What company wouldn’t love to get its competitors’ customers to download its app?
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Posted on EVANNEX on August 02, 2021 by Charles Morris
Elon Musk recently confirmed that Tesla will open up its proprietary Supercharging network to drivers of other electric vehicles, beginning later this year. During the company’s Q2 earnings conference call, he released some more details about Tesla’s plans, and offered a little comic relief with a fling at another high-tech company that’s not known for opening up its networks.
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“It is our goal to support the advent of sustainable energy,” Musk said. “It is not to create a walled garden and use that to bludgeon our competitors, which is sometimes used by some companies.” As reported by CNBC, Musk then did the old fake-throat-clearing routine and coughed, “Apple!”
Musk explained that non-Tesla EV owners will be able to use the Tesla smartphone app to manage and pay for their charging sessions: “We are thinking about a real simple thing where you just download the Tesla app, you go to the Supercharger, you just indicate which stall you are in, you plug in your car, even if it’s not a Tesla, and you just access the app to tell it, ‘turn on the stall that I’m in for how much electricity,’ and this should work for almost any manufacturer’s electric car.”
It’s a fiendishly clever idea. What company wouldn’t love to get its competitors’ customers to download its app? Given the ubiquity of the Supercharger network, non-Tesla drivers will have every incentive to sign up for an account, and once they do, they’ll get firsthand experience of how the Tesla ecosystem works, while giving Tesla access to their contact info.
The real beauty of the scheme is that it requires no buy-in from the other automakers. Tesla can easily make its Superchargers available to anyone with a CCS connector (it has already retrofitted CCS plugs to European Superchargers, and has now confirmed plans to make an adapter available in the US). Other EV-makers may not like the arrangement, but they can’t stop their customers from downloading the Tesla app.
This is a hugely important development for Tesla, and for the EV industry, but there are still plenty of unanswered questions.
WILL THIS BREAK THE SUPERCHARGER NETWORK?
Unsurprisingly, many current Tesla owners are against the move—reading some of the comments on Musk’s tweet, you can almost hear the weeping, wailing and gnashing of teeth—and they do have a point. In EV-rich areas, long lines can already be seen at both Supercharger and non-Tesla charging sites (some commenters helpfully provided photos), and nobody wants to make those lines longer (and I sure don’t want somebody parking a beat-up old Volt or Leaf next to my Plaid Model S).
Well folks, for better or for worse, this is what progress looks like. If all cars are going to go electric, public charging is going to become a much larger-scale endeavor, and the opening of the Superchargers is something that was bound to happen sooner or later. Yes, overcrowding at charging sites is a problem (just as it is at airports, on highways and everywhere else that humans travel). The only solutions are to increase charging speed and to build out a lot more chargers—and going open-source may actually help to accelerate both of these trends.
WHY IS TESLA DOING THIS, AND WHY NOW?
There are (at least) two answers—the self-interest-based answer is that making the Superchargers accessible to all could allow Tesla to take advantage of billions in government subsidies. This certainly seems to be behind some of the recent announcements having to do with European markets.
Tesla has reportedly been negotiating with the local government of Vestland county in Norway about receiving incentives to deploy charging stations, but only charging stations that serve all EVs are eligible. According to minutes of a council meeting obtained by Electrek, officials agreed to approve the incentives when Tesla told them that it plans to open the Supercharger network to other automakers.
A similar scenario may be playing out in Sweden. According to the Swedish EV mag Elbilen (the name means “electric vehicles”), Tesla has applied for support to deploy some chargers under a program that requires that they be open to all EVs. “We, therefore, assume that the charging stations they build will be public [accessible to all],” said Hanna Eklöf of the Swedish Transport Administration.
Here in the US, the proposed Bipartisan Infrastructure Framework includes $7.5 billion in funding for a national charging network. It remains to be seen how much will eventually be on the table, and how the largesse will be ladled out, but the administration has made it clear that only charging networks that are open to all EVs will be getting the goodies.
Another, more idealistic reason to open up the network is that it’s a step forward for EV adoption. Tesla wants everyone to drive EVs, even if some of them come from other automakers. Also, Tesla is all about efficiency, and maintaining two separate, incompatible charging networks is anything but efficient.
Tesla’s Supercharger advantage is what biz-school types call a moat, and as Elon Musk and Warren Buffett both know, a moat can eventually be breached by a determined attacker. The best of the non-Tesla networks, such as Electrify America, are quickly expanding their coverage, and improving their quality and reliability. Having a proprietary network may not be a big advantage for much longer, so Tesla isn’t giving up much by lowering the drawbridge.
