In The Land Of Irrelevant Numbers, Tesla Gave Us A Goldmine

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 |  About: Tesla Motors (TSLA)
by: Siddharth Dalal

Summary

Tesla Superchargers are a profit center, not a cost.

Recently Tesla blogged about actual charging numbers which were painted as irrelevant to investors.

I will use those numbers to expand on my previous calculations on supercharger profits.

On Thursday, July 10, Seeking Alpha contributor Paulo Santos posted an article stating that Tesla (NASDAQ:TSLA) made a blog post that is irrelevant to investors. I'm not sure why it is expected to be the norm to expect every corporate communication from Tesla to have some relevance to investors, however, this specific one was very relevant. I have speculated before that Supercharging can be extremely profitable for Tesla. The First time was based on my assumptions and the second time based on educated guesses and other data from Tesla.

However, at those times, the supercharger network was much smaller and the number of Tesla cars on the road was also much smaller. Now finally, we have some real numbers from the Tesla blog post in question:

In June, Tesla's Supercharger network passed a charging milestone, delivering more than 1 GWh of energy to Model S vehicles in a single month. That energy accounts for a collective 3.7 million miles driven, 168,000 gallons of gas saved, and 4.2 million pounds of carbon dioxide offset. That's like driving to the moon and back seven and a half times, and nixing a day's worth of CO2 from 73,684 Americans.

Using these we can calculate how profitable the Supercharger network really can be. There were an estimated 27,000 Model S in the US in June - 23,800 from previous quarters (Tesla does not break out numbers by country so these are estimates) and just over 3000 estimated from this quarter (assuming similar sales in Q2 and Q1). There are currently 102 Supercharger stations in the US.

Tesla had been selling the Model S for 24 months so on average Tesla sold 1125 Model S vehicles a month. If we assume 80% of people opted for the Supercharger option (conservative assumption, the adoption is close to 100%) and paid $2000 for the privilege, then Tesla made $1.8 million per month for Supercharger access.

If we assume that Tesla paid 12c/kWh, the US average, then it cost Tesla just $120,000 in electricity!

Let's do some further analysis. Assuming average driving of 12,000 miles a year, a fleet of 27,000 cars would drive 27 million miles a month. Of these 3.7 million miles were driven using the Supercharger network representing approximately 14% of miles driven. At some point the supercharger rollout will be complete and expansion will involve adding more bays to the chargers, a much smaller expense than a complete supercharger station.

As Tesla's growth story continues, sales rates will continue to grow with the rollout of new models, more brand recognition and general acceptance of electric vehicles. This will keep the supercharger revenues on a continued path of growth handily outpacing costs and provide Tesla better margins than other automakers going forward furthering my previous thesis about Tesla being more than just an automaker and going to $1000 by 2020.

Disclosure: The author is long TSLA. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.