⚡️ Jaan's calculations for Tesla Supercharger rollout

It all started from the Supercharging team layoffs (our deep dive here) and then Elon Musk writing an update:

So how many Superchargers will Tesla deploy with the $500M? What does “thousands” mean here? I did some of my back-of-the-napkin calculations which I know you love so much.

If we’re accepting a proper margin of error, my back-of-the-napkin calculations (I know you love those haha) show that if we take the average hardware & installation costs Tesla shared on last year’s Investor Day (green for Tesla, grey for competitor average),

and not considering the subsidies Tesla gets both in US through NEVI and in Europe through AFIR funding, Tesla could deploy 12,500 new connectors at the average cost of $40k this year. For either end of the spectrum, it’d be 10k chargers if the average is $50k, and 16,666 chargers if Tesla somehow averages at a $30k cost.

I’d assume Musk means global numbers here, for the $500M. And since Tesla has already deployed 2,687 connectors so far in the first quarter globally (down from 2,750 of Q1 2023 btw), that would leave 9,813 left to be deployed this year. Or on the other cases, 7,313 or 13,979 respectively.

Considering Tesla deployed 12,473 connectors in 2023 (growing 29% YoY in Q4), 2024 is likely to look like this:

• 12,500 new connectors for 2024, if the average cost is $40k and $500M is spent, is doable and would mean virtually growing at the same rate (just +0,21% more) from the previous year.

Tesla could likely do this other scenario too, but it doesn’t fall in line with him saying Tesla will continue building out the network at a slower pace:

• 16,666 new connectors for 2024 is doable and would mean a 33.6% increase over 2023 deployments, if considering the NEVI and AFIR subsidies lower the cost of deployment to at least $30k-per-connector range.

So, really, it’s almost like the two and two don’t match here. On one hand, Musk says Tesla will slow down the pace of growth (which we could say is the 29% growth in Q4 2023 over Q4 2022), on the other the $500M+ spend hints at a higher growth, because Tesla will get significant funds in subsidies, which should bring the $/connector down to $30k range.

Other aspects to consider:

• There’s likely a temporary slowdown in deployments in the next few quarters due to the “restructuring”.

• Tesla will increase utilization of its Superchargers (due to dominance and slower new charger rollout, especially in the US),

• The non-Tesla access to its Superchargers in US is still about to roll out in a more significant manner, as in several parts of EU and China, which will also lead to extra utilization of its existing network. Each supercharger deployed will bring in more money.

• Tesla’s SC deployments are bound to keep costing less, with reduced headcount, increased efficiency of pre-fabricated supercharger deployments, and likely 3rd-party sales.

All in all I expect Tesla to come out in a few quarters saying they have significantly improved their margins on the Supercharging business. Hopefully we’ll hear some concrete numbers once the dust settles (Tesla hasn’t really provided it before).

Whatever the short-term effects, I would still assume that in a few years, we’ll see Tesla’s network as a mean cash-machine already set, while other networks are perhaps finally starting to catch up to the size. Am I overly optimistic? Perhaps.

Musk also created a public Supercharger Community on his X platform on Friday for “Discussing issues with the Supercharging experience and where next to deploy new Superchargers.”

Meanwhile, BP CEO Sujay Sharma says the company “is aggressively looking to acquire real estate to scale our network, which is a heightened focus following the recent Tesla announcement.” (link)

Thanks for reading my rants here. Please comment below with your thoughts on all this.

And feel free to return to our newsletter, Teslaverse #10.