Elon Musk just announced a brilliant move that I really didn't expect. So In this episode,
I'd like to round out my bull thesis on Tesla by talking about the controversial decision
to open Tesla's supercharging network to other vehicles and how that fits into
the bigger picture. This is a massive change that makes me think Tesla stock
is now very undervalued when I look 5 years out. Don't sleep on this!
If you enjoy this type of commentary and analysis, consider liking this video and subscribing to the
channel with all notifications turned on. That way, you'll be the first to know when I come
out with new research, regardless of how YouTube tunes its algorithm. Let's charge right into it.
Instead of relying on third-party charging networks like most other automakers,
Tesla spent years developing its own network from the ground up, which was a necessity,
considering how early Tesla entered the electric vehicle market. Today,
Tesla now has over 25,000 Superchargers at over 2,700 stations around the world.
Right now, Tesla uses its own proprietary charging connector, so only Tesla vehicles can
charge on the supercharger network. This ends up being a massive advantage they enjoy over
other automakers, since range anxiety is still one of the major factors that stop people from
buying an electric vehicle today. Range anxiety isn't really something Tesla owners experience,
because Elon Musk used his first-mover advantage to optimize the LOCATIONS of the actual charging
stations. I don't think people understand how big of a deal this is and it just got way bigger.
Very recently on Twitter, TesLatino tweeted: "Funny how many people
are now questioning why Tesla created their own proprietary charging connector
and that it's not fair for other EVs. How about no support for @elonmusk when he was
advancing the technology. His team created a reliable way to charge the fleet? Deal with it!"
Elon Musk replied: "We created our own connector, as there was no standard back then and Tesla was
only maker of long-range electric cars. It’s one fairly slim connector for both low & high power
charging. That said, we’re making our Supercharger network open to other EVs later this year."
Then Aaron S asked if it will be open to other EVs in all countries or just specific ones,
to which Elon replied: "over time, all countries." This shift will cause a lot of short-term
inconvenience to Tesla owners and they are letting Elon know that they think he's giving up
one of Tesla's biggest advantages. Here's why this is awesome for Tesla in the long-term:
First, let's talk about the supercharger network itself. Like I mentioned, the actual locations of
the supercharger are optimized to make sure that most people are always in range of one
and, as most of these tweets point out, that means they're in high traffic areas.
That makes them perfect gathering points for the electric vehicle community at large,
not just Tesla owners. There's no better way to market Teslas to their exact target
audience than to make owners of other electric vehicles go to Tesla branded
superchargers and surround them by Tesla vehicles and enthusiastic Tesla owners.
Here's another thing that might happen down the road. Recently, several major EV charging
networks signed an agreement allowing users to roam across their combined networks of over
50 thousand chargers in the US and Canada. That means electric vehicle owners would no longer need
individual accounts and memberships with each provider depending on which charger happens to
be at your mall, your work, or wherever else you go. This roaming agreement will make the
experience more like withdrawing cash at ATM machines: most cards let you use any ATM even
if it's not your bank, so everyone enjoys more access to cash through a shared infrastructure.
I can see Tesla joining this type of agreement in the future,
since this type of unified charging experience will reduce the friction associated with car
charging and accelerate the world's transition to electric vehicles. The current plug-and-charge
experience, where the charger communicates directly with the vehicle to “identify,
authenticate, authorize and bill the customer’s registered account for the charging session"
could become the norm, meaning more people can flow through each supercharger as
charging EVs there becomes simpler. Then, if most electric vehicle owners are part of this agreement
and Tesla provides the best charging experience, the supercharger network will become a MAJOR
contributor to converting electric vehicle owners in general to Tesla owners specifically.
And that leads me to my second point: the Tesla app. If Tesla opens its charging network to other
electric vehicles, that could mean that owners of other electric vehicles may have to download
the Tesla mobile app, which is how Tesla owners get that streamlined plug and charge experience
today. Think about how much exposure these users will be getting to the Tesla brand
not only at the physical chargers, but through various notifications on the app as well.
Did you know that if you owned a Tesla, you would have saved $4 dollars on this charge?
Did you know that if you owned a Tesla, you could skip the line and use one of these four
dedicated Tesla-only chargers, saving you about ten minutes of wait time? What if Tesla starts
incentivizing people to try full self-driving for a month by giving them credits at super
chargers or rewards people who already use full self-driving for their data, by giving them
supercharging credits for every autonomous mile driven? Or, an even simpler idea would be giving
people credits to the Tesla arcade or another digital service. Oops, you can only enjoy all
of these benefits if you're a Tesla owner. The app can serve as a very powerful marketing tool.
