $19 billion, but itâs lost nearly 97% of its value and is at about $600M - and thatâs with the prospect of billions of federal dollars to subsidize charging. Itâs still losing money hand over fist, despite the continued expansion of the U.S. EV fleet.
It may simply be the case that charging isnât simply a low margin business. It may not be a business at all. The thing about electrons is that theyâre pretty cheap, and theyâre available at home to a lot of people. Thatâs part of the promise of the premise with EVâs - that you dramatically reduce your fuel costs. The flip side of that is that thereâs not a lot of money to be made selling electrons. If a fill up at home costs less than $10, customer demand is going to be super price-sensitive.
Charging may only be economically viable as an amenity or bundled service (ie. a perk at the office or a lure to get people to hang at a mall), a governmentally mandated feature of buildings (like water fountains), an extension of a power utility⌠or as an exclusive benefit to buying a particular brand of car. Once the last option got taken off the table, maybe Tesla correctly concluded that there just wasnât any value there any more.
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You may be right, but for sure there is a need along the Interstates if anyone is ever to travel more than a few hundred miles. Iâd opine that theyâre also needed at various other places (WalMarts would be good if done universally) because, you know, gas stations, and people run out.)
Traveling around here I see Teslas and other EVs fairly often in my city/county. Traveling to Maryville or Oak Ridge - roughly 10-15 miles out as I do from time to time I have yet to see a single one. If anyone is serious about this âbeing the next waveâ then remote charging is a significant issue. I have trouble seeing one of the parties getting behind it to any significant degree, however.
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Apparently they are working on it and expect it to be completed in 2030.
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I completely agree. But that doesnât necessarily mean it can ever be cost-effective to run a business covering that need. To use a trivial example, people need bathrooms along the interstate, but for obvious reasons we donât expect a private business selling bathroom uses (either exclusively or primarily) to be able to make money. So we have government-run rest stops.
I wonder if the economics of charging are a big reason behind Toyotaâs idiosyncratic insistence on trying to make hydrogen cars happen - which otherwise is a bit hard to explain. As you point out, a motor vehicle needs to have places to refuel to be a useful widely adopted product. If running chargers canât work as a business because electricity is both cheap and ubiquitous, that might be a core economic flaw in BEVâs. Since hydrogen is neither cheap nor ubiquitous, people can make money selling it - which might create the virtuous circle feedback loop that has yet to really manifest for EVâs.
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I have been wondering that as well, and what it might mean overall to the EV future.
10-15 miles may simply not be considered âfar enoughâ to justify chargers. If the distance was 50-75 miles, then you likely would see chargers.
Keeping my contrarian âElon is right about thisâ hat on for a moment, it really depends on autonomy.
Stepping way back, charging and range are problems that arise only when people own their own vehicles. They exist not because people are taking longer trips. They exist because people need this vehicle - the one they own - to make the entire trip.
That makes charging a logistical problem. My car canât charge while a drive it. When my car runs out of juice I need my car to refuel and complete my journey. Because Iâm tied to the car, I canât time-shift or vehicle-shift the charging. The charging needs to happen during my journey, and the car canât charge while itâs being driven - so I have to find a charger and stop and wait while it charges.
Thatâs not really the case in a TaaS world. People are just using whatever cars are available. Collectively, some cars will be charging while other cars are being used - and as the active cars run out of juice, they just swap out with cars that have been charged. Itâs the same idea that Better Place had back in the day, when they thought about swapping batteries - but instead of swapping batteries, youâre swapping cars.
If Iâm driving my car from Miami to Jacksonville, Iâll need somewhere to charge it along the way. If Iâm taking a TaaS car to Jacksonville, I wonât. The TaaS car (Car 1) drives me around halfway, coordinates with another fully charged car in the service in that area for me to switch into, and I take the second car (Car 2) the rest of the way. Car 2 charges during the first half of my trip, Car 1 charges during the second half. No need for public chargers at all, just fleet chargers.
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That would be good, but they have a long way to go. WMT has something like 5,000 locations, so far theyâve done less than 300. But I agree that having a charging station that close to so much of the population would be a big boost.
Well, I think there are more âprivate enterpriseâ rest stops than government ones. They sell gas, French fries, ice cream cones, why not electrons?
