Why Tesla's Battery-Swap Machine Will Boost Profits

Last week, Tesla Motors (NASDAQ: TSLA  ) showed off an innovation that can only be described as "cool": a system that swaps out the battery pack of the Model S and installs a new one -- in just seconds.

Tesla plans to roll this system out to its busiest recharging stations, to offer Model S owners an option to "refuel" quickly. But as Fool.com contributor John Rosevear explains in this video, Tesla isn't just doing it for the cool factor -- there are a couple of good reasons to think that this will boost Tesla's profits.

Tesla's plan to disrupt the global auto business has yielded spectacular results. But giant competitors are already moving to disrupt Tesla. Will the company be able to fend them off? The Motley Fool answers this question and more in our most in-depth Tesla research available. Get instant access by clicking here now.


Read/Post Comments (7) | Recommend This Article (1)

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  • Report this Comment On June 29, 2013, at 11:03 AM, sabebrush6 wrote:

    When I go to a store, especially a grocery store, I always check EVERY label to verify is was NOT a Product of China. We have people in the United States that need our support plus we have much better inspection & regulations of our products. I will go to more than one store if necessary to get American made products. And if it costs a bit more, well - so be it.

  • Report this Comment On June 29, 2013, at 11:14 AM, lyleg wrote:

    The battery swapping is a cool idea but they need to get the price point down. If I'm going to go to the trouble and expense of buying an electric vehicle I don't want to have to pay as much to "refuel" as I would with a conventional luxury car.

    They really shouldn't have to charge that much for a battery exchange program. We should all ditch the concept of "owning" the battery pack and think of it the same way we think of the propane tank in a gas grill. You don't really "own" the propane tank. You just swap it out when you need a new one.

  • Report this Comment On June 29, 2013, at 11:26 AM, emailnodata wrote:

    To anyone at Tesla and the Big Boys:

    The battery swap process is a GREAT idea (except):

    it you want mass acceptance, even just mass-affluent acceptance, then the battery swaps need to be universal and common.

    IN short, no different than buying a can of propane, or 9-volt battery. I need to be able to pop into any convenience store with a "battery-lot" and swap with as little hassle as possible...nearly mindless, like buying gas.

    You get the idea.

  • Report this Comment On June 29, 2013, at 11:28 AM, emailnodata wrote:

    To add, I think we all know that economies of scale and market forces are not in play yet.

    You'd really need an economic study to see just how the total cost of a battery swap should be in a saturated market.

  • Report this Comment On June 29, 2013, at 11:47 AM, TMFMarlowe wrote:

    @sabebrush6: I'm not sure what your point is here. Teslas are made in California.

    @emailnodata: These battery packs weigh about a thousand pounds. They're not really something you can pick up at Home Depot.

    Thanks to all for watching.

    John Rosevear

  • Report this Comment On June 29, 2013, at 12:04 PM, StanO6 wrote:

    It appears some of you are missing the point. You do not need the battery swapping. Go home. Plug-in. Go to sleep. In the morning your car is charged.

    Simple.

  • Report this Comment On June 29, 2013, at 8:33 PM, Threemagisteria wrote:

    @StanO6:

    On a typical day, you would be right. Tesla owners don't normally need either supercharging or swapping if they are driving under the maximum range in a day (nominally 300 mi for the 85Kw pack).

    However, sometimes people do take longer trips. Boston to DC requires one supercharge stop that can occur at mealtime. Boston to Grandma's house in Altoona, PA would require a couple of swaps, which won't be possible until Spring 2014 according to Tesla's schedule of station construction.

    Although, once that date arrives, even the annual cross-state holiday trip to Grandma's won't require a gas vehicle, and the EV will officially outgrow its "auxiliary vehicle" status as far as virtually all American drivers are concerned.

    Those who routinely drive 400+ mi/day in remote areas of the country will still need gas, but the US market as a whole will be able to reap the benefits of electric.

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