Comment below with your thoughts on other ways Tesla could market
to other EV owners through their supercharger network and their app.
That brings me to point three: When it comes to opening the superchargers, having some dedicated
charging stations only for Teslas and avoiding Tesla marketing if you already own one are just
the tip of the iceberg. As more EVs utilize the superchargers and their energy demand ramps up,
I think autobidder and other energy management software will play an increasingly important
role in making sure this infrastructure can meet demand in a profitable way.
What if, through autobidder, Tesla buys excess energy when it's cheap
and stores it at the superchargers. Then, it offers two different rates,
depending on whether you're charging a Tesla or not? What if Tesla owners pay some more
consistent price based on the average cost that Tesla paid for the energy, but non-Tesla
owners pay based on the peak cost instead? Or, what if Tesla offered pre-paid charge cards
in 1000 kilowatt hour chunks and Tesla owners got 10% percent off? I think the possibilities
on how Tesla manages the entire charging experience for non-Tesla owners are endless.
I think it's important to mention I'm not advocating for a worse charging experience
if you're a non-Tesla owner, I'm advocating for one that constantly makes you consider owning one.
That means supercharging should be a high quality, low friction experience overall
but if you owned a Tesla, it would also be a little cheaper and with less marketing,
sort of how Disney World has lower rates if you're a Florida resident,
or Androids are great phones but man, do I sometimes wish I had iMessage and Facetime.
That's the sort of difference I'm talking about Tesla building into their supercharging here.
I also want to point out that this would be the start of a powerful virtuous cycle.
As demand increases for Tesla's supercharging, Tesla is incentivized to spend money further
building out their supercharger network. As more non-Tesla owners spend money with Tesla,
Tesla would continue to expand it's lead by reinvesting that capital into more supercharging
stations and supporting infrastructure. At the end of the day, getting more non-Tesla
owners to spend money with Tesla is a huge win, and that brings me to my fourth point.
This is something that was actually pointed out to me by Tom Nash and it's a really big deal.
This move stops Tesla's direct competitors from making these types of infrastructure
investments themselves. Let me give you a little context.
If you didn't know, governments around the world have introduced
incentives for automakers to develop electric vehicles or very low-carbon emitting cars.
Credits are given to carmakers that build and sell environmentally friendly vehicles. These
carmakers are required to have a certain amount of regulatory credits each year.
If they can’t meet the target, they can buy them from other companies that have excess credits.
Because Tesla only sells electric cars which come under the zero emission vehicle category,
the company always has excess regulatory credits and can effectively sell them at a 100% profit.
Michael Burry revealed that he has a short position on Tesla inexcess of HALF A BILLION
DOLLARS in large part because of Tesla's reliance on these regulatory credits. What
Tom Nash and others have pointed out is that Tesla actually weaponized these credits, not the other
way around. Tesla sold these credits to other automakers, allowing them to keep making internal
combustion engine cars in the short term while fulfilling their regulatory credit requirements.
At the same time, Tesla kept extending their lead in electric vehicles. These credits
aren't just a profit center for Tesla, they're a mechanism for actively reducing the competition's
immediate need to switch to electric and, as we all know, necessity is the mother of invention.
Tesla opening their supercharger network to other EVs prevents other automakers from needing
to make their own investments in infrastucture to reduce the range anxiety associated their brands.
Why build their own charging stations when they can just use Teslas? Well,
in 15 or 20 years when an incredibly large chunk of vehicles on the road are electric, who is going
to own the lion's share of the infrastructure? Also, shout out to Tasha Keeney from ARK Invest,
who started talking about Tesla spinning off its supercharging network or allowing third parties
to use it back in twenty sixteen. If you want to know why I'm so focused on ARK Invest's research,
this type of forward thinking is exactly why. And if you want to read that article,
I've linked it in the description below. Things like this are why I think ARK Invest still has
over 3 BILLION dollars in Tesla today, making it their biggest position by a massive margin.
I hope this episode helped you understand some of the major benefits
of Tesla opening its superchargers to other EVs, how Tesla's supercharger stations could
serve as major community hubs and profit centers that reach far beyond just Tesla's car owners,
and how this is another way that Tesla's energy business
can grow beyond the size of it's auto business, as Elon Musk has stated in the past.
If it did, let me know by investing in the like button and subscribing to the channel
with all notifications turned on and check out my other pieces on Tesla. That's a great
way to invest in the channel that invests in you. Until next time, This is ticker symbol you,
my name is Alex, reminding you, that the best investment you can make is in you.