Tesla (NASDAQ: TSLA) faces a growing problem: overcrowding at certain Supercharger stations on peak travel days. The availability of a vast Supercharger network is an important selling point for Tesla, so the company must ensure that chargers are available for its customers when they are needed most.
Continue Reading Below
Over the past six months, Tesla has started to address this issue with a few policy changes. Earlier this week, the company made its boldest move yet, announcing plans to double the size of the Supercharger network in 2017. However, the number of Teslas on the road is rising so quickly that this move won't fix the overcrowding problems for long.
The scope of the problem
To be clear, there is space available at most Supercharger sites most of the time. But some Supercharger locations tend to be more crowded than others. During peak times -- such as holiday weekends when lots of people are making long trips -- some Supercharger sites have developed unbearably long lines.
With Tesla sales on the rise, overcrowding at Superchargers has become an issue. Image source: Tesla.
For example, one Supercharger site in California had a roughly two hour wait on the day after Christmas in 2015. While this was an unusually bad incident, there have been numerous user reports of long Supercharger lines in the past couple of years.
Even Elon Musk recognizes that this overcrowding is a real problem. Earlier this year, he called increasing Supercharger capacity a "top priority" for Tesla.
Tesla makes some changes
In late 2016, Tesla announced two key changes designed to address overcrowding at certain Supercharger sites. First, it eliminated the lifetime free Supercharging perk for cars ordered after January 15 (or delivered after April 15). Instead, new cars will come with an annual free charging allowance of 400 kWh, good for about 1,000 miles of range. There will be a nominal fee for users who go past their allowance in a given year.
Second, Tesla has implemented an "idle fee" of $0.40/minute. This is charged to Tesla owners who leave their cars parked at Supercharger stalls for more than five minutes after the car has finished charging.
These two program changes are mainly designed to cut down on abuse. The first change addresses some Tesla owners' frequent use of local Superchargers to save a few dollars rather than charging at home. The second change penalizes people who waste charging capacity by parking their cars at Supercharger stalls for hours at a time.
Tesla is cracking down on abuse of the Supercharger system. Image source: Tesla.
Tesla has also added a "live-status" feature that allows drivers to check how busy a particular Supercharger location is in real-time. This will help Tesla owners avoid the most congested Superchargers.
Growing the network
Since early 2017, Tesla has been promising further action to address long lines at Supercharger locations. According to its recent announcement, there were more than 5,000 Superchargers operating at the beginning of the year, and Tesla plans to double that number to more than 10,000 by year-end.
Tesla's plan includes expanding existing Supercharger locations, building new Supercharger sites with dozens of stalls along heavily traveled routes, and building some sites closer to city centers to serve Tesla owners who can't charge at home.
In California alone -- home to the highest concentration of Tesla owners -- the company plans to build another 1,000 Superchargers this year. In the short term, this should help relieve some of the worst congestion problems.
Technology is the only real solution
The flaw in the Supercharger expansion plan is that the number of Teslas on the road is set to grow at an exponential rate in the next few years -- at least if Tesla manages to hit its ambitious Model 3 production and sales targets.
Based on Tesla's plan to ramp up total output to 1 million vehicles per year by 2020, there could be close to 4 million Teslas on the road five years from now, up from a little more than 200,000 today. It would be extremely expensive -- not to mention a logistical nightmare -- to add Supercharger stalls at a comparable rate. And in some congested corridors, it could be hard to find enough land to build the massive Supercharger sites that would be needed to meet future demand.
Faster charging could be a potential solution, though. Tesla claims that its Superchargers can provide 170 miles of range in as little as 30 minutes. However, Elon Musk and other top Tesla executives have hinted that future Supercharger iterations will be able to reduce charging times to as little as 5-10 minutes.
There are significant technical hurdles to reducing charging times so drastically. But if Tesla can pull this off, it would be a huge coup. First, faster charging times would make Supercharger use far more convenient. Second, by reducing the time needed to charge, Tesla could provide any given amount of "peak" capacity with a fraction of the Supercharger stalls it would otherwise need.
If Tesla can reduce charging times while rapidly adding Superchargers over the next few years, it just might be able to keep ahead of the expected growth in charging demand. But based on its aggressive Model 3 launch schedule, Tesla will need to move quickly. Otherwise, it risks disappointing hundreds of thousands of customers with long Supercharger wait times on future holiday weekends.
10 stocks we like better than TeslaWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Tesla wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of April 3, 2017