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Tesla Motors Inc (TSLA) Won’t Charge to Charge the Model X

tesla motors model x tow hitch

Tesla Motors Inc  is doing all that is within its power to ensure that its Model X hits the ground running when deliveries start in the next three weeks. Tesla has revealed that Model X buyers would have free access to the Supercharger network as standard on their orders. Tesla said this in the configurator system used for taking pre-orders of the Signature Series Model X. If Tesla keeps its word, Model X buyers would enjoy free charging –this perk should drive interest in the EV.

tesla motors model x tow hitch

As the deliveries of the Model X draw near, potential Tesla buyers have wondered if Tesla would offer free charging on SUVs costing upwards of $90,000. The market is also interested in knowing Tesla’s stance on the cost of charging. A group of investors believes that Tesla should be able to increase its revenue by selling energy to owners of its cars. Another group opines that Tesla’s charm lies in a free charging solution.

The case for making charging free to Tesla buyers

One of the key selling points of EVs is the savings in fuel-costs that buyers can have when they opt for EVs as opposed to buying ICE-cars that run on gasoline. In essence, the amount of money you’ll have spent on buying gas accrues to you as savings when you buy EVs that don’t run on gas. However, if Tesla starts asking its car owners to pay when they use its Superchargers – it won’t be much different from going to the gas station to fill up the tank.

Secondly, global oil prices have had a steep decline and it is unlikely that oil prices will rise in the short to medium terms as U.S. shale boom and the politics of OPEC continues to support the oil glut. In essence, the cost of gasoline won’t be outrageously higher than the cost of charging up an EV to obtain the same mileage. Hence, it might just be easier to buy an ICE-car and fill up the gas tank from any of the million gas stations instead of suffering from range anxiety with EVs.

You might argue that buyers of EVs who can afford to shell out about $100,000+ for the current line up Model S and Model X won’t be worried about charging costs in relation to fuel costs – you might be right. However, when Tesla Motors ‘s mass market Model 3 hits the market at $35,000, the cost of charging, vis-à-vis the cost of fuel, in relation to the kind of other ICE-cars with the same price tag will make a difference.

Will Tesla offer free charging for Model 3?

Tesla Motors has grown a robust Supercharger network and the firm is not resting on its laurels yet. Tesla now has 508 Supercharger stations with 2.871 Supercharger units and marked a 5X increase in 2014.

The firm says it is planning to double its Supercharger units this year – at a cost of a 5% increase in CapEX. Tesla Motors can still afford to offer free-charging without making a big hole in its budget It remains to be seen if free charging will be an option when it start selling 500,000 cars yearly by 2020.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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