Let's assume for the sake of this article that the future of personal mobility is indeed pure EVs (a scenario where electric cars will come without range extender or similar gas-powered hybrid option, i.e. just a medium-size or large battery pack as energy source).
In this scenario, two things have to happen:
1. Battery prices have to come down a lot and battery manufacturing has to increase multiple times compared to the present output. EV car companies such as Tesla - alone or with a battery partner such as Panasonic, Samsung or LG - have to build giant battery factories needed for mass-produced EV cars in the near future. TSLA competitors in the EV space such as Renault-Nissan already completed this move:
Nissan's New US Battery Plant Shows Major Dedication To EVs
(Nissan-Renault has two similar battery plants in Japan and Europe which in total required investments of billions of dollars. For details, please refer to Nissan-Renault press releases and financial reports or read my upcoming Instablog on the investments needed).
I foresee a future (always assuming a pure EV scenario) where most car manufacturers build their own battery plants - or at least form a joint-venture with a battery company because battery technology (and manufacturing capability) is becoming so important for them.
The problem is that the battery technology race is wide open, investing billions in the "wrong" (outdated) technology will be very costly. For example, R&D is ongoing in nanowires (en.wikipedia.org/wiki/Nanowire_battery ):
Next-generation Li-Ion batteries are likely to make use of silicon anodes that utilize silicon nanotubes, or a comparable coating process. This will result in significantly higher energy storage and longer battery life.
In addition, entirely new battery types such as Lithium-Air or Lithium-Sulfur could one day replace current EV batteries.
It will be a very difficult timing decision for TSLA and its car sector competitors when the "right time" has come to invest billions of dollars into battery manufacturing. TSLA needs a giant battery factory to be able to produce/secure enough battery packs for its upcoming mass-market car (due later this decade):
Tesla's solution to battery shortages is to build its own 'giga factory'
[...] Musk describes a "giga factory" that would be comparable in size to "all lithium-ion production in the world".
Recent battery technology history is full of promising battery start-ups who had delays over years, if not decades to finally come to market - as well as many public failures or bankruptcies (former publicly traded A123 comes to mind).
2. There have to be better and more public fast-charging (DC ) options, especially for people who have no charging options overnight in their own garage. This is especially important for the mass market (currently, the ASP for new cars is about 30-35k USD) where the percentage of homeowners is smaller compared to tenants (with some of the apartment owners living in highrises with no garage access or personal outdoor plug at all).
Other future charging options include retro-fitting existing road infrastructure (e.g. adding EV charging plugs to street lights *) or wireless charging when the car (or bus) is stopping or parked. (Wireless charging is probably years off, new standards have to emerge first. At the moment, the prototype systems aren't compatible across different vendors).
Combining the need for 1. and 2. outlined above, some TSLA investors think that the company can somehow license...
- its battery technology and battery management systems (NYSE:BMS) and
- its proprietary "Supercharger" network
to other (car) companies in the future.
In short, Tesla can become the ExxonMobil of the EV age in this view and not "just" a new EV manufacturer on a global scale.
I don't see any of the above happening - partly for strategic reasons, partly for technical reasons as outlined below in more detail:
Why should the rest of the car world adopt Tesla chargers/charging technology and become dependent on TSLA long-term (always assuming the future of cars is pure EV transportation)?
The other car companies won't be as stupid as IBM to repeat a mistake in the early 80s when IBM licensed MSFT's operating system - they have already created two standards of their own with standardized plugs (namely Chademo and CCS, more on this below). That is the strategic part.
The technical/engineering perspective focuses on implementation of these two (DC fast-charging) standards:
- CCS (Combined Charging System, also known as SAE Combo **)
Both systems allow to re-charge a small or medium-range battery up to 80% or even 100% in about 30 minutes.
While Chademo is the older DC charging system favored by Asian manufacturers, CCS is the newer choice of all car companies in the U.S. and Europe from 2013 onwards - except for Tesla.
Therefore, TSLA will most likely not be able to have its third proprietary standard "forced" on other car companies, especially because the other brands already have mass-market EV cars on sale now (Nissan LEAF...) or coming in 2014-2016 (BMW i3, VW Golf and VW e-up, KIA Soul...). TSLA won't have a car in this market segment until 2017.
Better Place (a now bankrupt company from Israel) tried a similar model with battery swapping stations and failed. If Better Place or Tesla were successful, they would become the Microsoft of the electric car industry:
Making money (license fees) for each EV (battery) sold and/or charged, swapped.