If you go out 50-75 miles thereâs even less of a case. Now youâre in the hinterland where theyâre not going to buy Teslas (or any other EV) for many many years to come, so theyâre not going to use chargers either. Chicken:egg. I used Maryville & Oak Ridge as examples because theyâre big enough to support nearly all the big box stores, multiples of each fast food franchise, and so on, yet thereâs not a fast charger in sight, not to mention any dealerships that would be pushing EVs. (Yes, they have all the major dealerships, but Iâm sure those are the ones people complain about that ânobody knows nuthinââ
If I was Hertz I would not be worried about this scenario for at least another decade, maybe two, maybe ever.
Oh, and hereâs a piece from Business Insider in which one analyst put the value of Teslaâs charging network at $100B. Except now, ???
Tesla's Supercharger Changes Tell the EV Industry: Fend for Yourselves.
They can. Absolutely! Electrons can be an amenity to another service. But they might not be a business all their own. Which makes it really hard to operate a pure-electrons business, or sell the electrons business to someone else. If itâs a feature that only makes sense when itâs a small part of a bundle of other services or products, then your standalone electron shops donât have a lot of value on the open market.
I agree. But thatâs not Teslaâs theory of the industry. They certainly believe that full autonomy is very near, and probably believe that TaaS will be a huge part of the transportation market.
Just because some analyst talking the bull case for Tesla last year thought the charging network was worth $100B doesnât mean thatâs correct - or that expanding the network in an âeveryone can use itâ world has anywhere near that value. Itâs possible that it had a lot of value in helping Tesla sell cars, but not a lot of ability to generate profit as a standalone operation. Once the linkage was broken in 2023 at the behest of the administration, supercharging going forward might not have been worth much at all. The existing installations might generate enough profit to just keep running them, sure - but the marginal benefits to either further developing the tech or implementing it in more locations might have been negligible.
I have never been in a government rest stop. I go to the local gas station nearest an off ramp.
If a toilet flushes 100k times a business does not profit from that.
Why compare selling an EV charge up to toilet water?
But the restaurant, fast food, souvenirs, gas, and other businessesâat the same locationâdo VERY well. Bathrooms draw kids, who are with their families on a trip, and âgotta go!!â means they stop (and likely buy stuff).
Because itâs something that people need, and therefore could theoretically be charged for - but isnât charged for because itâs so ubiquitously available at low cost that a standalone business canât make money offering the service.
EV charge ups might not end up being the same wayâŚbut they do face some of the same problems. Theyâre absolutely necessary to long-distance travelers, so the economic need is there. But unlike gasoline, and like toilets, most people have access to the service in their own homes, and many other facilities already offer it as a bundled amenity.
So it might not be possible to get the economics to work for a high fixed-cost, low variable cost service. Charge too much and no one will use your service, and instead will only charge up at home or work; charge too little and you canât cover your fixed costs.
Thatâs why charging might end up more like toilets than gasoline - if you want it, you canât rely on third-party businesses to come in and provide it, because a third-party business canât make enough money on selling the product. So you might need to provide it as public infrastructure or require most businesses to bundle it into their other services (again, like we do with toilets).
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I donât want autonomy in my car. I donât want my car to drive itself. Iâm really struggling to figure out why he, or anyone, thinks TaaS is going to disrupt car ownership.
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Usually they believe:
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That most people arenât like you, and would vastly prefer if they didnât have to do the driving in a car;
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That TaaS will be cheaper than car ownership, and so will displace car ownership (either entirely or in very large part) just due to basic economics; or
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That TaaS will be much safer than self-driving, so eventually everyone will be forced to switch over.
Note - autonomy isnât the same as TaaS, so you can believe that cars will be autonomous while thinking car ownership will persist. And some of the above are interrelated - part of the reason people think TaaS will be cheaper, for example, is that they believe AVâs will be safer (and therefore have lower insurance costs) than self-driven cars.
Would have could have should have
Meanwhile, this is an econ board.
Iâm not sure that is true. Musk said after the layoffs that the supercharger network would continue to expand but more slowly, with an emphasis now on increasing the number of chargers in existing locations.
Impossible to assess without any numbers but it is possible with over 2,000 charging locations in the US that most of the obvious sites are done. What might be needed now is time to gather data to determine the second tier of sites.
The most profitable business model is probably high volume stations with lots of superchargers, solar canopies, and battery storage. An example is the 84 supercharger site in Quartzite AZ.
This may be the direction Tesla is heading with its supercharger network. The announced supercharger station in Yeehaw Junction, FL is supposed to eventually have 200 stalls.
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