CHARGING FOR CHARGING
It’s also worth pointing out that Tesla won’t be offering Supercharging for free. To paraphrase the Godfather’s nemesis Don Barzini, Tesla must let customers of other automakers draw the water from the well, but certainly it can present a bill for such services. “After all, we are not Communists.” Tesla has said in the past that Superchargers are not a profit center, and it’s believed to be providing electricity to Tesla owners pretty much at cost. However, it has no obligation to do so for other EV drivers.
Some believe that the income potential is large. Goldman Sachs has estimated (as reported by Teslarati) that Tesla could rake in as much as $25 billion per year in charging fees from non-Tesla drivers. “Tesla opening up its network could represent a sizable opportunity over time as the EV fleet grows, especially if Tesla charges more for non-Tesla owners,” wrote the investment bank’s analysts.
I for one would take any such predictions with a large dose of lithium salt. It’s way too early to predict what the charging industry will look like once the S-curve of EV adoption flattens, but most industry observers expect electrons to become a commodity product, with razor-thin profit margins. There’s little profit in pumping gasoline (retailers make their money on human fuel like overpriced soda and chips), and there’s no reason to expect a different business case for EV charging. If Tesla charges substantially more than competitors such as Electrify America and EVgo (which are increasingly siting chargers near, or adjacent to, Superchargers), few will use the Superchargers. And if charging an EV costs as much as gassing up a fossil car, then drivers who often make long drives will not buy EVs at all. Trying to earn billions from charging would run counter to the mission of encouraging EV adoption, and I doubt Tesla will show any interest in doing so.
WHAT ABOUT THE TECHNICAL DETAILS?
We’ve seen some articles by naysayers and worriers, speculating that Tesla will replace its proprietary plug with a CCS connector, requiring existing vehicles to be retrofitted, or that other automakers will be asked to add new connectors, or Tesla-compliant software to their vehicles, which they are unlikely to agree to do.
Fortunately, there’s a much simpler solution, and it’s already being rolled out. The standards war between CCS and CHAdeMO ended when charger manufacturers started producing chargers equipped with both plugs, and the Supercharger moat will be bridged in the same way. Model 3 and Model Y vehicles sold in the European market come with a CCS Combo 2 charge port, and Tesla has retrofitted its European Supercharger stations with dual cables. “In advance of Model 3 rollout in Europe, we will be retrofitting our existing Superchargers with dual charge cables,” a Tesla spokesperson said in 2018. A CCS adapter is (finally) available for drivers of Models S and X.
The dual-standard solution is coming from the other side too—public fast charging network EVgo began cooperating with Tesla in 2019 to add Tesla’s proprietary connector to its DC fast charging stations, and hundreds of its stations around the country now support all three US fast charging standards, with no need for a separate adaptor. Other networks will probably find it wise to follow suit soon.
On the software side, things are a little more complex, as Tesla is not a participant in the Open Charge Point Protocol (OCPP), which allows interoperability among charging stations from different manufacturers. However, Elon Musk doesn’t seem to see much of an issue here. “Our Supercharger network is not intended to be a walled garden—it’s intended to be available to other manufacturers if they’d like to use it,” he said in 2015. “The only requirements are that the cars must be able to take the power output of our Superchargers, and then just pay whatever their proportion their usage is of the system.”
The legacy automakers are beginning to implement the Plug & Charge standard, which, as the name implies, allows drivers to simply plug in and walk away, letting the car handle authentication and billing on its own, just as Teslas have always done.
The big picture is that public charging is steadily becoming better in every way. The third-party networks are catching up to Tesla, even as the California carmaker is raising its own game. Coverage is rapidly expanding—there are dozens of major charging infrastructure projects underway around the country (and the world) as you read this, financed by electric utilities, automakers (including startups with new perspectives, such as Rivian), fleet operators, state and local governments, and ambitious private charging networks.
As public charging becomes a mass-market phenomenon, some of the fun will inevitably be lost. “Tesla time,” the chance to chat about EVs with a select group of early adopters, won’t be the same when you’re charging at a station with 100 stalls, patronized by drivers of every EV on the market. For better or for worse, that’s what happens when a niche technology goes mainstream.
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Written by: Charles Morris; Sources: InsideEVs, Reuters, Electrek, Charged, Forbes, ilovetesla
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