The big car companies won't repeat the mistake IBM made giving the control keys to MSFT as I mentioned above.
Generally speaking, all these "technology licensing and vertical integration ideas" strike me as wishful thinking by TSLA investors.
I also don't see any current efforts from TSLA to market/license its Supercharger network to others. It's doubtful that even the Mercedes B EV (Daimler being a TSLA investor) will include support for Supercharging in late 2014.
Regarding selling battery packs and drive trains to other car companies, TSLA is also quite low key (look at revenue numbers from this systems segment versus TSLA car sales revenue, it's almost at zero at the moment):
TSLA reiterated in its Q3 2013 conference call (November 5, 2013) that it has trouble manufacturing/procuring enough cells with/from partner Panasonic. Tesla probably isn't even happy having to supply Mercedes B models because it doesn't have enough batteries for its own Model S and X cars at the moment and in the near future. The Toyota RAV EV (where TSLA supplies parts for its second investor Toyota) also has no Supercharger access.
Finally, governments around the world will support (with tax money) combined CCS and Chademo plug stations since these standards are not tied to a single brand/car company.
One early project implementation is currently being built in the Netherlands (marketed as "Fastned"); the entire country will be covered with charging systems offering both CCS and Chademo plugs by the end of 2015:
In total, Fastned will put down 200 charging stations in the Netherlands. Together, these stations form a nationwide network and the ability to charge every 40 km of highway.
Other European countries such as the UK, Ireland and Switzerland have similar initiatives planned. Estonia (as of 2013, the PR below is from early 2012 announcing the project before it was built) already has a nationwide charging network based on Chademo installed:
Estonia orders 200 DC chargers to create the world's first nationwide fast-charging network for electric vehicles
Therefore, Tesla will have to compete not only with the rest of the auto industry but also with public money subsidizing the other two charging standards in many countries.
Because of these developments, Tesla is soon offering a Chademo adapter for the Model S and might offer a CCS adapter one day (?) - otherwise Tesla cars will only be able to use slower AC (even if the plugs are called "Fast AC)") charging plugs at these public stations.
Large manufacturers such as ABB are now (end of 2013, it took some time to pass international safety certifications) selling 2-in-1 or even 3-in-1 (including AC) charging stations, offering two or three plugs:
- "Fast" AC
These charging stations will allow EV drivers to rapidly charge at any of these stations regardless what brand they drive.
Policy makers using public funds can now sign off on these combo chargers (Chademo, CCS and fast AC) - virtually every available and future EV car is finally supported. There was a high risk until now choosing a proprietary technology path going nowhere. This risk is now gone.
The likely outcome therefore is: Tesla will have to adapt to the other dominant two (DC) fast-charge standards over time - not the other way around.
Update: One day, we also might have wireless charging standards with no need for cables and plugs. These standards will again take time to agree upon and deploy. First developments happening in this space:
SAE International Announces Agreement On Wireless Power Transfer Frequency For EVs
* An interesting start-up working on such a system (" intelligent charging cable with a street light integrated system socket") in Germany is: ubitricity.com
** A technical detail about capabilities and charging times: Since TSLA proponents keep arguing that the "Supercharger" system is faster and better (currently 90-120 kW, being upgraded in 2013 and 2014 to 135 kW): The CCS standard is designed to handle up to 86-170 kW DC should the need arise in the future for longer-range EVs with larger battery packs: http://bit.ly/1aEqn67 (PDF file, overview of CCS). The Chademo standard/plug is built to accept up to 100kW in the future.
As for the marketing argument that TSLA Superchargers are "free forever" for Model S (and future Model X and Gen III car owners):
"Free" of course is never free. The charging and station price is built into the price of every Model S or sold as a separate $2k option upon car delivery or $2.5k later on ("free" is a marketing illusion). If needed, the rest of the car industry can copy this "free" model anytime. In fact, they will spend less because Chademo or CCs are standards, there will be many more charging stations operated by third-parties. (Most stations built from now on will offer both Chademo and CCS plugs, further saving on both the installation costs and space needed.)
For example, EV vendors such as Nissan or BMW could offer buyers a smartphone app or NFC-enabled card for xyz years of "free" DC charging and have contracts in place with major charging networks (instead of building their own stations and/or using a proprietary standard as TSLA does). As for cell phones, "roaming" agreements are being worked out so that a car owners can charge on other large charge networks without having to sign multiple agreements or access codes.
Disclosure: I am short TSLA.