Ahead of Model 3, Tesla Motors, Inc. Continues to Revamp Its Supercharger Program

By Daniel Sparks Markets Fool.com

One of the key selling points to Tesla Motors' (NASDAQ: TSLA) all-electric vehicles is the company's expansive Supercharger network. This robust network's 120 kilowatt-powered charging stations makes long-distance travel feasible in the U.S., Western Europe, China, Japan, and part of Australia -- and Tesla continues to add new markets. But the network is set to be tested when the electric-car maker brings to market its $35,000 Model 3 next year.

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Tesla Supercharger. Image source: The Motley Fool.

Ahead of Model 3's launch, and in anticipation of higher demand for the charging locations, Tesla is making lots of changes its Supercharger program.

Supercharger idling fees

Thanks to the Model 3's lower price point compared with Tesla's Model S and X vehicles, Tesla expects that the Model 3 will help take annual production from a run rate of 100,000 units today to 500,000 in 2018. With five times as many cars on the road, Tesla needs to ensure the stations don't become congested -- a problem Tesla has already been dealing with in markets where electric vehicles are popular -- namely, California and Norway.

But the automaker announced a solution on Friday it thinks will increase Supercharger availability and "make the Supercharging experience far better for everyone." To address Supercharger congestion, completely charged vehicles still sitting at a Supercharger location will now incur a fee.

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Tesla explained the move in its blog post:

The Tesla app allows owners to remotely monitor their vehicle, alerting them when their charge is nearly complete and again once fully charged. For every additional minute a car remains connected to the Supercharger, it will incur a $0.40 idle fee. If the car is moved within 5 minutes, the fee is waived. To be clear, this change is purely about increasing customer happiness and we hope to never make any money from it.

But there is one exception to this fee, Musk said in a follow-up tweet after the announcement: "We are going to modify this so that people only pay a fee if most bays are occupied. If the site is basically deserted, no problem to park."

Free forever -- but only for some

For now, every Tesla vehicle purchased gets free lifetime access to Tesla's Supercharger network when traveling long distance. But, earlier this year, Tesla announced that it will end this benefit for any orders made after Jan. 1.

Tesla detailed the change in a blog post:

"For Teslas ordered after January 1, 2017, 400 kWh of free Supercharging credits (roughly 1,000miles) will be included annually so that all owners can continue to enjoy free Supercharging during travel. Beyond that, there will be a small fee to Supercharge which will be charged incrementally and cost less than the price of filling up a comparable gas car."

The change, Tesla said, will allow the company to reinvest into its network, accelerating its growth to improving the experience for current and future owners. But Tesla was careful to emphasize that its Supercharger network "will never be a profit center for the company."

An expansion

Model 3. Image source: Tesla Motors.

Of course, fees for idle vehicles at Superchargers and the network's monetization won't be enough to fully alleviate problems associated with a rapidly growing number of Teslas on the road as the Model 3 launches at a higher volume. To this end, the company is also investing in an aggressive expansion of the network. At Tesla's Model 3 unveiling in March, the company said it planned to double its Supercharger stations, or individual charging stalls (not to be confused with Supercharger locations) around the world by the end of 2017, increasing them from about 3,600 when the Model 3 was unveiled to 7,200. Today, Tesla has 4,875 Superchargers.

Tesla's charging network is integral to its customers' experience of owning a fully electric car. By offering much faster charging than what's available for other electric cars, Tesla currently is the only manufacturer to make long-distance travel in a fully electric car feasible. So it's good to see Tesla taking steps to prepare the way for the Model 3, which management plans to begin delivering to customers sometime during the second half of 2017.

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Daniel Sparks owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.